Exhibit 10.1

EXECUTION VERSION

 

 

REVOLVING CREDIT, TERM LOAN, GUARANTY

AND

SECURITY AGREEMENT

PNC BANK, NATIONAL ASSOCIATION

(AS AGENT AND JOINT LEAD ARRANGER)

AND

CITIBANK, N.A.

(AS JOINT LEAD ARRANGER AND DOCUMENTATION AGENT)

AND THE LENDERS PARTY HERETO

 

DASAN ZHONE SOLUTIONS, INC.,

and various of its Subsidiaries

 

(BORROWERS)

February 27, 2019

 

 

 

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TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS.1

 

1.1

Accounting Term1

 

 

1.2

General Terms2

 

 

1.3

Uniform Commercial Code Terms68

 

 

1.4

Certain Matters of Constructio.69

 

ARTICLE II

ADVANCES, PAYMENTS.69

 

2.1

Revolving Advances.69

 

 

2.2

Procedures for Requesting Revolving Advances; Procedures for Selection of
Applicable Interest Rates for All Advances.71

 

 

2.3

Term Loan73

 

 

2.4

Swing Loans.74

 

 

2.5

Disbursement of Advance Proceed75

 

 

2.6

Making and Settlement of Advances.76

 

 

2.7

Maximum Advance.78

 

 

2.8

Manner and Repayment of Advances.78

 

 

2.9

Repayment of Excess Advances79

 

 

2.10

Statement of Account79

 

 

2.11

Letters of Credit.80

 

 

2.12

Issuance of Letters of Credit.80

 

 

2.13

Requirements For Issuance of Letters of Credit.81

 

 

2.14

Disbursements, Reimbursement.82

 

 

2.15

Repayment of Participation Advances.83

 

 

2.16

Documentation84

 

 

2.17

Determination to Honor Drawing Request.84

 

 

2.18

Nature of Participation and Reimbursement Obligations84

 

 

2.19

Liability for Acts and Omissions.86

 

 

2.20

Prepayments87

 

 

2.21

Use of Proceeds.91

 

 

2.22

Defaulting Lenders.92

 

 

2.23

Payment of Obligation.94

 

 

2.24

Increase in Maximum Revolving Advance Amount.95

 

ARTICLE III

INTEREST AND FEES.97

 

3.1

Interest.97

 

 

3.2

Letter of Credit Fees.98

 

 

3.3

Facility Fee.99

 

 

3.4

Fee Letter; Collateral Evaluation Fees.100

 

 

3.5

Computation of Interest and Fees101

 

 

3.6

Maximum Charges.101

 

 

3.7

Increased Costs101

 

 

3.8

Alternate Rate of Interest.102

 

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3.8.1.

Interest Rate Inadequate or Unfair.  In the event that Agent or any Lender shall
have determined that:102

 

 

3.9

Capital Adequacy.104

 

 

3.10

Taxes.104

 

 

3.11

Replacement of Lender.107

 

ARTICLE IV

COLLATERAL: GENERAL TERMS107

 

4.1

Security Interest in the Collateral108

 

 

4.2

Perfection of Security Interest108

 

 

4.3

Preservation of Collateral..109

 

 

4.4

Ownership and Location of Collateral.109

 

 

4.5

Defense of Agent’s and Lenders’ Interests..110

 

 

4.6

Inspection of Premises.110

 

 

4.7

Appraisals..111

 

 

4.8

Receivables; Deposit Accounts and Securities Accounts.111

 

 

4.9

Inventory..114

 

 

4.10

Maintenance of Equipment..114

 

 

4.11

Exculpation of Liability.114

 

 

4.12

Financing Statements..114

 

 

4.13

Investment Property Collateral..115

 

 

4.14

Provisions Regarding Pledged Equity Interests.115

 

 

4.15

Agreements Regarding Korean Collateral.121

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES.122

 

5.1

Authority.122

 

 

5.2

Formation and Qualification.123

 

 

5.3

Survival of Representations and Warranties..123

 

 

5.4

Tax Returns..123

 

 

5.5

Financial Statements.123

 

 

5.6

Entity Names..124

 

 

5.7

O.S.H.A.; Environmental Compliance; Flood Insurance.125

 

 

5.8

Solvency; No Litigation, Violation, Indebtedness or Default; ERISA
Compliance.125

 

 

5.9

Intellectual Property127

 

 

5.10

Licenses and Permits..127

 

 

5.11

[RESERVED].127

 

 

5.12

No Default..127

 

 

5.13

No Burdensome Restrictions.127

 

 

5.14

No Labor Disputes..127

 

 

5.15

Margin Regulations.128

 

 

5.16

Investment Company Act..128

 

 

5.17

Delivery of DNI Agreements..128

 

 

5.18

Delivery of KeyMile Acquisition Documents..128

 

 

5.19

Swaps..128

 

 

5.20

Business and Property of Loan Parties.128

 

 

5.21

Ineligible Securities.129

 

 

5.22

Equity Interests..129

 

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5.23

Commercial Tort Claims.130

 

 

5.24

Letter of Credit Rights.130

 

 

5.25

Material Contracts..130

 

 

5.26

Affiliate Transactions..130

 

 

5.27

Certificate of Beneficial Ownership..130

 

 

5.28

Disclosure..130

 

ARTICLE VI

AFFIRMATIVE COVENANTS.130

 

6.1

Compliance with Laws.130

 

 

6.2

Conduct of Business and Maintenance of Existence and Assets..131

 

 

6.3

Books and Records.131

 

 

6.4

Payment of Taxes..131

 

 

6.5

Financial Covenants.132

 

 

6.6

Insurance.135

 

 

6.7

Payment of Indebtedness and Leasehold Obligations..136

 

 

6.8

Environmental Matters.137

 

 

6.9

Standards of Financial Statements.137

 

 

6.10

Federal Securities Laws..138

 

 

6.11

Execution of Supplemental Instruments..138

 

 

6.12

Exercise of Rights.138

 

 

6.13

Government Receivables..138

 

 

6.14

Membership / Partnership Interests..138

 

 

6.15

Keepwell..138

 

 

6.16

Certificate of Beneficial Ownership and Other Additional Information..139

 

 

6.17

Repatriation.139

 

ARTICLE VII

NEGATIVE COVENANTS.140

 

7.1

Merger, Consolidation, Acquisition and Sale of Assets.140

 

 

7.2

Creation of Liens..142

 

 

7.3

Guarantees..142

 

 

7.4

Investments142

 

 

7.5

Loans..142

 

 

7.6

Capital Expenditures..142

 

 

7.7

Restricted Payments.143

 

 

7.8

Indebtedness..143

 

 

7.9

Nature of Business.143

 

 

7.10

Transactions with Affiliates..143

 

 

7.11

[RESERVED].144

 

 

7.12

Subsidiaries.144

 

 

7.13

Fiscal Year and Accounting Changes..148

 

 

7.14

Pledge of Credit.148

 

 

7.15

Amendment of Organizational Documents..148

 

 

7.16

Compliance with ERISA..149

 

 

7.17

Prepayment of Indebtedness; Repayment of Permitted Korean LGU Indebtedness149

 

 

7.18

DNI Subordinated Debt and Obligations.150

 

 

7.19

Amendments to Other Agreements..150

 

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ARTICLE VIII

CONDITIONS PRECEDENT.150

 

8.1

Conditions to Initial Advances.150

 

 

8.2

Conditions to Each Advance.156

 

 

8.3

Post-Closing Covenants/Conditions.156

 

ARTICLE IX

INFORMATION AS TO LOAN PARTIES.159

 

9.1

Disclosure of Material Matters..160

 

 

9.2

Schedules.160

 

 

9.3

Environmental Reports.161

 

 

9.4

Litigation.161

 

 

9.5

Material Occurrence.161

 

 

9.6

Government Receivables..162

 

 

9.7

Annual Financial Statements.162

 

 

9.8

Quarterly Financial Statements..162

 

 

9.9

Monthly Bank Statements.163

 

 

9.10

Other Reports.163

 

 

9.11

Additional Information..163

 

 

9.12

Projected Operating Budget..163

 

 

9.13

Variances from Operating Budget..163

 

 

9.14

Notice of Suits, Adverse Events..163

 

 

9.15

ERISA Notices and Requests..163

 

 

9.16

Additional Documents..164

 

 

9.17

Updates to Certain Schedules..164

 

 

9.18

Financial Disclosure..164

 

ARTICLE X

EVENTS OF DEFAULT.165

 

10.1

Nonpayment.165

 

 

10.2

Breach of Representation.165

 

 

10.3

Financial Information.165

 

 

10.4

Judicial Actions.165

 

 

10.5

Noncompliance.165

 

 

10.6

Judgments.166

 

 

10.7

Bankruptcy.  166

 

 

10.8

[RESERVED].166

 

 

10.9

Lien Priority.166

 

 

10.10

Subordinated Loan Default.166

 

 

10.11

Cross Default.166

 

 

10.12

Breach of Guaranty, Guarantor Security Agreement or Pledge Agreement.167

 

 

10.13

Change of Control.167

 

 

10.14

Invalidity.167

 

 

10.15

Seizures.167

 

 

10.16

[RESERVED].167

 

 

10.17

Pension Plans.167

 

 

10.18

Anti-Terrorism Laws..167

 

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ARTICLE XI

LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.167

 

11.1

Rights and Remedies.168

 

 

11.2

Agent’s Discretion.169

 

 

11.3

Setoff.169

 

 

11.4

Rights and Remedies not Exclusive..170

 

 

11.5

Allocation of Payments and Proceeds of Collateral after Event of Default170

 

ARTICLE XII

WAIVERS AND JUDICIAL PROCEEDINGS.173

 

12.1

Waiver of Notice.173

 

 

12.2

Delay.173

 

 

12.3

Jury Waiver..174

 

ARTICLE XIII

EFFECTIVE DATE AND TERMINATION.174

 

13.1

Term..174

 

 

13.2

Termination.174

 

ARTICLE XIV

REGARDING AGENT.175

 

14.1

Appointment.175

 

 

14.2

Nature of Duties..175

 

 

14.3

Lack of Reliance on Agent..176

 

 

14.4

Resignation of Agent; Successor Agent; Resignation of Non-Agent Issuing
Bank..176

 

 

14.5

Certain Rights of Agent.177

 

 

14.6

Reliance..177

 

 

14.7

Notice of Default..178

 

 

14.8

Indemnification.178

 

 

14.9

Agent in its Individual Capacity..178

 

 

14.10

Delivery of Documents.178

 

 

14.11

Loan Parties’ Undertaking to Agent..178

 

 

14.12

No Reliance on Agent’s Customer Identification Program.179

 

 

14.13

Other Agreements..179

 

ARTICLE XV

BORROWING AGENCY.179

 

15.1

Borrowing Agency Provisions.179

 

 

15.2

Waiver of Subrogation.180

 

ARTICLE XVI

MISCELLANEOUS.180

 

16.1

Governing Law..180

 

 

16.2

Entire Understanding.181

 

 

16.3

Successors and Assigns; Participations; New Lenders.184

 

 

16.4

Application of Payments..187

 

 

16.5

Indemnity.187

 

 

16.6

Notice.189

 

 

16.7

Survival.190

 

 

16.8

Severability..191

 

 

16.9

Expenses.191

 

 

16.10

Injunctive Relief..191

 

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16.11

Consequential Damages.191

 

 

16.12

Captions..191

 

 

16.13

Counterparts; Facsimile Signatures..191

 

 

16.14

Construction..192

 

 

16.15

Confidentiality; Sharing Information..192

 

 

16.16

Publicity.192

 

 

16.17

Certifications From Banks and Participants; USA PATRIOT Act.192

 

 

16.18

Anti-Terrorism Laws.193

 

 

16.19

Acknowledgement and Consent to Bail-In of EEA Financial Institutions.194

 

 

16.20

Currency Indemnity..195

 

 

16.21

Sovereign Immunity..195

 

 

16.22

Ex-Im Subfacility.195

 

ARTICLE XVII

GUARANTY AND SURETYSHIP AGREEMENT196

 

17.1

Guaranty and Suretyship Agreement.196

 

 

17.2

Guaranty of Payment and Not Merely Collection..196

 

 

17.3

Guarantor and Suretyship Waivers.197

 

 

17.4

Repayments or Recovery from Secured Parties.198

 

 

17.5

Enforceability of Obligations.198

 

 

17.6

Guaranty Payable upon Event of Default; Remedies.199

 

 

17.7

Waiver of Subrogation..199

 

 

17.8

Continuing Guaranty and Suretyship Agreement.199

 

 

17.9

General Limitation on Guarantee Obligations..200

 

 

17.10

Limitation with respect to German Guarantors.200

 

 

17.11

Right of Contribution..203

 

 

17.12

Keepwell..203

 

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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 2.3(a)Form of Term Loan Note

Exhibit 2.4Form of Swing Loan Note

Exhibit 8.1(g)Form of Financial Condition Certificate

Exhibit 16.3 Form of Commitment Transfer Supplement

 

 

Schedules

 

Schedule 1.1Lenders and Commitments

Schedule 1.2(a)

Dormant Subsidiaries

Schedule 1.2(b)

Disqualified Persons

Schedule 1.2(c)

Existing German Pension Plans/Old Age Part Time Working Schemes

Schedule 2.21(a)

Korean and Japanese Loan Facilities to be Repaid at Closing

Schedule 4.4 Equipment and Inventory Locations; Place of Business, Chief
Executive Office, Real Property

Schedule 4.8(j)Deposit and Investment Accounts

Schedule 4.14Pledged Equity Interest Collateral

Schedule 5.1Consents

Schedule 5.2(a) States of Qualification and Good Standing

Schedule 5.2(b) Subsidiaries

Schedule 5.4Federal Tax Identification Number

Schedule 5.6 Prior Names

Schedule 5.8(b) Litigation

Schedule 5.8(e) Plans

Schedule 5.9 Intellectual Property

Schedule 5.14 Labor Disputes

Schedule 5.23Equity Interests

Schedule 5.24Commercial Tort Claims

Schedule 5.25Letter of Credit Rights

Schedule 5.26Material Contracts

Schedule 7.2Permitted Encumbrances

Schedule 7.3 Permitted Guarantees

Schedule 7.4Permitted Investments

Schedule 7.8Permitted Indebtedness

 

 

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REVOLVING CREDIT, TERM LOAN,

GUARANTY AND SECURITY AGREEMENT

 

Revolving Credit, Term Loan, Guaranty and Security Agreement dated as of
February 27, 2019, by and among DASAN ZHONE SOLUTIONS, INC., a Delaware
corporation (“DZSI”), ZTI MERGER SUBSIDIARY III, INC., a Delaware corporation
(“ZTI”and together with DZSI and each Person joined hereto as a borrower from
time to time, collectively, the “Borrowers” and each, a “Borrower”), PREMISYS
COMMUNICATIONS, INC., a Delaware corporation (“Premisys”), ZHONE TECHNOLOGIES
INTERNATIONAL, INC., a Delaware corporation, (“Zhone International”), PARADYNE
NETWORKS, INC., a Delaware corporation (“Paradyne Networks”), PARADYNE
CORPORATION, a Delaware corporation (“Paradyne Corporation”), DASAN NETWORK
SOLUTIONS, INC., a California corporation (“DNS”), DASAN NETWORK SOLUTIONS,
INC., a corporation organized under the laws of the Republic of Korea (“DNS
Korea”), KEYMILE GMBH, a limited liability company (Gesellschaft mit
beschränkter Haftung) organized under the laws of Germany, registered with the
commercial register (Handelsregister) of the local court (Amtsgericht) of
Hannover under registration number HRB 208693 (“KeyMile”, and together with (i)
Premisys, Zhone International, Paradyne Networks, Paradyne Corporation, DNS and
DNS Korea, and (ii) each other 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 hereafter become parties hereto
(collectively, the “Lenders” and each a “Lender”), PNC BANK, NATIONAL
ASSOCIATION (“PNC”), in its capacity as agent for the Lenders (in such capacity,
together with its successors and assigns, the “Agent”), with PNC BANK, NATIONAL
ASSOCIATION and CITIBANK, N.A., as Joint Lead Arrangers, and CITIBANK, N.A., as
Documentation Agent.

 

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

ARTICLE IDEFINITIONS.

1.1Accounting Terms.  As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement or any of the Other Documents, all accounting terms not defined in
Section 1.2 hereof or elsewhere in this Agreement or partly defined in Section
1.2 hereof to the extent not defined shall have the respective meanings given to
such terms under GAAP; provided, however 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
as applied in preparation of the audited financial statements of DZSI and its
consolidated Subsidiaries for the fiscal year ended December 31, 2017.  If there
occurs after the Closing Date 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, Agent, Lenders and Loan
Parties 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 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 Loan Parties shall provide additional financial statements or
supplements thereto,

 

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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 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.  However, notwithstanding anything to the contrary provided for
in this Section 1.1 or otherwise in this Agreement, (x) leases of the Companies
in effect on the Closing Date shall continue to be classified and accounted for
on a basis consistent with GAAP as applied in preparation of the audited
financial statements of DZSI and its consolidated Subsidiaries for the fiscal
year ended December 31, 2017 for all purposes of this Agreement, notwithstanding
any change in GAAP relating thereto, unless the parties hereto shall enter into
a mutually acceptable amendment addressing such changes, as provided for above,
and (y) leases of the Companies entered into after the Closing Date shall be
classified and accounted for on a basis consistent with GAAP as in effect from
time to time, unless the parties hereto shall enter into a mutually acceptable
amendment to the contrary, except that, notwithstanding anything to the contrary
provided for in this sentence (or otherwise in this Section 1.1), to the extent
that, after the Closing Date, (1) DZSI or any of its Subsidiaries shall enter
into any new real estate lease in connection with a relocation of DZSI’s
corporate headquarters facility currently located at 7195 Oakport Street,
Oakland, California, and such new real estate lease is on terms no less
favorable on the whole, and at a cost to Companies that is equal to or less
than, the existing lease for such existing headquarters facility, or (2) KeyMile
or any of its Subsidiaries shall enter into any new real estate lease in
connection with a relocation of KeyMile’s corporate headquarters and/or
warehouse facilities currently located at Wohlenbergstrasse 5, 30179, Hannover,
Germany, and such new real estate lease is on terms no less favorable on the
whole, and at a cost to Companies that is equal to or less than, the applicable
existing lease for such existing headquarters facility or warehouse facilities,
as applicable, each such lease shall be classified and accounted for on a basis
consistent with GAAP as applied in preparation of the audited financial
statements of DZSI and its consolidated Subsidiaries for the fiscal year ended
December 31, 2017 for all purposes of this Agreement, notwithstanding any change
in GAAP relating thereto (and specifically notwithstanding the effect of ASC
842).

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

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

“Acquisition” shall mean any transaction (or series of related transactions) for
the purchase or other acquisition, by merger or otherwise, by any Company of (a)
Equity Interests in any Person having ordinary voting power to elect at least a
majority of the directors of such Person or other governing body performing
similar functions for such Person (or otherwise conferring similar control over
the governance and policies of such Person), or (b) all or substantially all the
assets of any Person (or all or substantially all the assets constituting a
business unit, division, product line or line of business of any Person), but
not any other type of Investment in any Person (any such Person, and/or assets
and/or business unit, division, product line or line of business of any Person,
acquired in any such transaction, the “target”).

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

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

“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 which 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 five percent (5%) 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 assigns.

“Agreement” shall mean this Revolving Credit, Term Loan, Guaranty 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 Overnight
Bank Funding 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.  Any change in the Alternate Base Rate (or any component thereof)
shall take effect at the opening of business on the day such change occurs.

“Alternate Source” shall have the meaning set forth in the definition of
Overnight Bank Funding Rate.

“Annual Audited Financials” shall mean, as to any fiscal year of Loan Parties,
the audited financial statements, related statements and reports, related
Accountant’s opinion, letters, and reports, and related Compliance Certificates
required to be delivered by Loan Parties with respect to such fiscal year to
Agent under Section 9.7 hereof.

“Anti-Terrorism Laws” shall mean any Laws 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, 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.

3

 

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“Applicable Margin” shall mean, with respect to each Revolving Advance, Swing
Loan, and portion of the Term Loan and also with respect to Letter of Credit
Lender Fees, the applicable percentage as follows:

Domestic Rate Revolving Advances

LIBOR Rate Revolving Advances

Swing Loans

Domestic Rate Term Loan

LIBOR Rate Term Loan

Letters of Credit

1.50%

2.50%

1.50%

5.00%

6.00%

2.50%

 

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

“Appraisal Costs” shall have the meaning set forth in Section 3.4(d) hereof.

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

“Approved Credit Insurance Policy” shall mean, as to any Receivable arising from
a sale to a Customer outside the United States of America, a policy of credit
insurance for comprehensive commercial and political risk under which the
payment and collection of such Receivable is insured, if and to the extent that
(i) the insurance carrier, coverage amounts and terms of coverage with respect
to such Receivable under such insurance policy shall be reasonably acceptable to
Agent in its Permitted Discretion (provided that, as of the Closing Date, Euler
Hermes is acceptable to Agent), and (ii) such insurance policy shall name Agent
as beneficiary, additional insured or lender loss payee, as applicable, to whom
all proceeds and payments under such credit insurance policy shall be paid on
terms acceptable to Agent pursuant to an endorsement to such credit insurance
policy acceptable to Agent in its discretion.

“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 Credit Management Module of
PNC’s PINACLE® 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.

“Approved Foreign Currencies” shall mean Euros ( € ), Great Britain Pounds
Sterling (£), Canadian Dollars (CAD$), United Arab Emirates dirham/ Emirati
dirham (AED), and Korean Won (KRW).

“Approved LC Foreign Currencies” shall mean United Arab Emirates dirham/ Emirati
dirham (AED), and such other currencies other than Dollars as Issuer shall
approve in its sole discretion from time to time.

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“Approved Fund” shall mean any Fund that is administered, advised, managed,
underwritten or sub-advised by (a) a Lender, (b) an Affiliate of a Lender, or
(c) an entity or an Affiliate of an entity that administers, advises, manages,
underwrites or sub-advises a Lender.

“Bail-In Action” means 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” means, with respect to any EEA Member Country implementing
Article 55 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.

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled
“Bankruptcy,” as in effect from time to time, or any successor statute.

 

“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.

“Beneficial Owner” shall mean, for each Loan Party, each of the following: (a)
each individual, if any, who, directly or indirectly, owns 25% or more of such
Loan Party’s Equity Interests; and (b) a single individual with significant
responsibility to control, manage, or direct such Loan Party.

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

“Blocked Account Bank” 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 include their successors and permitted assigns.

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

“Borrowing Agent” shall mean DZSI.

“Borrowing Base Certificate” shall mean a certificate in substantially the form
of Exhibit 1.2(a) hereto duly executed by the President, Chief Financial Officer
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.

“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

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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 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.  Capital Expenditures for any period shall include the principal
portion of Capitalized Lease Obligations paid in such period.

“Capitalized Lease Obligation” shall mean any Indebtedness of any Company
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

“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,
(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, and
(i) with respect to any Foreign Subsidiary of DZSI with respect to investments
made in a country outside the United States of America, subject at all times to
Sections 10.18 and 16.18, other customarily utilized high-quality investments of
credit quality and liquidity equivalent to clauses (a) through (g) above, and,
with respect to clause (d) above, with banks of equivalent credit quality, in
each case appropriate in the country where such Foreign Subsidiary is located or
in which such investment is made.

“Cash Management Liabilities” shall mean the indebtedness, obligations and
liabilities of any Loan Party or any of their respective Subsidiaries 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

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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 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
and/or any of their respective Subsidiaries: (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.

“Casualty Proceeds Event” shall mean the receipt by any Person in cash of any
proceeds of any claim, award, or other amount under any insurance policy on
account of damage or destruction of any assets or property or as a result of any
taking or condemnation of any assets or property.

“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.

“Certificate of Beneficial Ownership” shall mean, for each Loan Party, a
certificate in form and substance acceptable to Agent (as amended or modified by
Agent from time to time in its sole discretion), certifying, among other things,
the Beneficial Owner of such Loan Party.

“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.

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“Change of Control” shall mean the occurrence of any event (whether in one or
more transactions) which results in: (a) any person or group of persons (within
the meaning of Section 13(d) or 14(a) of the Exchange Act) other than DNI
acquiring beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the SEC under the Exchange Act) of 35% or more of the voting Equity Interests of
DZSI; (b) during any period of 12 consecutive months, a majority of the members
of the board of directors or equivalent governing body of DZSI cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board was approved by individuals referred to in clause (i)
above constituting at the time of such election or nomination at least a
majority of that board, or (iii) whose election or nomination to that board was
approved by individuals referred to in clauses (i) and (ii) above constituting
at the time of such election or nomination at least a majority of that board;
and (c) the failure of DZSI to hold, directly or indirectly, 100% of the issued
and outstanding Equity Interests (other than any directors’ qualifying shares or
other de minimus ownership interest required by Applicable Law to be owned by a
Person other than DZSI or one or more of its Subsidiaries) of and otherwise
control (x) each Loan Party, and (y) its other Subsidiaries other than Zhone
Technologies SA and Dasan Network Solutions Japan, Inc. (or, as to Zhone
Technologies SA and Dasan Networks Solutions Japan, Inc., the failure of DZSI to
hold, directly or indirectly, the same percentage ownership of the issued and
outstanding Equity Interest in either such Subsidiary as held, directly or
indirectly, by DZSI as of the Closing Date or the same rights of management
and/or control with respect to either such Subsidiary as held, directly or
indirectly, by DZSI as of the Closing Date.  For purposes of this definition,
“control of” any Person shall mean the power, direct or indirect (A) to vote
more than 50% of the Equity Interests having ordinary voting power for the
election of directors (or the individuals performing similar functions) of such
Person or (B) to direct or cause the direction of the management and policies of
such Person by contract or otherwise.

 

“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 or any
Company.

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

“Claims” shall have the meaning given to such term in Section 16.5 hereof.

“Closing Date” shall mean the date of this Agreement or such other date as may
be agreed to in writing by the parties hereto.

"Closing Date Flow of Funds Agreement" shall have the meaning set forth in
Section 8.1(bb) hereof.

“Closing Date Korean Yangdo Dambo” shall mean the Yangdo-Dambo Agreement
governed by Korean law dated on or about the Closing Date, by and among Agent,
the Lenders

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and DNS Korea; as such agreement may be amended, modified, supplemented,
renewed, restated or replaced from time to time.

“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 (including
without limitation all Export-Related Accounts Receivable);

(b)all equipment and fixtures;

(c)all general intangibles (including all payment intangibles and all software)
and all supporting obligations related thereto (including without limitation all
Export-Related General Intangibles);

(d)all Inventory;

(e)all Subsidiary Stock, securities, Investment Property and financial assets
(but excluding any Equity Interests of any Subsidiary of Borrowers or Credit
Agreement Guarantors that does not constitute Subsidiary Stock);

(f)[RESERVED];

(g)[RESERVED];

(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;

(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

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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 Loan Parties, would be sufficient to create a perfected Lien in any
property or assets that such Loan Party may receive upon the sale, lease,
license, exchange, transfer or 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 foregoing, Collateral shall not include any Excluded
Property.

“Commitments” shall mean, collectively, the Revolving Commitments and the Term
Loan Commitments.

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

“Companies” shall mean, collectively, all of the Loan Parties and all of their
respective Subsidiaries, and “Company” shall mean each and any of them.

“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 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 Company’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, the Ex-Im Subfacility Credit Agreement, or the Ex-Im Subfacility
Other 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.

“Consolidated Basis” shall mean, with respect to any Person the consolidation of
the accounts or other items of such Person and its Subsidiaries in accordance
with GAAP.

“Contemplated Rights Offering” shall mean an equity rights offering by DZSI, of
the type discussed by Lenders and DZSI prior to the Closing Date, that is
consummated and closed following the Closing Date resulting in Net Cash Proceeds
in respect thereof of not less than $25,000,000.

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

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“Contractual Obligation” shall mean, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

“Control Agreement” shall mean a deposit account control agreement or securities
account control agreement or blocked account agreement, as applicable, entered
into by any one or more Loan Parties, an applicable bank or other depository
institution or securities intermediary and Agent, sufficient to provide Agent
with “control” (for purposes of Articles 8 or Article 9 of the Uniform
Commercial Code, as applicable) over the deposit account(s) or securities
accounts(s) subject thereto maintained with such applicable bank or other
depository institution or securities intermediary, and otherwise in form and
substance reasonably acceptable to Agent in their Permitted Discretion.

“Controlled Group” shall mean, at any time, each Company 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 Company, are treated as a single employer under Section 414 of the Code.

“Corporate Cure Subsidiary” shall have the meaning set forth in Section 8.3(i)
hereof.

“Covered Entity” shall mean (a) each Loan Party, each of each Loan Party’s
Subsidiaries 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, 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.

“Cure Period” shall have the meaning set forth in Section 6.5(d) hereof.

“Cure Right” shall have the meaning set forth in Section 6.5(d) hereof.

“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 Company,
pursuant to which such Company is to deliver any personal property or perform
any services.

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

“Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by
Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the
Reserve Percentage; provided, however, that if the Daily LIBOR Rate determined
as provided above would be less than zero, such rate shall be deemed to be zero
for purposes of this Agreement.

“Debt Payments” shall mean for any Person for any period, in each case: (a)
interest payments paid or payable in cash by such Person on any Advances or any
“Advances” under the Ex-Im Subfacility Credit Agreement during such period, plus
(b) regularly scheduled principal

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payments paid or payable in cash by such Person in respect of the Term Loan
during such period, plus (c)  any fees, commissions and charges set forth herein
or in the Ex-Im Subfacility Credit Agreement paid or payable in cash by such
Person during such period, plus (d) payments in respect of Capitalized Lease
Obligations paid or payable in cash by such Person during such period, plus (e)
payments with respect to Interest Expense or regularly scheduled principal
payments with any other Indebtedness for borrowed money paid or payable in cash
by such Person during such period, including without limitation, (x) regularly
scheduled repayments of the Permitted KeyMile Seller Working Capital Facility
Indebtedness, and (y) an amount equal to (but not exceeding) fifty percent (50%)
of the aggregate amount of the repayment in full in cash of the Permitted LGU
Indebtedness on the scheduled maturity thereof as required by Section 7.17(c).

“Default” shall mean the occurrence of an event or circumstance 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
Business Days of the date required to be funded or paid, to (i) in the case of
any Revolving Lender, to fund any portion of such Lender’s Revolving Commitment
Percentage of any Revolving Advances, (ii) in the case of any Revolving Lender,
to fund any portion of its Participation Commitment in any Letters of Credit or
Swing Loans, (iii) the case of any Term Lender, to fund any portion of such
Lender’s Term Loan Commitment in any Term Loan, or (iv) pay over to Agent,
Issuer, the Swing Loan Lender or any Lender any other amount required to be paid
by it hereunder, unless, in the case of clause (i) or clause (iii) 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 Borrowers 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 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 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
Lenders.  However, without limiting the generality of or contradicting any of
the foregoing, each Lender that is a “Defaulting Lender” for any reason under
the Ex-Im Subfacility Credit Agreement shall also be a Defaulting Lender
hereunder.

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

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

“Disposition” shall mean any sale, assignment, lease, sublease, license,
sublicense, conveyance, exchange, transfer or other disposition of any
assets.  Variations of such term (i.e. “Dispose”) shall have corresponding
meanings.

“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 six (6)
months prior to the last day of the Term (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 six (6) months prior to the last day of the
Term, or (c) are entitled to receive scheduled dividends or distributions in
cash prior to the time that the Obligations are Paid in Full.

“Disqualified Person” shall mean (a) any natural Person, or (b) any Person
listed on Schedule 1.2(b) or any Person that is clearly identifiable as an
Affiliate of any such Person listed on Schedule 1.2(b) based on such Affiliate’s
name; provided, however, Agent and the Lenders shall be entitled to rely in good
faith on any representation and warranty made by a potential purchaser, assignee
or transferee that such Person is not a Disqualified Person.

“DNI” shall mean Dasan Networks, Inc., a corporation organized under the laws of
the Republic of Korea.  As of the Closing Date, DNI owned a majority of the
outstanding and issued Equity Interests of DZSI.

“DNI Closing Date Loan Amendment” shall mean that certain Amendment Agreement to
be dated on or about the Closing Date providing for an amendment to each of the
Permitted DNI Subordinated Loans to extend the maturity of each such Permitted
DNI Subordinated Loan to a date that is ninety (90) days after the last day of
the Term.

“DNI IP License” shall have the meaning set forth in Section 8.3(e) hereof.

“DNI IP Pledge Consents” shall mean, collectively, the written consents from DNI
to the granting of Liens in favor of Agent and Ex-Im Agent pursuant to the
Korean IP Pledges in the forms, respectively, of Schedule IV to the Domestic
Korean IP Pledge and the Ex-Im Korean IP Pledge.

“DNI Subordination Agreement” shall mean that certain Subordination Agreement
dated on or about the Closing Date among Agent, Ex-Im Agent, and DNI, as such
agreement may be amended, modified, supplemented, renewed, restated or replaced
from time to time in accordance with the terms thereof.

“DNI/DNS Korea Guarantee Fee Agreement” shall mean that certain Guarantee Fee
Agreement dated as of April 1, 2015 by DNS Korea as the “Delagator” and DNI as
the “Delagatee”.

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“DNS Japan” shall mean Dasan Network Solutions Japan, Inc., a Subsidiary of DZSI
and DNS.

“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 at any time (i) as to any amount denominated in
Dollars, the amount thereof at such time, and (ii) as to any amount denominated
in any other currency, the equivalent amount in Dollars calculated by the Agent
in good faith at such time using the Exchange Rate in effect on the day of
determination.

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

“Domestic Loan Party” means any Loan Party that is not a Foreign Loan Party.

“Domestic Obligations” shall mean any and all Obligations other than Ex-Im
Obligations.

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

“Dormant Subsidiaries” shall mean, collectively, each Subsidiary of DZSI
designated by Credit Parties as a Dormant Subsidiary either on Schedule
1.2(a)  delivered by Loan Parties on the Closing Date, or, in the case of any
applicable Subsidiary acquired (directly or indirectly) by DZSI in a transaction
permitted under this Agreement, in a written notice given to Agent as of the
first date Credit Parties are obligated to give Agent notice of such acquisition
(or, if no such notice is otherwise required, on the date such acquisition
occurs), provided that, as of the date of such designation, all of the
representations and warranties set forth in Section 5.20(d) hereof shall be true
and correct as to such Subsidiary; provided that, notwithstanding the foregoing
or anything to the contrary contained herein, Credit Parties may at any time
give written notice to Agent that any Dormant Subsidiary wishes to become a Loan
Party hereunder, and upon the giving of any such notice and completion by Loan
Parties and such Subsidiary of all the requirements of Section 7.12(a), as
applicable, with respect to such Subsidiary and the Equity Interests of such
Subsidiary as though such Subsidiary was a newly acquired Subsidiary, such
Subsidiary shall cease to be a Dormant Subsidiary and shall be a Loan Party for
all purposes hereunder.

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

“EBITDA” shall mean for any period with respect to Loan Parties on a
Consolidated Basis, the sum of (a) net income (or loss) for such period
(excluding extraordinary gains and losses), plus (b) all Interest Expense for
such period, plus (c) all charges against income, for such period for federal,
foreign, state, local, franchise, excise and similar taxes and foreign
withholding taxes of Loan Parties paid or accrued during such period, plus
(d) depreciation expenses for such period, plus (e) amortization expenses for
such period, plus, (f) the amount of all non-recurring expenses, fees, costs and
charges incurred during such period in connection with (x) the KeyMile
Acquisition (to the extent incurred prior to the Closing Date), (y) the
Transactions contemplated by this

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Agreement, and (z) any Contemplated Rights Offering, plus (g) the amount of all
non-recurring expenses, fees, costs and charges incurred for such period in
connection with any proposed or actual Permitted Acquisition or Permitted
Investment (excluded any Permitted Investment by one or more Companies in any
other one or more Companies); provided that, the amount of all such expenses,
fees, costs and charges incurred in any fiscal year and added back to EBITDA
under this clause (g) with respect to any proposed Permitted Acquisition(s) or
Permitted Investment(s) shall not exceed $1,000,000 in the aggregate, and
further provided that, the amount of all such expenses, fees, costs and charges
incurred in any fiscal year and added back to EBITDA under this clause (g) with
respect to any actual Permitted Acquisition(s) or Permitted Investment(s) shall
not exceed $2,000,000 in the aggregate; plus (h) all non-cash stock based
compensation expense for such period; plus (i) non-cash goodwill write-offs and
write-downs for such period; plus (j) non-cash purchase accounting adjustments
during such period; plus (k) any other non-cash charges for such period; plus
(l) the amount of business restructuring charges for such period (which, for the
avoidance of doubt, shall include the effect of plant closure, retention,
severance and excess pension charges); plus (m) the amount of cost savings,
operating expense reductions and cost synergies projected by Loan Parties in
good faith to result from actions taken or committed to be taken no later than
twelve (12) months after the end of such period (calculated on a pro forma basis
as though such cost savings, operating expense reductions and cost synergies had
been realized on the first day of such measurement period for which EBITDA is
being determined and as if such cost savings, operating expense reductions and
cost synergies were realized during the entirety of such measurement period),
net of the amount of actual benefits realized during such measurement period
from such actions; plus (n) the amount of unusual, extraordinary or
non-recurring losses or expenses during such period not otherwise covered by any
other clause of this definition to the extent acceptable to Agent in its
Permitted Discretion; plus (o) the amount of any foreign currency translation
gains or losses during such period; plus (p) the amount of any cash proceeds
received by any Compan(ies) during such period in respect of claims under
business interruption insurance; plus (q) [RESERVED;] plus (r) Special Projects
Costs during such period; plus (s) costs and expenses for such period related to
the initial implementation by the Companies of their “enterprise resource
planning” (or “ERP”) systems; provided that, notwithstanding the foregoing, (I)
the amounts added back to EBITDA pursuant to the foregoing clauses (l), (m),
(n), (r) and (s) in any applicable fiscal measurement period shall not exceed,
in the aggregate, fifteen percent (15%) of the EBITDA for Loan Parties on a
Consolidated Basis for such fiscal measurement period (after giving effect to
such addback), and (II) any amounts added back to EBITDA pursuant to the
foregoing clauses (l), (m), (n), and (r) in any applicable fiscal measurement
period shall be conditioned upon receipt by Agent, if so requested by Agent in
its sole discretion, of supporting documentation and evidence for such addback
satisfactory to Agent in its Permitted Discretion.

“EEA Financial Institution” means (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” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

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“EEA Resolution Authority” means 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.

“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 Export-Related Accounts Receivable” shall mean, collectively, all
“Eligible Export-Related Accounts Receivables” of the Ex-Im Borrowers as defined
in the Ex-Im Subfacility Credit Agreement.

“Eligible Foreign Receivable” shall mean any Receivable of any Borrower
denominated in Dollars or in an Approved Foreign Currency arising in the
Ordinary Course of Business that (i) in the case of any Receivable of any
Borrower that is also an Ex-Im Borrower, would qualify as an Eligible
Export-Related Account Receivable as defined in the Ex-Im Subfacility Credit
Agreement but for the provisions of clause (ff) of the definition of Eligible
Export-Related Accounts Receivable set forth in the Ex-Im Subfacility Credit
Agreement; (ii) would qualify as an Eligible Receivable but for the provisions
of clause (b) and/or (g) of the definition of Eligible Receivables, (iii) is not
due or unpaid more than ninety (90) days after the original invoice date (or
such greater number of days past invoice date for such Receivable permitted
under the applicable Approved Credit Insurance Policy) or more than sixty (60)
days after the original due date (or such greater number of days past due for
such Receivable permitted under the applicable Approved Credit Insurance
Policy), (iv) is insured through an Approved Credit Insurance Policy, and (v) is
owing from a Customer that has been approved by Agent in its Permitted
Discretion from time to time upon request of the Borrowers as an eligible
Customer for Eligible Foreign Receivables (as of the Closing Date, Agent has
approved Emirates Telecommunications Corp., Axtel S.A. de C.V., and Baud Telecom
Company, and also, so long as the Approved Credit Insurance Policy under which
their Receivables are insured is issued by Euler Hermes, WNI Equipamentos
Electronics Ltda. and Furukawa Electric Co, Ltd., as eligible Customers for
Eligible Foreign Receivables; provided that, Agent in its Permitted Discretion
may from time to time in its Permitted Discretion and notice to the Borrowing
Agent revoke such approval as to any such Customer described in this
parenthetical); provided that, for the avoidance of doubt and without limiting
the generality of any of the foregoing or of any clause(s) of the definition of
Eligible Receivables, but notwithstanding anything to the contrary provided for
otherwise in this Agreement (x) Agent may from time to time in its Permitted
Discretion establish a sublimit with respect to any Eligible Foreign Receivables
owing for any approved Customer, and (y) no such Receivable otherwise described

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in this definition shall be an Eligible Foreign Receivable if Agent in its
Permitted Discretion shall have deemed it excluded from Eligible Foreign
Receivables based on such consideration as Agent may from time to time deem to
be appropriate (which such considerations may include risks related to any
political or extraordinary conditions that are adverse to the interests of Agent
and Lenders in the country where the applicable Customer on the Receivable is
located).

“Eligible Receivables” shall mean and include, each Receivable of a Borrower
denominated in Dollars or in an Approved Foreign Currency 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.  In addition, no Receivable shall be an
Eligible Receivable if:

(a)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;

(b)such Receivable is due or unpaid more than ninety (90) days after the
original invoice date (or, in the case of any Eligible Foreign Receivable, to
the extent the applicable Approved Credit Insurance Policy covering such
Eligible Foreign Receivables permits original repayment terms for such
Receivable for a greater number of days past original invoice date, such greater
number of days) or more than sixty (60) days after the original due date;

(c)such Receivable is due from a Customer with respect to which fifty percent
(50%) or more of the Receivables (other than Export-Related Accounts Receivable)
owing from such Customer are not deemed Eligible Receivables (including Eligible
Foreign Receivables) hereunder (such percentage may, in Agent’s Permitted
Discretion, be increased or decreased from time to time), or such Receivable is
due from a Customer with respect to which fifty percent (50%) or more of the
Receivables (including Export-Related Accounts Receivable) owing from such
Customer are not deemed Eligible Receivables (including Eligible Foreign
Receivables) hereunder or Ex-Im Eligible Export-Related Accounts Receivable
under the Ex-Im Subfacility Credit Agreement (such percentage may, in Agent’s
Permitted Discretion, be increased or decreased from time to time);

(d)such Receivable is not subject to Agent’s first priority perfected Lien or is
subject to any other Liens (other than Permitted Encumbrances);

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

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

(g)the sale is to a Customer outside the United States of America, unless the
sale is on letter of credit, Guaranty or acceptance terms, in each case
acceptable to Agent in its Permitted Discretion (including approval by Agent of
the bank or financial institution issuing such Letter of Credit in accordance
with Agent’s institutional procedures);

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(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 sole 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;

(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)with respect to any Eligible Foreign Receivables, the Receivables of the
Customer from which such Receivable is owing exceed a credit limit determined by
the applicable credit insurer, to the extent such Receivable exceeds such limit;

(m)such Receivable is owing from a Customer whose total Receivables (other than
Export-Related Accounts Receivable) owing to all Borrowers exceed 20% of all
Eligible Receivables (including Eligible Foreign 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 in its Permitted
Discretion, 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);

(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;

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(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 by Agent
in its Permitted Discretion.

Notwithstanding anything to the contrary contained in the foregoing or in any
other provision of this Agreement or any Other Document, no Receivable of any
Borrower that is also an Ex-Im Borrower may simultaneously be both a Eligible
Receivable eligible for inclusion in the Formula Amount under this Credit
Agreement and an Eligible Export-Related Account Receivable eligible for
inclusion in the Ex-Im Formula Amount under the Ex-Im Subfacility Credit
Agreement, and in the event any Receivable of any Ex-Im Borrower would otherwise
fit within the definitions of both an Eligible Receivable (or, if applicable, an
Eligible Foreign Receivable) under this Agreement, and an Eligible
Export-Related Account Receivable under the Ex-Im Subfacility Credit Agreement,
the parties hereto agree that (x) if such Receivable of any Ex-Im Borrower is
payable by an Customer located in the United States, it shall be a Eligible
Receivable, and (y) if such Receivable of any Ex-Im Borrower is payable by an
Customer located outside of the United States, it shall be an Eligible
Export-Related Account Receivable (provided that, for the avoidance of doubt,
any Receivable of any Ex-Im Borrower that would otherwise be an Eligible
Export-Related Account Receivable but for the provisions of clause (ff) of the
definition of Eligible Export-Related Account Receivable set forth in the Ex-Im
Subfacility Credit Agreement shall be an Eligible Foreign Receivable under this
Agreement if and to the extent that such Receivable shall satisfy all the
requirements of the definition of Eligible Foreign Receivable hereunder).

Notwithstanding anything to the contrary, unless the context shall expressly
provide or shall require otherwise, all Eligible Foreign Receivables shall be
Eligible Receivables for all purposes under this Agreement except for the
purposes of Section 2.1(a)(y)(i)(A).

“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.

“Equity Interests” shall mean, with respect to any Person, any and all shares,
rights to purchase, 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 of the following rights relating to
such Equity Interests, whether arising under the Organizational Documents of the
Person issuing such Equity Interests (the “issuer”) or under the applicable laws
of such issuer’s jurisdiction of organization relating to the formation,
existence

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and governance of corporations, limited liability companies or partnerships or
business trusts or other legal entities, as the case may be (all of the
following rights, as to any applicable Equity Interests, the “Related Equity
Interest Rights”): (i) all economic rights (including all rights to receive
dividends and distributions) relating to such Equity Interests; (ii) all voting
rights and rights to consent to any particular action(s) by the applicable
issuer; (iii) all management rights with respect to such issuer; (iv) in the
case of any Equity Interests consisting of a general partner interest in a
partnership, all powers and rights as a general partner with respect to the
management, operations and control of the business and affairs of the applicable
issuer; (v) in the case of any Equity Interests consisting of the
membership/limited liability company interests of a managing member in a limited
liability company, all powers and rights as a managing member with respect to
the management, operations and control of the business and affairs of the
applicable issuer; (vi) all rights to designate or appoint or vote for or remove
any officers, directors, manager(s), general partner(s) or managing member(s) of
such issuer and/or any members of any board of
members/managers/partners/directors that may at any time have any rights to
manage and direct the business and affairs of the applicable issuer under its
Organizational Documents as in effect from time to time or under Applicable Law;
(vii) all rights to amend the Organizational Documents of such issuer, (viii) in
the case of any Equity Interests in a partnership or limited liability company,
the status of the holder of such Equity Interests as a “partner”, general or
limited, or “member” (as applicable) under the applicable Organizational
Documents and/or Applicable Law; and (ix) all certificates evidencing such
Equity Interests.

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

“EU Bail-In Legislation Schedule” means 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.

“Ex-Im Agent” shall mean the “Agent” pursuant to the Ex-Im Subfacility Credit
Agreement, as such term is defined therein.

“Ex-Im Agreements” shall mean, collectively, the Ex-Im Borrower Agreement, the
Ex-Im Joint Application, the Ex-Im Loan Authorization Notice, the Ex-Im Master
Guarantee and the Ex-Im Waivers, each as defined in the Ex-Im Subfacility Credit
Agreement.

“Ex-Im Bank” shall mean the Export-Import Bank of the United States.

“Ex-Im Borrower” shall mean those Borrowers that are party to the Ex-Im
Subfacility Credit Agreement and the Ex-Im Subfacility Other Documents as
“Borrowers” from time to time.  The parties hereto acknowledge that as of the
Closing Date, the only Ex-Im Borrowers are DZSI and ZTI.

“Ex-Im Credit Agreement Guarantors” shall mean the “Guarantors” party to the
Ex-Im Subfacility Credit Agreement from time to time.  

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“Ex-Im Credit Parties” shall mean, collectively, the Ex-Im Borrowers and the
Ex-Im Credit Agreement Guarantors.

“Ex-Im Default” shall mean any “Default” as defined in the Ex-Im Subfacility
Credit Agreement.

“Ex-Im Event of Default” shall mean any “Event of Default” as defined in the
Ex-Im Subfacility Credit Agreement.

“Ex-Im Foreign Currency Letter of Credit” shall mean any “Foreign Currency
Letter of Credit (as defined in the Ex-Im Subfacility Credit Agreement) made
under the Ex-Im Subfacility Credit Agreement.

“Ex-Im Formula Amount” shall mean the “Formula Amount” as defined in the Ex-Im
Subfacility Credit Agreement.

“Ex-Im Lenders” shall mean the “Lenders” pursuant to the Ex-Im Subfacility
Credit Agreement, as such term is defined therein.

“Ex-Im Letter of Credit” shall mean any “Letter of Credit” as defined in and
issued under the Ex-Im Subfacility Credit Agreement in reliance on the Ex-Im
Formula Amount.

“Ex-Im Obligations” shall mean any and all loans (including without limitation,
all Ex-Im Revolving Advances), advances, debts, expenses, fees, liabilities and
obligations (including reimbursement obligations and cash collateralization
obligations in respect of any letters of credit issued under the Ex-Im
Subfacility Credit Agreement, if any and if applicable) covenants and duties
owing by Ex-Im Borrowers or Ex-Im Credit Agreement Guarantors to Ex-Im Agent or
any Ex-Im Lender arising under, relating to, or evidenced by the Ex-Im
Subfacility Credit Agreement or any Ex-Im Subfacility Other Documents, of any
kind or nature, present or future (including any prepayment premiums, interest
or other amounts accruing thereon, any fees accruing under or in connection
therewith, any costs and expenses of any Person payable by any Ex-Im Borrower or
Ex-Im Credit Agreement Guarantor and any indemnification obligations payable by
any Ex-Im Borrower or Ex-Im Credit Agreement Guarantor, in each case arising or
payable after maturity, or after the filing of any petition in bankruptcy, or
the commencement of an Insolvency Proceeding relating to any Ex-Im Borrower or
Ex-Im Credit Agreement Guarantor, whether or not a claim for post-filing or
post-petition interest, fees or other amounts is allowable or allowed in such
proceeding), 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, regardless of how such indebtedness or liabilities arise,
including all costs and expenses of Ex-Im Agent and any Ex-Im Lender incurred in
the documentation, negotiation, modification, enforcement, collection or
otherwise in connection with any of the foregoing to the extent provided for in
the Ex-Im Subfacility Credit Agreement or any Ex-Im Subfacility Other Documents,
including but not limited to reasonable attorneys’ fees and expenses to the
extent provided for under the Ex-Im Subfacility Credit Agreement or any Ex-Im
Subfacility Other Documents, and all obligations of any Loan Party to Ex-Im
Agent or any Ex-Im Lender to perform acts or refrain from taking any action
provided however, that, for the avoidance of doubt, Ex-Im Obligations shall
expressly exclude any Cash Management Liabilities and any Hedge Liabilities.

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“Ex-Im Reserves” shall mean any “Reserves” (as defined in the Ex-Im Subfacility
Credit Agreement) in effect against the Ex-Im Subfacility Maximum Amount at any
time.

“Ex-Im Revolving Advances” shall mean, collectively, all “Revolving Advances”
(as defined in the Ex-Im Subfacility Credit Agreement) made under the Ex-Im
Subfacility Credit Agreement.

“Ex-Im Revolving Commitment” shall mean, as to each Ex-Im Lender, such Ex-Im
Lender’s “Revolving Commitment” under the Ex-Im Subfacility Credit Agreement.

“Ex-Im Revolving Commitment Percentage” shall mean, as to each Ex-Im Lender,
such Ex-Im Lender’s “Revolving Commitment Percentage” under the Ex-Im
Subfacility Credit Agreement.

“Ex-Im Secured Parties” shall mean, collectively, all “Secured Parties” as
defined in the Ex-Im Subfacility Credit Agreement.

“Ex-Im Specified Event of Default” shall mean any “Specified Event of Default”
as defined in the Ex-Im Subfacility Credit Agreement.

“Ex-Im Subfacility” shall mean the credit subfacility for revolving credit
advances based on the Ex-Im Formula Amount made available by Ex-Im Lenders to
Ex-Im Borrowers under the Ex-Im Subfacility Credit Agreement and the Ex-Im
Subfacility Other Documents.

“Ex-Im Subfacility Credit Agreement” shall mean that certain Export-Import
Revolving Credit and Security Agreement dated as of the Closing Date among Ex-Im
Borrowers, the Ex-Im Credit Agreement Guarantors, Ex-Im Lenders and Ex-Im Agent,
as hereafter amended, modified, supplemented, restated or replaced from time to
time in accordance with the terms thereof.

“Ex-Im Subfacility Maximum Amount” shall mean the “Maximum Revolving Advance
Amount” as defined in the Ex-Im Subfacility Credit Agreement.

“Ex-Im Subfacility Other Documents” shall mean, collectively, all of the “Other
Documents” as defined under the Ex-Im Subfacility Credit Agreement.

“Ex-Im Subfacility Outstandings Amount” shall mean, as of any date, the Dollar
Equivalent of the sum of (x) the aggregate outstanding principal balance as of
such date of all Ex-Im Revolving Advances and all Ex-Im Swing Loans plus (y) the
Dollar Equivalent of the “Maximum Undrawn Amount” (as defined in the Ex-Im
Subfacility Credit Agreement) of all Ex-Im Letters of Credit outstanding out as
of such date.

“Ex-Im Swing Loan Lender” shall mean the “Swing Loan Lender” pursuant to the
Ex-Im Subfacility Credit Agreement, as such term is defined therein.

“Ex-Im Swing Loans” shall mean, collectively, all “Swing Loans” (as defined in
the Ex-Im Subfacility Credit Agreement) made under the Ex-Im Subfacility Credit
Agreement.

“Ex-Im Waivers” shall have the meaning given to such term in the Ex-Im
Subfacility Credit Agreement.

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“Excess Cash Flow” shall mean, for any period with respect to Loan Parties on a
Consolidated Basis:

(A)EBITDA for such period, minus

(B)the sum of the following, without duplication, in each case to the extent (x)
actually paid in cash during such period and deducted in the determination of
net income for such period and (y) not paid/made in violation of the terms of
this Agreement or any Other Document:

(i)Debt Payments; plus

(ii)Unfinanced Capital Expenditures, plus

(iii)Taxes, plus

(iv)expenses and fees incurred during such period to consummate the Transactions
contemplated by this Agreement or the KeyMile Acquisition (to the extent
incurred prior to the Closing Date), but solely to the extent permitted to be
added-back to net income for such period under clause (f) of the definition of
“EBITDA” and actually paid in cash and deducted in the determination of net
income for such period.

“Excess Cash Flow Percentage” shall mean fifty percent (50%); provided that, if
the Leverage Ratio for Loan Parties on a Consolidated Basis calculated as of the
last day in any fiscal year shall equal or be less than 1.50 to 1.00, the Excess
Cash Flow Percentage to be used in the calculation of any mandatory prepayment
under Section 2.20(b)(ii) hereof with respect to the Excess Cash Flow of such
fiscal year shall be twenty-five percent (25%).

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

“Exchange Rate” shall mean, with respect to any calculation of the Dollar
Equivalent of any amount denominated in any currency other than Dollars on any
date of determination (including the amount of any Receivable denominated in an
Approved Foreign Currency outstanding on such date of determination or the
Maximum Undrawn Amount of any Foreign Currency Letter of Credit outstanding on
such date of determination), the prevailing spot rate of exchange for the
conversion of such other currency into Dollars as determined by Agent’s foreign
exchange department (in the exercise of its ordinary business practices
regarding foreign currency exchange for customers of the Agent similarly
situated to Borrowers) as of the close of business for Agent’s foreign exchange
department on the Business Day immediately preceding such date of determination;
provided that, notwithstanding the foregoing, in the context of (x) any actual
conversion by Agent or any Lender of any funds received by Agent or any Lender
(whether as a payment made by any Loan Party or the proceeds of any Collateral
(including any collections on any Receivable received by Agent or any Lender))
from one currency to another for the purpose of applying such funds to the
Obligations in accordance with the terms of this Agreement, Exchange Rate” means
the spot-buying or spot-selling (as the case may be) rate of exchange at which
Agent or such Lender is actually able to exchange the one currency for the other
in the exercise of its ordinary business practices regarding foreign currency
exchange at the time of such actual conversion, or (y) any actual conversion by
Agent or any Lender of the proceeds of any

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Revolving Advance or Participation Advance made in Dollars for purposes of
satisfying any Reimbursement Obligation to Issuer and/or repayment of any Letter
of Credit Borrowing in connection with any Foreign Currency Letter of Credit
(and/or the determination of the Dollar Equivalent amount of such Reimbursement
Obligation and/or any Letter of Credit Borrowing with respect to such
Reimbursement Obligation and/or the determination of the amount in Dollars of
any Revolving Advance and/or Participation Advance needed/necessary/to be
advanced to satisfy any such Reimbursement Obligation and/or Letter of Credit
Borrowing), “Exchange Rate” means the spot-buying or spot-selling (as the case
may be) rate of exchange at which Agent or such Lender is actually able to
exchange Dollars for the currency in which such Foreign Currency Letter of
Credit is denominated in the exercise of its ordinary business practices
regarding foreign currency exchange at the time of the actual satisfaction of
such Reimbursement Obligation and/or Letter of Credit Borrowing and/or of the
making of the applicable Revolving Advance and/or Participation Advance to
satisfy such Reimbursement Obligation and/or Letter of Credit Borrowing, as
applicable.  

“Excluded Account” shall mean (a) any deposit account, securities account,
commodities account or other account of any Loan Party (and all cash, cash
equivalents and other securities or investments held therein) to the extent
solely and exclusively used for payment of payroll, employee benefits and
withholding taxes, (b) any deposit account, securities account, commodities
account or other account of any Loan Party to the extent solely and exclusively
used to hold any cash or Cash Equivalents pledged as a Permitted Encumbrance,
and (c) deposit accounts of any Loan Party which do not hold more than $50,000
in the aggregate at any time.

“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, 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 Loan Parties, but not all of them, the definition of “Excluded Hedge
Liability or Liabilities” with respect to each such Loan Party shall only be
deemed applicable to (i) the particular Swap Obligations that constitute
Excluded Hedge Liabilities with respect to such Loan Party, and (ii) the
particular Loan Party with respect to which such Swap Obligations constitute
Excluded Hedge Liabilities.

“Excluded Korean Receivable” shall have the meaning given such term in Section
4.15 of this Agreement.

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“Excluded Property” shall mean, collectively (a) any lease, license, franchise,
charter or other governmental authorization, or any other contract or agreement
to which any Loan Party is a party, and any of its rights or interests
thereunder or assets subject thereto, if and to the extent that a Lien in favor
of Agent is prohibited by or in violation of (i) any Applicable Law, or (ii) a
term, provision or condition of any such lease, license, charter, governmental
authorization, contract or agreement; provided, that, in each case, if such
Applicable Law, term, provision or condition would be rendered ineffective with
respect to the creation or enforcement 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 (including the United States Bankruptcy Code) or principles of
equity, or the consent of any applicable Person to the granting of such Lien in
favor of Agent has been obtained, then the foregoing shall not constitute
Excluded Property (and shall constitute Collateral) immediately at such time as
the contractual or legal prohibition shall no longer be applicable; provided,
further, that, to the extent severable, Agent’s Lien shall attach immediately to
any portion of such lease, license, charter, governmental authorization,
contract, agreement or assets not subject to the foregoing prohibitions; (b) any
Equity Interests of a Subsidiary of a Loan Party that do not constitute
Subsidiary Stock; (c) “intent-to-use” United States trademark applications to
the extent that an amendment to allege use or statement of use has not been
filed under 15 U.S.C. §1051(c) or 15 U.S.C. §1051(d), respectively, or if filed,
has not been deemed in conformity with 15 U.S.C. §1051(a) or (c), it being
agreed that for purposes of this Agreement and the Other Documents, no Lien
granted to Agent on any “intent-to-use” United States trademark applications is
intended to be a present assignment thereof; (d) any Excluded Account of the
type described in clause (a) or (b) of the definition thereof (including all
deposits and other financial assets maintained in any such Excluded Account);
(e) all Real Property including all Leasehold Interests;  (f) cash pledged
pursuant to a Permitted Encumbrance; and (g) all Excluded Korean Receivables;
provided, however, that Excluded Property shall not include any proceeds (or
right to receive proceeds) of any of the assets described in the foregoing
clauses (a) – (e) or (g) or any goodwill of any Loan Party’s business associated
therewith or attributable thereto.

“Excluded Subsidiaries” shall mean, collectively, at any time of determination,
the Dormant Subsidiaries at such time and the Foreign Legal Restrictions
Subsidiaries at such time.

“Excluded Taxes” shall mean, with respect to Agent, any Lender, Participant,
Swing Loan Lender, Issuer or any other recipient of any payment to be made by or
on account of any Obligations, (a) taxes imposed on or measured by its overall
net income (however denominated), and franchise taxes imposed on it (in lieu of
net income taxes), by the jurisdiction (or any political subdivision thereof)
under the laws of which such recipient is organized or in which its principal
office or applicable lending office is located or, in the case of any Lender,
Participant, Swing Loan Lender or Issuer, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which any Company is
located, (c) in the case of a Foreign Lender, any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending office) or is
attributable to such Foreign Lender’s failure or inability (other than as a
result of a Change in Law) to comply with Section 3.10(e) hereof, except to the
extent that such Foreign Lender or Participant (or its assignor or seller of a
participation, if any) was entitled, at the time of designation of a new lending
office (or assignment or sale of a participation), to receive additional amounts
from Companies with respect to such

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withholding tax pursuant to Section 3.10(a) hereof, or (d) any Taxes imposed on
any “withholding payment” payable to such recipient as a result of the failure
of such recipient to satisfy the requirements set forth in the FATCA after
December 31, 2012.

 

“Existing WF Letters of Credit” shall mean each of the letters of credit listed
on Exhibit B to the Wells Fargo Payoff Letter.

“Export-Related Accounts Receivable” shall mean, collectively, all
“Export-Related Accounts Receivable” of any Ex-Im Borrower as defined in the
Ex-Im Subfacility Credit Agreement.

“Export-Related Collateral” shall mean the “Export-Related Collateral” as
defined in the Ex-Im Subfacility Credit Agreement.

“Export-Related General Intangibles” shall mean, collectively, all
“Export-Related General Intangibles” of any Ex-Im Borrower as defined in the
Ex-Im Subfacility Credit Agreement.

“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 Closing Date
(or any amended or successor version that is substantively comparable and not
materially more onerous to comply with) and any current or future regulations
thereunder or official interpretations thereof.

“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%) determined by the Federal Reserve Bank of New York (or any
successor), based on such day’s federal funds transactions by depositary
institutions, as determined in such manner as such Federal Reserve Bank (or any
successor) shall set forth on its public website from time to time, and as
published on the next succeeding Business Day by such Federal Reserve Bank as
the “Federal Funds Effective Rate”; provided that if such Federal Reserve Bank
(or its successor) does not publish 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.

“Fee Letter” shall mean the fee letter, dated as of the Closing Date, by and
among Borrowers and PNC.

“Field Examination” shall mean, with respect to (x) any Loan Party, (y) any
Subsidiary or Person acquired (or to be acquired) by any Loan Party that is
required to become a Loan Party under the provisions of Section 7.12 hereof, or
(z) any assets of any Person or line or business or division of a Peron acquired
(or to be acquired) by any Loan Party (or Person that is required to become a
Loan Party under the provisions of Section 7.12 hereof), a customary asset-based
lender’s field examination and audit of such Person and its business and assets
and/or such assets conducted by Agent and its employees and/or any third party
retained by Agent for such purpose of a scope and detail acceptable to Agent in
its Permitted Discretion.

“Field Examination Fees and Costs” shall have the meaning set forth in Section
3.4(c) hereof.

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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, minus (iii) cash taxes paid or required to be paid by such Person
during such period, to (b) the sum of (i) all Debt Payments for such Person
during such period, plus (ii) Restricted Payments made by such Person during
such period, but expressly excluding any Permitted Restricted Payments made
pursuant to clause (c) of the definition of Permitted Restricted Payments.

“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 Liquidity” shall mean, as of any date of determination, the amount
of unrestricted cash and Cash Equivalents of Foreign Subsidiaries of DZSI held
in deposit accounts or securities accounts outside the United States which such
cash and Cash Equivalents are (i) unrestricted, (ii) not subject to any Lien
(other than Permitted Encumbrance of the types described in clauses (a) and (k)
of the definition of Permitted Encumbrances), (iii) freely available to such
Foreign Subsidiaries for withdrawal/transfer without registration or approval of
any Governmental Body (other than registrations or approvals by Governmental
Bodies in the Republic of Korea that are not materially more onerous or
restrictive than the registrations and approvals by Governmental Bodies in the
Republic of Korea as in effect on the Closing Date), (iv) freely available for
repatriation (by means of dividends and distributions from the respective
Foreign Subsidiaries to the respective Domestic Loan Parties) at the option of
such Foreign Subsidiaries and DZSI without restriction due to any applicable
currency controls of any applicable local Governmental Body (other than currency
controls of any applicable local Governmental Bodies in the Republic of Korea
that are not materially more onerous or restrictive than the currency controls
by Governmental Bodies in the Republic of Korea as in effect on the Closing
Date), (v) denominated in Dollars or in a currency that can be easily converted
into Dollars on the international foreign currency exchange markets, and (vi) is
not and could not reasonably be expected to be at risk of nationalization or
expropriation by any applicable local Governmental Body.

“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 entered into by any
Loan Party and/or any of their respective Subsidiaries.

“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

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the Liens securing all other Obligations under this Agreement and the Other
Documents, subject to the express provisions of Section 11.5 hereof.

“Foreign Currency Letter of Credit” shall have the meaning set forth in Section
2.11(a) hereof.

“Foreign Law Guaranty/Security Documents” shall mean, collectively, (i) the
German Law Guarantees and the German Loan Security Documents, (ii) the Korean
Law Guarantees and Security Documents, (iii) each other Guaranty from time to
time executed by any Guarantor that is governed by the laws of a jurisdiction
other than the United States, any State or territory thereof or the District of
Columbia, (iv) any Guarantor Security Agreement from time to time executed by
any Guarantor with respect to any assets or property of any Guarantor that is
governed by and/or creates and/or perfects Liens under the laws of a
jurisdiction other than the United States, any State or territory thereof or the
District of Columbia, or (v) any Pledge Agreement from time to time executed by
any Loan Party with respect to a pledge and creation and grant of a Lien on any
Equity Interests of any Foreign Subsidiary that is governed by the laws of the
jurisdiction of organization of such Foreign Subsidiary or any other
jurisdiction other than the United States, any State or territory thereof or the
District of Columbia

“Foreign Legal Restrictions Subsidiary” shall mean any Foreign Subsidiary that
(as demonstrated by Loan Parties to the reasonable satisfaction of Agent in its
Permitted Discretion) is prohibited by Applicable Law from giving a Guaranty
with respect to the Guaranteed Obligations.    

Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which 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 Loan Party” shall mean any Loan Party that is not organized or
incorporated in the United States, any State or territory thereof or the
District of Columbia.

“Foreign Secured Loan Parties” shall mean, collectively, at any time (x) DNS
Korea, (y) KeyMile, and (z) each other Tier I Foreign Material Subsidiary that,
as of such time, has fully complied with the requirements of Section 7.12(a).

“Foreign Subsidiary” shall mean 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.

“Foreign Unsecured Loan Parties” shall mean, collectively, at any time, each
Tier II Foreign Material Subsidiary that, as of such time, has fully complied
with the requirements of Section 7.12(a).  As of the Closing Date, there are no
Foreign Unsecured Loan Parties.

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

“Fund” shall mean any Person that is (or will be) engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business.

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“Funded Debt” shall mean, with respect to any Person, without duplication, the
sum of (x) 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 Companies, the Obligations and, without duplication,
Indebtedness consisting of guaranties of Funded Debt of other Persons, and (y)
all “earnouts” and similar contingent obligations in connection with
Acquisitions, in each case, valued in accordance with GAAP.  For the avoidance
of doubt, the undrawn face amount of any letters of credit (including but not
limited to Letters of Credit issued under this Agreement and Ex-Im Letters of
Credit issued under the Ex-Im Subfacility Credit Agreement) are not included in
the definition of Funded Debt.

“GAAP” shall mean generally accepted accounting principles in the United States
of America, except that, when it comes to the internal and/or consolidating
books and records of a Foreign Subsidiary of DZSI, GAAP may mean, at DZSI’s
election, the generally accepted accounting principles in the jurisdiction of
such Foreign Subsidiary’s establishment or incorporation (including IFRS), in
each case as in effect from time to time.

“German Guarantor” means a Guarantor incorporated as a limited liability company
(Gesellschaft mit beschränkter Haftung) or established as a limited partnership
with a limited liability company as general partner (GmbH & Co KG), in each case
under the laws of Germany.”

“German Law Assignment Agreement” shall mean that certain Assignment Agreement
governed by German law, dated on or about the date hereof, by KeyMile in favor
of Agent and Ex-Im Agent, as amended, restated, supplemented or otherwise
modified from time to time.

“German Law Guarantees” shall mean, collectively, (i) the Guarantee governed by
German law dated on or about the date hereof by KeyMile in favor of Agent and
Ex-Im Agent, and (ii) any other Guaranty governed by German law executed
subsequent to the Closing Date by any Loan Party to secure the Obligations, in
each case as such Guaranty may be amended, modified, supplemented, renewed,
restated or replaced from time to time

“German Law Security Documents” shall mean, collectively (i) the German Law
Assignment Agreement, (ii) the Share Pledge Agreement governed by German law
dated on or about the Closing Date by ZTI in favor of Agent and Ex-Im Agent with
respect to the Equity Interests in KeyMile, (iii) the Share Pledge Agreement
governed by German law dated on or about the Closing Date by KeyMile in favor of
Agent and Ex-Im Agent with respect to the Equity Interests in KeyMile Networks
GmbH, (iv) the Account Pledge Agreement governed by German law dated on or about
the Closing Date by KeyMile in favor of Agent and Ex-Im Agent, and (v) any other
pledge agreement(s), assignment agreement(s), or other security documents
governed by German law executed subsequent to the Closing Date by any Loan Party
to create a Lien under German law in any assets or properties of such Loan Party
to secure the Obligations, in each case as such agreement may be amended,
modified, supplemented, renewed, restated or replaced from time to time.

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“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), and any group or body having financial regulatory
authority over any applicable Person or any applicable bank, depositary
institution or other financial institution.

“Guarantees” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation, provided that the term “Guarantee” shall not include endorsements
for collection or deposit in the ordinary course of business.  The amount of any
Guarantee at any time shall be deemed to be an amount equal to the lesser at
such time of (i) the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made (or, if not stated or determinable, the
maximum reasonably anticipated amount of the obligations in respect of which
such Guarantee is made) and (ii) the maximum amount for which the guarantor may
be liable pursuant to the terms of the instrument embodying such Guarantee.

“Guaranteed Obligations” shall have the meaning set forth in Section 17.1
hereof.

“Guarantor” shall have the meaning set forth in the preamble to this Agreement
and shall extend to each Person which may hereafter guarantee payment or
performance of the whole or any part of the Obligations, and shall also extend
to all successors and permitted and assigns of such Persons, and “Guarantors”
shall mean collectively all 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 satisfactory to Agent, including with respect
to Guarantors that are parties hereto, the provisions of Article IV of this
Agreement; as each may be amended, modified, supplemented, renewed, restated or
replaced from time to time.

“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 satisfactory

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to Agent, including, with respect to Guarantors that are parties hereto, the
provisions of Article XVII hereof, as each may be amended, modified,
supplemented, renewed, restated or replaced from time to time.

“Hazardous Discharge” shall mean any Release or threat of Release of a
reportable quantity of any Hazardous Materials at the Real Property owned or
leased by any Company.

“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.

“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 (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 other
transaction (including forward sale or purchase agreements, capitalized leases
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 or guarantees or
credit support therefor, including electronic trade payable transactions,
incurred in the Ordinary Course of Business which are not represented by a
promissory note or otherwise reflected as indebtedness in the books and records
of the Person and which, unless Properly Contested, are not more than
seventy-five (75) days past due; (g) all Disqualified Equity Interests; (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 and/or pension plan liabilities of such Person;
(k) obligations arising under bonus,

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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); provided that Indebtedness, shall exclude any
obligation or liability arising from the application or interpretation of ASC
Topic 840 or 842 or any related, similar or successor pronouncement, guideline,
publication or rule.

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

“Ineligible Security(ies)” shall mean any security which may not be underwritten
or dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.

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

“Insolvency Event” shall mean, with respect to any Person, including without
limitation any Lender, such Person or such Person’s direct or indirect parent
company (a) becomes the subject of an Insolvency Proceeding (including any
proceeding under the Bankruptcy 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 Person having its center of main interest (in accordance with
EU Regulation 2015/848) in Germany, a reason for the opening of insolvency
proceedings pursuant to §§ 17 - 19 German Insolvency Code applies, (e) with
respect to a Lender, such Lender is unable to perform hereunder due to the
application of Applicable Law, or (f) 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 company 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.

“Insolvency Law” shall mean as applicable, (a) the Bankruptcy Code, (b) the
German Insolvency Code, and (b) any other federal, state, provincial or foreign
Applicable Law  regarding the insolvency of a Person or a business, or for the
relief of debtors or affecting creditors’ rights generally, or regarding the
appointment of a receiver, conservator, trustee, administrator, custodian,
assignee for the benefit of creditors or similar Person with respect to any
Person or the assets or properties of any Person, or regarding the
reorganization or liquidation of a Person or a business.

“Insolvency Proceeding” shall mean (a) any voluntary case or proceeding under
any Insolvency Law with respect to any Loan Party, (b) any other voluntary
proceeding or involuntary or bankruptcy case or proceeding, or any interim
receivership, liquidation or other similar case or proceeding with respect to
any Loan Party or with respect to a material portion of its assets, (c) any
liquidation, dissolution, or winding up of any Loan Party whether voluntary or
involuntary and

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whether or not involving any Insolvency Law or (d) any assignment for the
benefit of any creditors or any other marshaling of assets or liabilities of any
Loan Party.

“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, design right, assumed name or license or other
right to use any of the foregoing under Applicable Law.

“Intellectual Property Collateral” shall mean all Collateral constituting
Intellectual Property.

“Interest Expense” shall mean, for any period, the aggregate interest expense of
the Loan Parties on a Consolidated Basis, determined in accordance with GAAP.

“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 its Subsidiaries in order
to provide protection to, or minimize the impact upon, such Loan Party and/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 Person all of such Person’s
inventory (as defined in Article 9 of the Uniform Commercial Code or as such
term is used under any Applicable Law) and all of such Person’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
Person’s business or used in selling or furnishing such goods, merchandise and
other personal property, and all Documents of such Person.

“Inventory Collateral” shall mean all Collateral consisting of Inventory and the
proceeds thereof.

“Investment” means, as to any Person, (a) any Acquisition by such Person, (b)
any direct or indirect acquisition or investment by such Person in another
Person, whether by means of the purchase or other acquisition of Equity
Interests or debt or other securities of another Person (including any
partnership or joint venture interest), or (c) any direct or indirect loan,
advance or

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capital contribution to, Guarantee with respect to any Indebtedness or other
obligation of, such other Person.  For purposes of covenant compliance, the
amount of any Investment on any date of determination shall be, in the case of
any Investment in the form of (i) a loan or an advance, the principal amount
thereof outstanding on such date, (ii) a Guarantee, the amount of such Guarantee
as determined in accordance with the last sentence of the definition of such
term, (iii) a transfer of Equity Interests or other property by the investor to
the investee, including any such transfer in the form of a capital contribution,
or the issuance of Equity Interests to such investor, the fair market value (as
determined reasonably and in good faith by the chief financial officer of the
Borrowing Agent) of such Equity Interests or other property as of the time of
the transfer or issuance, without any adjustment for increases or decreases in
value of, or write-ups, write-downs or write-offs with respect to, such
Investment, and (iv) any Investment (other than any Investment referred to in
clauses (i), (ii) or (iii) above) in the form of an Acquisition or a purchase or
other acquisition for value of any evidences of Indebtedness or other securities
of any other Person, the original cost of such Investment (including any
Indebtedness assumed in connection therewith), plus the cost of all additions,
as of such date, thereto, and minus the amount, as of such date, of any portion
of such Investment repaid to the investor in cash as a repayment of principal or
a return of capital, as the case may be, but without any other adjustment for
increases or decreases in value of, 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.

“Issuer” shall mean, both collectively and individually: (a) Agent in its
capacity as an Issuer of Letters of Credit under this Agreement, (b) Citibank,
N.A. in its capacity as an Issuer of Letters of Credit under this Agreement, and
(c) any other Person which Agent in its discretion, and with the consent of such
Person, shall designate as Issuer of and cause to issue any particular Letter of
Credit under this Agreement in place of Agent as issuer.

“KeyMile Acquisition” shall mean the sale by KeyMile Seller and purchase by ZTI
of all of the issued and outstanding Equity Interests of KeyMile pursuant to and
on the terms and conditions provided for in the KeyMile Purchase Agreement, and
the transactions related thereto contemplated by the KeyMile Purchase Agreement
to occur substantially contemporaneously with such sale and purchase, including
the incurrence of the Permitted KeyMile Seller Working Capital Indebtedness,
which sale and purchase and related transactions were closed and consummated on
January 3, 2019.

“KeyMile Acquisition Documents” shall mean the KeyMile Purchase Agreement and
all of the other agreements, documents and instruments executed and delivered in
connection therewith or related thereto (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if any)
and all amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof.

“KeyMile Purchase Agreement” shall mean that certain share purchase agreement
dated as of Share Purchase Agreement dated as of October 5, 2018 (deed no.
1206/2018 B of notary Dr.

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Gesa Beckhaus, Hamburg) between, amongst others, the KeyMile Seller and ZTI,
including all annexes, exhibits and schedules thereto, as amended by that
certain agreement on various issues in relation to postponed closing dated as of
December 31, 2018 between the KeyMile Seller and ZTI.

“KeyMile Seller” shall mean Riverside KM Beteiligung GmbH, a limited liability
company (Gesellschaft mit beschränkter Haftung) organized under the laws of
Germany, registered with the commercial register (Handelsregister) of the local
court (Amtsgericht) of Hannover under registration number HRB 208686.

“KeyMile Seller Working Capital Facility Agreement” shall mean that certain
Working Capital Facility Agreement dated on or about January 3, 2019 between the
KeyMile Seller, as the grantor of a working capital facility consisting of a
single working capital advance in the principal amount of €4,000,000 funded by
the KeyMile Seller allowing the “Retained Cash Amount” (as defined  in the
KeyMile Purchase Agreement) to remain with KeyMile, and KeyMile, as the
recipient of such working capital facility.

“KeyMile Seller Working Capital Facility Guaranty” shall mean that certain
Guaranty Agreement dated on or about October 5/6, 2018 by DZSI and ZTI, as
guarantors, in favor of the KeyMile Seller, as the grantor of the working
capital facility under the KeyMile Seller Working Capital Facility Agreement,
pursuant to which DZSI and ZTI shall guaranty such working capital facility on
an unsecured but unconditional and unlimited basis.

“Korean Law Customer Notices” shall mean such stamped notices directed to
Customers as are necessary under Korean law to (1) where required, obtain the
consent of the Customer to the establishment of Liens and/or (2) perfect Agent’s
or Lender’s Liens in the Receivables of DNS Korea.

 

“Korean Law Guarantee and Security Documents” shall mean, collectively, (i) the
Guaranty and Security Agreement governed by Korean law dated on or about the
Closing Date, by and among Agent, the Lenders, the Borrowers and DNS Korea, (ii)
the Intellectual Property Keun-Pledge Agreement governed by Korean law dated on
or about the Closing Date, by and among Agent, the Lenders and DNS Korea, (iii)
the Share Keun-Pledge Agreement governed by Korean law dated on or about the
Closing Date, by and among Agent, the Lenders and DNS, (iv) the Yangdo-Dambo
Agreement governed by Korean law dated on or about the Closing Date, by and
among Agent, the Lenders and DNS Korea and (v) any other pledge agreement(s),
security agreement(s), guarantee agreement(s), or other security documents
governed by Korean law executed subsequent to the Closing Date by any Loan Party
to create a Lien under Korean law in any assets or properties of such Loan Party
to secure the Obligations, in each case as such agreement may be amended,
modified, supplemented, renewed, restated or replaced from time to time.

“Law(s)” shall mean any law(s) (including common law and equitable principles),
constitution, statute, treaty, regulation, rule, ordinance, opinion, issued
guidance, code, release, ruling, order, executive order, injunction, writ,
decree, bond judgment authorization or approval,

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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 meanings given to such terms in the
preamble to this Agreement and shall include all of their transferees, successor
and permitted assigns.  For 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 and any Cash Management
Liabilities) is owed.

“Lender-Provided Foreign Currency Hedge” shall mean a Foreign Currency Hedge
which is provided by any Lender or Agent, or any Affiliate of any Lender or
Agent, and with respect to which such provider 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 or Agent, or any Affiliate of any Lender or Agent, and
with respect to which such provider 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 Default Rate” shall have the meaning set forth in Section
3.2(a) hereof.

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

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

“Letter of Credit Sublimit” shall mean $10,000,000.

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

“Leverage Ratio” shall mean, for any Person for any period of determination, the
ratio of (a) Funded Debt of such Person on the last day of such period to (b)
EBITDA of such Person for such period.

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

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“LIBOR Rate” shall mean for any LIBOR Rate Loan for the 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 (x) 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), (y) if the LIBOR Rate
is unascertainable as set forth in Section 3.8.2(i) hereof, a comparable
replacement rate determined in accordance with Section 3.8.2 hereof), 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 (0.00%),
such rate shall be deemed to be zero (0.00%) 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.

“LIBOR Termination Date” shall have the meaning set forth in Section 3.8.2(a)
hereof.

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in 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 in form and substance reasonably
satisfactory to Agent which is executed in favor of Agent by a Person who owns
or occupies, or holds a senior mortgage with respect to, premises at which any
Collateral may be located from time to time.

“Liquidity” shall mean, as of any date of determination, the sum of (a) Undrawn
Availability as of such date plus (b) Qualified Cash as of such date.

“Loan Party” and “Loan Parties” shall have the meanings set forth in the
preamble to this Agreement and shall include their successors and permitted
assigns.  For the avoidance of doubt, (x) no Guarantor that is not a party to
this Agreement shall be included within the meaning of the

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term “Loan Party”, and (y) DNI shall not under any circumstances or at any time
be considered a Loan Party for any purpose hereunder.

“Loan Parties on a Consolidated Basis” shall mean the consolidation in
accordance with GAAP of the accounts or other items of DZSI and its
Subsidiaries.

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

“Material Contract” shall mean any contract, agreement, instrument, permit,
lease or license, written or oral, of any Company (x) that accounts for/produces
(or could reasonably be expected to account for/produce) more than ten percent
(10%) of the gross revenues of Loan Parties on a Consolidated Basis in any
fiscal year, or (y) the termination of which could reasonably be expected to
result in a Material Adverse Effect.

“Maximum Permitted Korean Export-Import Bank Amount” an amount equal to the
total principal balance of the Permitted Korean Export-Import Bank Indebtedness
remaining outstanding after giving effect to all of the transactions provided
for in Section 5 of the Closing Date Flow of Funds Agreement.

“Maximum Revolving Advance Amount” shall mean $15,000,000 as such amount may be
increased in accordance with Section 2.24 hereof.

“Maximum Swing Loan Advance Amount” shall mean $2,000,000; 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.

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

“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 Company or any member of the
Controlled Group.

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“Multiple Employer Plan” shall mean a Plan which has two or more contributing
sponsors (including any Company 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.

“Net Cash Proceeds” shall mean:

(a)with respect to any Disposition (other than any issuance or sale of Equity
Interests), proceeds in cash as and when received by the Person making a
Disposition of assets (including without limitation, any deferred payments of
cash, delayed purchase price adjustments or earnouts, and payments on any
“seller note”), net of: (a) all reasonable and customary transaction costs and
expenses with respect thereto (including, without limitation, any reasonable
legal or other reasonable professional fees) or other actual transaction costs
and expenses approved by Agent, in each case to the extent payable to a Person
that is not an Affiliate of a Company, (b) sale, use or other transaction Taxes
paid or payable as a result thereof, (c) amounts required to be applied to repay
principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Permitted Encumbrance, which is senior to the Lien of Agent, on the
assets subject to such Disposition and that is required to be repaid under the
terms thereof as a result of such Disposition, (d) income Taxes payable as a
result thereof, and (e) reserves or escrows for indemnification obligations and
purchase price adjustments and other similar contingent liabilities that are
required to be in place under the terms of the agreement providing for such
Disposition; provided, that, if any amounts described in clauses (a) – (e) which
are retained by any Loan Party in anticipation of paying any item described in
clauses (a) – (e) are not thereafter in fact required to make any such
anticipating payment and/or released from any such reserve or escrow, such
amounts shall constitute Net Cash Proceeds;

 

(b)with respect to any issuance of Indebtedness or any issuance or sale of
Equity Interests by any Company, the cash proceeds thereof, net of all
reasonable and customary transaction costs and expenses with respect thereto
(including, without limitation, any reasonable legal or other reasonable
professional fees) or other actual transaction costs and expenses approved by
Agent, in each case to the extent payable to a Person that is not an Affiliate
of a Company; and

 

(c)with respect to any Casualty Proceeds Event, proceeds in cash, as and when
received, of such Casualty Proceeds Event, net of: (a) all reasonable and
customary collection expenses thereof (including, without limitation, any
reasonable legal or other reasonable professional fees) or other actual
collection expenses approved by Agent, in each case to the extent payable to a
Person that is not an Affiliate of a Company, (b) sale, use or other transaction
Taxes paid or payable as a result thereof, (c) amounts required to be applied to
repay principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Permitted Encumbrance which is senior to the Lien of Agent on the
assets subject to such taking, condemnation, damage or destruction and that is
required to be repaid under the terms thereof as a result of such taking,
condemnation, damage or destruction, and (d) income Taxes payable as a result
thereof; provided, that, if any amounts described in clauses (a) – (d) which are
retained by any Loan Party in anticipation of paying any item described in
clauses (a) – (d) are not thereafter in fact required to make any such
anticipating payment, such amounts shall constitute Net Casualty Proceeds.

 

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

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“Non-Core Companies” shall mean, collectively, at any time (x) all Foreign
Unsecured Loan Parties, and (y) all Companies that are not Loan Parties.

“Non-Defaulting Lender” shall mean, at any time, any Revolving Lender 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 Term Notes, the Revolving Credit Note and
the Swing Loan Note.

“Obligations” shall mean and include (a) 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 issued hereunder), covenants and
duties owing by any Loan Party (including in its capacity as an Ex-Im Borrower
or Ex-Im Credit Agreement Guarantor) or any Subsidiary of any Loan Party to
Issuer, Swing Loan Lender, Lenders or Agent (or to any other direct or indirect
subsidiary or Affiliate of Issuer, Swing Loan Lender, any Lender or Agent), or
to Ex-Im Agent or any Ex-Im Lender arising under, relating to, or evidenced by
this Agreement and the Other Documents or by the Ex-Im Subfacility Credit
Agreement and the Ex-Im Subfacility Other Documents, of any kind or nature,
present or future (including any prepayment premiums, 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 (including in its capacity
as an Ex-Im Borrower or Ex-Im Credit Agreement Guarantor) or any Subsidiary of
any Loan Party and any indemnification obligations payable by any Loan Party
(including in its capacity as an Ex-Im Borrower or Ex-Im Credit Agreement
Guarantor) or any Subsidiary of any Loan Party, in each case arising or payable
after maturity, or after the filing of any petition in bankruptcy, or the
commencement of an Insolvency Proceeding relating to any Loan Party or any
Subsidiary of 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 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, regardless of how such indebtedness or liabilities arise,
including all costs and expenses of Agent, Issuer, Swing Loan Lender, any
Lender, Ex-Im Agent, and any Ex-Im Lender incurred in the documentation,
negotiation, modification, enforcement, collection or otherwise in connection
with any of the foregoing to the extent provided for in this Agreement and the
Other Documents or by the Ex-Im Subfacility Credit Agreement and the Ex-Im
Subfacility Other Documents, including but not limited to reasonable attorneys’
fees and expenses to the extent provided for in this Agreement and the Other
Documents or by the Ex-Im Subfacility Credit Agreement and the Ex-Im Subfacility
Other Documents, and all obligations of any Loan Party to Agent, Issuer, Swing
Loan Lender or Lenders to perform acts or refrain from taking any action, (b)
all Hedge Liabilities, (c) all Cash Management Liabilities, and (d) all rights,
claims or obligations coming into existence after the opening of Insolvency
Proceedings.  Notwithstanding the foregoing, the Obligations shall not include
any Excluded Hedge Liabilities.

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“Ordinary Course of Business” shall mean, with respect to any Company, the
ordinary course of such Company’s business as conducted on the Closing Date (or
in the case of any Person that is formed and/or becomes a Company after the
Closing Date, as conducted as of the date such Person in formed and/or becomes a
Company).

“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 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 Perfection Certificates, the Fee
Letter, any Guaranty, any Guarantor Security Agreement, any Pledge Agreement,
any Foreign Law Guaranty/Security Documents, any Lender-Provided Interest Rate
Hedge, any Lender-Provided Foreign Currency Hedge, any documents and agreements
giving rise to Cash Management Liabilities, the DNI Subordination Agreement, the
Closing Date Flow of Funds Agreement, and any and all other agreements,
instruments and documents, including intercreditor agreements, subordination
agreements, guaranties, pledges, powers of attorney, consents, interest or
currency swap agreements and all other agreements, documents and 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, extensions, renewals, substitutions, restatements 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.

“Overnight Bank Funding Rate” shall mean, for any day, the rate per annum (based
on a year of 360 days and actual days elapsed) comprised of both overnight
federal funds and overnight Eurocurrency borrowings by U.S. managed banking
offices of depository institutions, as such composite rate shall be determined
by the Federal Reserve Bank of New York, as set forth on its public website from
time to time, and as published on the next succeeding Business Day as the
overnight bank funding rate by such Federal Reserve Bank (or by such other
recognized electronic source (such as Bloomberg) selected by Agent for the
purpose of displaying such rate) (an “Alternate Source”); provided, that if such
day is not a Business Day, the Overnight Bank Funding Rate for such day shall be
such rate on the immediately preceding Business Day; provided, further,  that if
such rate shall at any time, for any reason, no longer exist, a comparable
replacement rate determined by Agent at such time (which determination shall be
conclusive absent manifest error).  If the Overnight Bank Funding Rate
determined as set forth above would be less than zero, then such rate shall be
deemed to be zero for purposes of this Agreement.  The rate of interest charged

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shall be adjusted as of each Business Day based on changes in the Overnight Bank
Funding Rate without notice to the Borrowers.

“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.

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

“Participation Commitment” shall mean the obligation hereunder of each Revolving
Lender 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 with
respect to any proposed transaction(s) as to which satisfaction of such Payment
Conditions is a requirement under this Agreement: (a) no Default or Event of
Default shall exist or shall have occurred and be continuing on such date, or
would occur after giving effect to such proposed transaction, and (b) after
giving pro forma effect to such proposed transaction(s) and to any Advances
being made in connection with and/or to fund any portion of such proposed
transaction(s), in each case as though such proposed transaction(s) and any such
Advances had occurred and been made on the first day of the applicable four
quarter fiscal measurement period, (i) Borrowers shall have Undrawn Availability
on such date of not less than $6,000,000, (ii) Loan Parties shall have Qualified
Cash on such date of not less than $5,000,000, (iii) Loan Parties on a
Consolidated Basis shall have a Leverage Ratio of not more than 3.75 to 1.00,
and (iv) Loan Parties shall be in pro forma compliance with each of the
covenants set forth in Section 6.5 hereof as of and for the four quarter fiscal
measurement period ending as of the last day of in the most recently ended
fiscal quarter of DZSI and its Subsidiaries for which the Quarterly Financials
have been delivered to Agent .

“Payment in Full” or “Paid in Full” means, with respect to the Obligations, (i)
the termination of all commitments of the Lenders to extend credit under this
Agreement, (ii) the indefeasible payment in full in cash of all of the
Obligations, including interest accruing on or after the commencement of any
Insolvency Proceeding, whether or not such interest would be allowed in such
Insolvency Proceeding (other than contingent obligations for which no claim or
demand for payment, whether oral or written, has been made at such time and
obligations in respect of outstanding Letters of Credit, and outstanding
Interest Rate Hedge Liabilities under Lender-Provided Interest Rate Hedges and
outstanding Foreign Currency Hedge Liabilities under Lender-Provided Foreign
Currency Hedges), and (iii) the termination or cash collateralization (in an
amount and in the manner required by the Loan Documents) of Revolving Loan
Obligations consisting of (A) outstanding Letters of Credit (but not, in any
event, in an amount greater than 103% of the aggregate undrawn face amount of
such Letters of Credit), (B) Interest Rate Hedge Liabilities under
Lender-Provided Interest Rate Hedges (but not, in any event, in an amount
greater than 100% of amount reasonably estimated by Agent as the maximum amount
of indebtedness, obligations, and liabilities that could reasonably be expected
to become due and owing to the applicable Secured Party thereunder), (C) Foreign
Currency Hedge Liabilities under Lender-Provided Foreign Currency Hedges (but
not, in any event, in an amount greater than 100% of

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amount reasonably estimated by Agent as the maximum amount of indebtedness,
obligations, and liabilities that could reasonably be expected to become due and
owing to the applicable Secured Party thereunder), and (D) any Cash Management
Liabilities (but not, in any event, in an amount greater than 100% of amount
reasonably estimated by Agent as the maximum amount of indebtedness,
obligations, and liabilities that could reasonably be expected to become due and
owing to the applicable Secured Party thereunder).

 

“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 Sections 412, 430 or 436 of the
Code and either (i) is maintained or to which contributions are required by
Company or any member of the Controlled Group or (ii) has at any time within the
preceding five years been maintained or to which contributions have been
required by Company or any entity which was at such time a member of the
Controlled Group.

“Perfection Certificate” shall mean the information questionnaire and the
responses thereto provided by each Loan Party and delivered to Agent.

“Permitted Acquisitions” shall mean any Acquisition by any Domestic Loan Party
or any Foreign Secured Loan Party so long as and to the extent that:

(a) after giving pro forma effect to such Acquisition (and to any Revolving
Advances to be requested to fund any part thereof), the Payment Conditions shall
have been satisfied;

(b)the total costs and liabilities (including without limitation, all assumed
liabilities, all potential earn-out payments, deferred payments and the value of
any other stock or assets transferred, assigned or encumbered with respect to
such acquisitions) of all such Acquisitions that are not funded with Net Cash
Proceeds of any substantially contemporaneous issuance of Equity Interest
(excluding any Disqualified Equity Interests) do not exceed $20,000,000 in the
aggregate during the Term; but provided further that, to the extent any such
Acquisition shall be made with any proceeds of any Revolving Advance (and/or any
Ex-Im Revolving Advance) and/or any cash of any Domestic Loan Party or any
Foreign Secured Loan Party, such total costs and liabilities of all such
Acquisitions of any Foreign Subsidiary that will not be a Tier II Foreign
Material Subsidiary upon the closing of such Acquisition (as determined in
accordance with Section 7.12(b)(ii) (including, in the case of any Acquisition
consisting of an Acquisition pursuant to which both one or more Domestic
Subsidiaries/Tier II Foreign Material Subsidiaries and one or more Foreign
Subsidiary that will not be a Tier II Foreign Material Subsidiary upon the
closing of such Acquisition shall be acquired, the portion of the total costs
and liabilities of such Acquisition attributable to such Foreign Subsidiary that
will not be a Tier II Foreign Material Subsidiary upon the closing of such
Acquisition) in any fiscal year of DZSI and

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its Subsidiaries, taken together with (x) all Permitted Intercompany Advances
made during such fiscal year under clause (b) of the definition of Permitted
Intercompany Advances, (y) all Permitted Intercompany Investments made during
such fiscal year under clause (b) of the definition of Permitted Intercompany
Investments, and (z) all Investments made during such fiscal year under clause
(p) of the definition of Permitted Investments, shall not exceed the Permitted
General Investment Bucket for such fiscal year;

(c)the target shall have a positive EBITDA for target and any Subsidiaries on a
Consolidated Basis in accordance with GAAP measured for the trailing twelve (12)
fiscal month measurement period ending as of the most recently ended fiscal
quarter of such target for which audited or management-prepared financial
statements are available;

(d) with respect to any Acquisition consisting of an acquisition of the Equity
Interests of any Person, all of the provisions of Section 7.12 hereof shall be
complied no later than substantially contemporaneously with the closing and
consummation of such Acquisition;

(e) the business or property acquired is used or useful in Loan Parties’
Ordinary Course of Business;

(f)without limiting clause (d) above, Agent shall have received a first-priority
security interest in all acquired assets or Equity Interests constituting
Collateral in accordance with the provisions of this Agreement, subject to
documentation satisfactory to Agent;

(g)the board of directors (or other comparable governing body) of the Person
being acquired and/or of the seller of the assets being acquired shall have duly
approved the transaction;

(h) at least thirty (30) days (or such shorter period as may be agreed by Agent)
prior to the anticipated closing date of the proposed acquisition, Loan Parties
shall have delivered to Agent: (i) written notice of the proposed Acquisition
and a summary of the material terms thereof as anticipated as of the date of
such notice, (ii) a pro forma balance sheet and pro forma financial statements
and a Compliance Certificate demonstrating that, upon giving effect to such
Acquisition on a pro forma basis, Loan Parties would be in compliance with the
financial covenants set forth in Section 6.5 hereof as of the most recent fiscal
quarter end, (iii) financial statements of the acquired entity for the two most
recent fiscal years then ended, in form and substance reasonably acceptable to
Agent;

(i)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;

(j)no Indebtedness will be incurred, assumed or would exist with respect to any
Company as a result of such acquisition other than Permitted Indebtedness, and
no Liens will be incurred, assumed or would exist with respect to the assets of
any Company (including any assets of any target and/or any acquired assets) as a
result of such acquisition, other than Permitted Encumbrances;

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(k)if the total consideration, including the purchase price and liabilities
assumed, of any such acquisition shall exceed $15,000,000, Borrowing Agent shall
have delivered to Agent a quality of earnings report performed by a third party
firm acceptable to Agent;

(l)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, no later than the closing and consummation of such Acquisition, Borrowing
Agent shall provide Agent with 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;

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

(n)no assets acquired in any such Acquisition and/or of any Person acquired in
any such Acquisition shall be included in the Formula Amount for any purpose
(including any determination of compliance with the Payment Conditions under
clause (a) of this definition above) unless such assets will, after giving
effect to such Acquisition and the provisions of clause (d) above, such assets
will be owned by a Borrower, nor until Agent has received a Field Examination
with respect to such assets, in form and substance, and with results, acceptable
to Agent in its Permitted Discretion; provided that, upon Borrower’s written
request, Agent shall complete such Field Examination as promptly as is
commercially reasonable following the earlier of (x) the Acquisition of such
Subsidiary, or (y) the time Borrowers shall obtain from any Person to be
acquired and/or whose assets are being acquired sufficient access for Agent to
commence such Field Examination and Inventory Appraisal, and provided further
that, notwithstanding anything to the contrary in Sections 3.4(c) and 16.9
hereof, Borrowers shall be liable for the Field Examination Fees and Costs of
any such Field Examination conducted under this paragraph, and such Field
Examination Fees and Costs shall not be subject to (and shall not be included
in) any generally applicable limitations on the number of Field Examinations, or
the Borrowers’ liability for Field Examination Fees and Costs, under this
Agreement.

“Permitted Assignees” shall mean: (a) Agent, any Lender or any of their direct
or indirect Affiliates; (b) a federal or state chartered bank, a United States
branch of a foreign bank, an insurance company, or any finance company generally
engaged in the business of making commercial loans; (c) any Approved Fund; and
(d) any Fund to whom Agent or any Lender assigns its rights and obligations
under this Agreement as part of an assignment and transfer of such Agent’s or
Lender’s rights in and to a material portion of such Agent’s or Lender’s
portfolio of commercial credit facilities and shall exclude any Disqualified
Person, the Loan Parties and any of their Affiliates (including DNI).

“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:

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(a)the sale, lease, license, exchange, transfer or other disposition 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)(x) the licensing of patents, trademarks, copyrights, and other Intellectual
Property rights on a non-exclusive basis in the Ordinary Course of Business, (y)
the licensing of patents, trademarks, copyrights, and other Intellectual
Property rights on a non-exclusive to Affiliates of a Loan Party or its
Subsidiaries and (z) the licensing of patents, trademarks, copyrights, and other
Intellectual Property rights on a non-exclusive or exclusive basis by DNS Korea
to DZSI;

(e)the granting of Permitted Encumbrances;

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

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

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

(i)(i) the sale or issuance of Equity Interests (other than Disqualified Equity
Interests) of DZSI, (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 Loan Party or to any Subsidiary that is not a
Loan Party;

(j)(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;

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

(l)any other Disposition permitted under Section 7.1 of this Agreement;

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(m)the making of Permitted Investments; and

(n)transfer, assign or pledge to a pension trustee or similar Person any
policies of insurance obtained by KeyMile or any other Company organized under
the laws of the Germany supporting/safeguarding any pension obligations of
KeyMile or such other German Company and/or obligations under any old age
part-time working schemes of KeyMile or such other German Company permitted
under clause (s) of the definition of Permitted Indebtedness.

“Permitted DNI Subordinated Loans” shall mean, collectively, (i) all
Indebtedness, obligations, and liabilities owing by DNS Korea to DNI as lender
under that certain loan agreement dated as of March 27, 2018, with a maximum
principal loan amount outstanding thereunder not to exceed KRW 1,500,000,000 at
any time (the “DNI/DNS Korea 2018 Loan”), (ii) all Indebtedness, obligations,
and liabilities owing by DZSI to DNI as lender under that certain loan agreement
dated as of December 27, 2018, with a maximum principal loan amount outstanding
thereunder not to exceed $6,000,000 at any time (the “DNI/DZSI 2018 Loan”), and
(iii) all Indebtedness, obligations, and liabilities owing by DNS to DNI as
lender under that certain loan agreement dated as of February 15, 2016, with a
maximum principal loan amount outstanding thereunder not to exceed $1,800,000 at
any time, as amended by a written agreement dated as of February 27, 2017, and
as further amended by a written agreement dated as of that certain amendment 2
to the loan agreement dated as of January 31, 2018 (the “DNI/DNS 2016 Loan”),
each of the foregoing as further amended on the Closing Date by the DNI Closing
Date Loan Amendment and as further amended, modified, or supplemented in
accordance with the terms of this Agreement.

“Permitted DNI Reimbursement Obligations” shall mean all Indebtedness,
obligations, guarantee fees, and liabilities, whether contractual, statutory, or
under common law (or the equivalent of “common law” in the Republic of Korea)
owing from DNS Korea to DNI, contingent or liquidated, in connection with any
guarantee(s) given by DNI with respect to (but only to the extent of) (x) the
Permitted Korean Export-Import Bank Indebtedness and/or any payments by DNI
under any such guarantee(s), (y) the Permitted Korean Development Bank
Indebtedness and/or any payments by DNI under any such guarantee(s), and (z) the
Permitted Korean Bank LC Indebtedness and/or any payments by DNI under any such
guarantee(s).  

“Permitted Encumbrances” shall mean: 

(a)Liens (x) in favor of Agent, for the benefit of Secured Parties, including
without limitation, Liens securing Hedge Liabilities and Cash Management
Products and Services, (y) in favor of Ex-Im Agent, for the benefit of Ex-Im
Secured Parties, and (z) in favor of Ex-Im Bank under the Ex-Im Borrower
Agreement;

(b)Liens for taxes, assessments or other governmental charges not delinquent or
being Properly Contested;

(c) deposits or pledges of cash to secure obligations under worker’s
compensation, social security or similar laws, or under unemployment insurance;

(d)deposits or pledges of cash, including time deposits, to secure bids,
tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and

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appeal bonds, performance bonds and guarantees, and other obligations of like
nature arising in the Ordinary Course of Business;

(e)Liens arising by virtue of the rendition, entry or issuance against any
Company or any Subsidiary, or any property of any Company or any Subsidiary, of
any judgment, writ, order, or decree to the extent the rendition, entry,
issuance or continued existence of such judgment, writ, order or decree (or any
event or circumstance relating thereto) has not resulted in the occurrence of an
Event of Default under Section 10.6 hereof;

(f) carriers’, landlords’, bailees’, repairmens’, mechanics’, workers’,
materialmen’s or other like Liens arising by statute and in the Ordinary Course
of Business with respect to obligations which are not due or which are being
Properly Contested;

(g)purchase money Liens or the interests of lessors under a Capitalized Lease
Obligation 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)easements, rights-of-way, zoning restrictions, minor defects or
irregularities in title and other charges or encumbrances with respect to any
Company’s Real Property, in each case, which were not incurred in connection
with the borrowing of money or the obtaining of advances or credit, which do not
in the aggregate materially detract from Agent’s or Lenders’ rights in and to
such Real Property or the value of such Real Property which do not materially
impair the use thereof in the operation of any Company’s business or otherwise
interfere in any material respect with the Ordinary Course of Business of
Companies and their Subsidiaries;

(i)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;

(j)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;

(k)rights of setoff or bankers’ liens upon deposits of funds in favor of banks
or other depository institutions and Liens arising under the general terms of
business of an account bank, solely to the extent incurred in connection with
the maintenance of deposit accounts or giro accounts of the Loan Parties and
their Subsidiaries in the Ordinary Course of Business (not incurred in
connection with the borrowing of money or the obtaining of advances or credit);

(l)Liens granted in the Ordinary Course of Business on the unearned portion of
insurance premiums securing the financing of insurance premiums;

(m)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;

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(n)Liens on certain accounts receivable of DNS Korea as further specified in
Section 4 of the DNI Closing Date Loan Amendment securing the DNI/DNS Korea 2018
Loan to the extent subject to the DNI Subordination Agreement;

(o) Liens on the Equity Interests of Dasan Network Solutions Japan, Inc.
securing the DNI/DNS 2016 Loan to the extent subject to the DNI Subordination
Agreement,

(p) Liens set forth on Schedule 7.2 hereto; 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 Company other than the property and assets to which they apply as of the
Closing Date;

(q)Liens on assets of Foreign Subsidiaries operating in jurisdictions where
retention of title by vendors of goods are customary and enforceable arising
under retention of title arrangements with suppliers in the Ordinary Course of
Business;

(r)to the extent constituting Liens, any policies of insurance, bonds, or bank
guarantees or similar third-party guarantees obtained by KeyMile or any other
Company organized under the laws of the Germany supporting/safeguarding any
pension obligations of KeyMile or such other German Company and/or obligations
under any old age part-time working schemes of KeyMile or such other German
Company permitted under clause (s) of the definition of Permitted Indebtedness,
in each such case (x) to the extent obtained in the Ordinary Course of Business
consistent with the past practices of KeyMile, and (y) so long as the
obligations and liabilities of KeyMile or such other German Company to the
issuers of such policies of insurance, bonds, or guarantees are unsecured;

(q) extensions, renewals and replacements of Liens referred to in clauses (a)
through (p) above; provided, however, that any such extension, renewal or
replacement Lien shall be limited to the property or assets covered by the Lien
extended, renewed or replaced and that the obligations secured by any such
extension, renewal or replacement Lien shall be in an amount not greater than
the amount of the obligations secured by the Lien extended, renewed or replaced;

(r)the Permitted Korean Export-Import Bank Indebtedness Liens; and

(s)subject to the time restrictions in Section 8.3(d), the Florida Judgment
Lien.

 

“Permitted General Investment Bucket” shall mean, for any fiscal year,
$3,000,000.

“Permitted Indebtedness” shall mean:

(a)the Ex-Im Obligations and all other 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 $1,000,000 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)[RESERVED];

(h)Indebtedness (x) constituting deferred purchase price obligations consisting
of standard “working capital adjustment” provisions or similar provisions
arising in connection with Permitted Acquisitions, and (y) under non-compete
payment obligations arising in connection with Permitted Acquisitions, provided
that, such Indebtedness shall at all times be unsecured;

 

(i)Indebtedness incurred in the Ordinary Course of Business under performance,
surety, bid, statutory, or appeal bonds, performance guarantees, and related
reimbursement obligations;

 

(j)Indebtedness owed to any Person providing property, casualty, liability or
other insurance to any Company, 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;

(k)Indebtedness consisting of Interest Rate Hedges and Foreign Currency Hedges
(including Hedging Liabilities) that is incurred for the bona fide purpose of
hedging the interest rate, commodity or foreign currency risks associated with
the operations of the Companies and not for speculative purposes;

(l)Cash Management Liabilities;

(m)Indebtedness of any Company or its Subsidiaries in respect of Permitted
Intercompany Advances;

(n)any Permitted KeyMile Seller Working Capital Indebtedness;

(o)any Permitted DNI Subordinated Loans, to the extent subject to the DNI
Subordination Agreement;

(p)any Permitted Korean Bank LC Indebtedness and any Permitted DNI Reimbursement
Obligations related thereto, to the extent subject to the DNI Subordination
Agreement;

(q)any Permitted Korean Development Bank Indebtedness, and any Refinancing
Indebtedness in respect of such Indebtedness (provided that, notwithstanding
clause (a) of the definition of “Refinancing Indebtedness”, the principal amount
of such Refinancing Indebtedness may be in a principal amount equal to or less
than the outstanding principal amount

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of such Permitted Korean Development Bank Indebtedness as of the Closing Date,
plus the amount of premiums paid thereon and the fees and expenses incurred in
connection therewith and the amount of unfunded commitments with respect
thereto), and any Permitted DNI Reimbursement Obligations related thereto, to
the extent such Permitted DNI Reimbursement Obligations are subject to the DNI
Subordination Agreement;

(r)any Permitted Korean Export-Import Bank Indebtedness, and any Refinancing
Indebtedness in respect of such Indebtedness (provided that, notwithstanding
clause (a) of the definition of “Refinancing Indebtedness”, the principal amount
of such Refinancing Indebtedness may be in a principal amount equal to or less
than the Maximum Permitted Korean Export-Import Bank Indebtedness Amount, plus
the amount of premiums paid thereon and the fees and expenses incurred in
connection therewith and the amount of unfunded commitments with respect
thereto), and any Permitted DNI Reimbursement Obligations related thereto, to
the extent such Permitted DNI Reimbursement Obligations are subject to the DNI
Subordination Agreement;

(s)Indebtedness of KeyMile and/or any Subsidiary of KeyMile organized under the
laws of the Germany (i) arising from pension obligations and obligations under
old age part-time working schemes under the pension obligations and old age
part-time working schemes of KeyMile or such other German Company in existence
on the Closing Date and listed on Schedule 1.2(c) hereof, and (ii) any
Indebtedness relating to any policies of insurance, bonds, bank guarantees or
similar third-party guarantees obtained by KeyMile or any other Company
organized under the laws of the Germany supporting/safeguarding any pension
obligations of KeyMile or such other German Company and/or obligations under any
old age part-time working schemes of KeyMile or such other German Company, in
each such case under this clause (ii): (x) to the extent obtained in the
Ordinary Course of Business as required under German Applicable Law, and (y) so
long as the obligations and liabilities of KeyMile or such other German Company
to the issuers of such policies of insurance, bonds, or guarantees are
unsecured;

(t)any Permitted LGU Indebtedness;

(u)Indebtedness secured by Liens of the type permitted under clause (f) of the
definition of Permitted Encumbrances; and

(w)Indebtedness in an aggregate principal amount not to exceed $200,000 at any
time outstanding.

“Permitted Intercompany Advances” shall mean any loans, extensions of credit,
and/or advances made:

(a)among any one or more Domestic Loan Parties and/or any one or more Foreign
Secured Loan Parties;

(b)by any one or more Domestic Loan Parties and/or any one or more Foreign
Secured Loan Parties to any one or more Non-Core Companies (including Foreign
Unsecured Loan Parties) in an amount funded during any fiscal year of DZSI and
its Subsidiaries not to exceed, taken together with (x) the total costs and
liabilities of all Permitted Acquisitions made during such fiscal year pursuant
to the final proviso to clause (b) of the definition of Permitted Acquisitions,
(y) all Permitted Intercompany Investments made during such fiscal year under

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clause (b) of the definition of Permitted Intercompany Investments, and (z) all
Investments made during such fiscal year under clause (p) of the definition of
Permitted Investments, not to exceed the Permitted General Investment Bucket for
such fiscal year;

(c)among any one or more Non-Core Companies; and

(d)by any one or more Companies that are neither Domestic Loan Parties nor
Foreign Secured Loan Parties to any one or more Domestic Loan Parties and/or any
one or more Foreign Secured Loan Parties;

provided that, in each such case under this definition, to the extent requested
by Agent, (i) the applicable loan or advance is evidenced by a promissory note
(including any master intercompany note among DZSI and its Subsidiaries) on
terms and conditions (including terms subordinating payment of the Indebtedness
evidenced by such note owing by any Loan Party to the prior Payment in Full of
all of the Obligations) acceptable to Agent in its Permitted Discretion and
(ii) the original of 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.

“Permitted Intercompany Investments” shall mean any Investment (other than a
loan or other advance) made:

(a)among any one or more Domestic Loan Parties and/or any one or more Foreign
Secured Loan Parties;

(b)by any one or more Domestic Loan Parties and/or any one or more Foreign
Secured Loan Parties to any one or more Non-Core Companies (including Foreign
Unsecured Loan Parties) in an amount funded during any fiscal year of DZSI and
its Subsidiaries not to exceed, taken together with (x) the total costs and
liabilities of all Permitted Acquisitions made during such fiscal year pursuant
to the final proviso of clause (b) of the definition of Permitted
Acquisitions,  (y) all Permitted Intercompany Advances made during such fiscal
year under clause (b) of the definition of Permitted Intercompany Advances, and
(z) all Investments made during such fiscal year under clause (p) of the
definition of Permitted Investments, not to exceed the Permitted General
Investment Bucket for such fiscal year;

(c)among any one or more Companies that are neither Domestic Loan Parties nor
Foreign Secured Loan Parties; and

(d)any one or more Companies that are neither Domestic Loan Parties nor Foreign
Secured Loan Parties to any one or more Domestic Loan Parties and/or any one or
more Foreign Secured Loan Parties;

provided that, for all purposes under this Agreement and the Other Documents,
any guaranty given by any Company with respect to any Indebtedness or other
obligation or liability of any other Company shall be deemed to be an Investment
by the guaranteeing Company in the Company whose Indebtedness, etc. is being
guaranteed, and shall only be permitted to the extent that an Investment in the
form of a capital contribution in the amount of the Indebtedness, etc. being

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guaranteed would have been permitted by the guaranteeing Company in the Company
whose Indebtedness, etc. is being guaranteed at the time such guarantee is
given.

“Permitted Investments” shall mean:

(a)Investments in cash and Cash Equivalents;

(b)Investments in negotiable instruments deposited or to be deposited for
collection in the Ordinary Course of Business;

(c)Permitted Loans;

(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 in any Insolvency Proceeding involving a
Customer or upon the foreclosure or enforcement of any Lien in favor of a
Company;

(e)Investments owned by any Company on the Closing Date and set forth on
Schedule 7.4 hereto;

(f)guarantees permitted under Section 7.3 hereof;

(g)Permitted Intercompany Advances and Permitted Intercompany Investments;

(h)Equity Interests or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due or owing to a Company
(in any Insolvency Proceeding of any Customer or supplier or otherwise outside
the Ordinary Course of Business) or as security for any such Indebtedness or
claims;

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

(j)Permitted Acquisitions;

(k)Investments resulting from entering into (i) Interest Rate Hedges and Foreign
Currency Hedges incurred for the bona fide purpose of hedging the interest rate,
commodity or foreign currency risks associated with the operations of the
Companies and not for speculative purposes or Cash Management Products and
Services, or (ii) agreements relative to Indebtedness that is permitted under
clause (i) of the definition of “Permitted Indebtedness”;

(l)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;

(m)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;

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

(o)any other Investments of a type not described in the foregoing clauses of
this definition in an aggregate amount not to exceed, taken together with (x)
the total costs and liabilities of all Permitted Acquisitions made during such
fiscal year pursuant to the final proviso to clause (b) of the definition of
Permitted Acquisitions, (y) all Permitted Intercompany Advances made during such
fiscal year under clause (b) of the definition of Permitted Intercompany
Advances, and (z) all Permitted Intercompany Investments made during such fiscal
year under clause (b) of the definition of Permitted Intercompany Investments,
not to exceed the Permitted General Investment Bucket for such fiscal year for
all such Investments made pursuant to this clause (q) in any fiscal year;
provided that 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.

“Permitted Loans” shall mean:

(a)the extension of trade credit by a Company to a Customer in the Ordinary
Course of Business in connection with a sale of Inventory or rendition of
services, in each case on open account terms;

(b)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 $100,000 at any one time; and

(c)Permitted Intercompany Loans.

“Permitted KeyMile Seller Working Capital Indebtedness” shall mean all unsecured
Indebtedness, obligations, and liabilities of (x) KeyMile to KeyMile Seller
under the KeyMile Seller Working Capital Facility Agreement, and (y) of DZSI and
ZTI to KeyMile Seller under the KeyMile Seller Working Capital Facility
Guaranty.

“Permitted Korean Bank LC Indebtedness” shall mean unsecured Indebtedness of DNS
Korea owing to any one or more banks organized under the laws of the Republic of
Korea (and/or branches under the laws of the Republic of Korea of banks
organized under the laws of other jurisdictions) with respect to letters of
credit issued by such banks/bank branches for the account of DNS Korea (“Korean
LCs”) with an aggregate maximum undrawn face amount (including all automatic
increases provided for in such Korean LCs, whether or not any such automatic
increase has become effective) not to exceed the Dollar Equivalent of
$13,000,000 outstanding at any one time; provided that, such Indebtedness shall
only constitute Permitted Korean Bank LC Indebtedness (and Permitted
Indebtedness permitted under the provisions of Section 7.8) to the extent that
(i) such Indebtedness with respect to each such Korean LC remains fully
guaranteed by unlimited and unconditional guarantee(s) thereof by DNI in favor
of the applicable bank/bank branch that has issued such Korean LC, (ii) Agent
shall be reasonably satisfied in its Permitted Discretion that DNI’s financial
condition and financial performance are and could reasonably be expected to
remain sufficient for DNI to fully perform its obligations under such guaranty
if, when, and as provided for under the terms of such guaranty (and, without
limiting the generality of the foregoing, no event of the type described in
Section 10.7 shall have occurred with respect to DNI nor shall DNI have become
subject to any Insolvency Proceeding), and (iii) no Company other

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than DNS Korea shall have any obligation or liability (whether pursuant to any
guaranty or suretyship agreement or otherwise) for such Indebtedness.  For the
avoidance of doubt, nothing in this Agreement (including the definition of
Refinancing Indebtedness) shall be construed to limit the ability of DNS Korea
to obtain/open Korean LCs, replace any Korean LCs outstanding at any time with
new Korean LCs (whether or not such new Korean LCs are issued by the same
banks/bank branches as the outstanding Korean LCs), or renew or extend any
Korean LCs outstanding at any time, so long as the conditions and limitations of
the preceding sentence are complied with at all times.  Notwithstanding anything
to the contrary in this Agreement, if Agent shall determine that it is not
satisfied that DNI’s financial condition and financial performance are and could
reasonably be expected to remain sufficient for DNI to fully perform its
obligations under the aforesaid guaranty by DNI in favor of the applicable
bank/bank branch that has issued Korean LCs, Agent shall provide the Borrowing
Agent written notice thereof and such Indebtedness shall continue to constitute
Permitted Korean Bank LC Indebtedness (and Permitted Indebtedness permitted
under the provisions of Section 7.8) for forty-five (45) days after the Borrower
Agent’s receipt of such written notice.

“Permitted Korean Development Bank Indebtedness” shall mean unsecured
Indebtedness of DNS Korea owing to the Korea Development Bank under that certain
loan agreement between the Korea Development Bank and DNS Korea (with the first
draw-down made thereunder in the amount of KRW Five Billion (₩5,000,000,000) on
August 8, 2018) and under any promissory notes or other loan documents relating
thereto, with an aggregate maximum principal amount (exclusive of interest,
fees, and other non-principal amounts) not to exceed KRW Five Billion
(₩5,000,000,000) outstanding at any one time; provided that, such Indebtedness
shall only constitute Permitted Korean Development Bank Indebtedness (and
Permitted Indebtedness permitted under the provisions of Section 7.8) to the
extent that (i) such Indebtedness remains fully guaranteed by an unlimited and
unconditional guaranty thereof by DNI in favor of the Korea Development Bank,
(ii) Agent shall be reasonably satisfied in its Permitted Discretion that DNI’s
financial condition and financial performance are and could reasonably be
expected to remain sufficient for DNI to fully perform its obligations under
such guaranty if, when, and as provided for under the terms of such guaranty
(and, without limiting the generality of the foregoing, no event of the type
described in Section 10.7 shall have occurred with respect to DNI nor shall DNI
have become subject to any Insolvency Proceeding), and (iii) no Company other
than DNS Korea shall have any obligation or liability (whether pursuant to any
guaranty or suretyship agreement or otherwise) for such Indebtedness, and
further provided that, any refinancing, renewal or extension of such unsecured
Indebtedness of DNS Korea owing to the Korea Development Bank that constitutes
Refinancing Indebtedness under the terms of the clause (q) of the definition of
“Permitted Indebtedness” shall constitute Permitted Korean Development Bank
Indebtedness (and thereby be permitted under the provisions of Section 7.8) only
if and to the extent that any such Refinancing Indebtedness is unsecured and at
all times complies with the requirements of clauses (i) through (iii) of the
previous proviso.  Loan Parties shall provide at least thirty (30) days prior
written notice to Agent and Lenders of any intention to incur any Refinancing
Indebtedness to refinance the Permitted Korean Development Bank
Indebtedness.  Notwithstanding anything to the contrary in this Agreement, if
Agent shall determine that it is not satisfied that DNI’s financial condition
and financial performance are and could reasonably be expected to remain
sufficient for DNI to fully perform its obligations under the aforesaid guaranty
by DNI in favor of Korea Development Bank, Agent shall provide the Borrowing
Agent written notice thereof and such Indebtedness shall continue to constitute
Permitted Korean Development Bank Indebtedness (and

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Permitted Indebtedness permitted under the provisions of Section 7.8) for
forty-five (45) days after the Borrower Agent’s receipt of such written notice.

“Permitted Korean Export-Import Bank Indebtedness” shall mean Indebtedness of
DNS Korea owing to the Export-Import Bank of Korea under that certain agreement
for loan (limit) transactions between the Export-Import Bank of Korea and DNS
Korea (with the first draw-down made thereunder in the amount of KRW Seven
Billion Two Hundred Million (₩7,200,000,000) on December 31, 2018) and under any
promissory notes or other loan documents relating thereto, with an aggregate
maximum principal amount (exclusive of interest, fees, and other non-principal
amounts) not to exceed the Maximum Permitted Korean Export-Import Bank
Indebtedness Amount outstanding at any one time; provided that, such
Indebtedness shall only constitute Permitted Korean Export-Import Bank
Indebtedness (and Permitted Indebtedness permitted under the provisions of
Section 7.8) to the extent that (i) such Indebtedness remains fully guaranteed
by an unlimited and unconditional guaranty thereof by DNI in favor of the Korea
Development Bank, (ii) Agent shall be reasonably satisfied in its Permitted
Discretion that DNI’s financial condition and financial performance are and
could reasonably be expected to remain sufficient for DNI to fully perform its
obligations under such guaranty if, when, and as provided for under the terms of
such guaranty (and, without limiting the generality of the foregoing, no event
of the type described in Section 10.7 shall have occurred with respect to DNI
nor shall DNI have become subject to any Insolvency Proceeding), (iii) such
Indebtedness shall not be secured by any Liens on any assets of any Company
other than Liens on Inventory of DNS Korea (but only to the extent of any such
Liens on the Inventory in Korea in favor of the Export-Import Bank of Korea
securing such Indebtedness in existence on the date hereof (including, if
applicable, Liens on Inventory of DNS Korea acquired after the Closing Date to
the extent (but only to the extent) that the existing loan documents, security
documents, and pledges between DNS Korea and the Export-Import Bank of Korea
with respect to such Indebtedness provide for and would create valid and
enforceable Liens on any such Inventory of DNS Korea acquired after the Closing
Date) and cash deposit in an amount not to exceed  ₩2,500,000,000 at any time
(such liens, the “Permitted Korean Export-Import Bank Indebtedness Liens”), and
(iii) no Company other than DNS Korea shall have any obligation or liability
(whether pursuant to any guaranty or suretyship agreement or otherwise) for such
Indebtedness, and further provided that, any refinancing, renewal or extension
of such unsecured Indebtedness of DNS Korea owing to the Korea Export-Import
Bank that constitutes Refinancing Indebtedness under the terms of clause (r) of
the definition of “Permitted Indebtedness” shall constitute Permitted Korean
Export-Import Bank Indebtedness (and thereby be permitted under the provisions
of Section 7.8) only if and to the extent that any such Refinancing Indebtedness
at all times complies with the requirements of clauses (i) through (iv) of the
previous proviso.  Loan Parties shall provide at least thirty (30) days prior
written notice to Agent and Lenders of any intention to incur any Refinancing
Indebtedness to refinance the Permitted Korean Export-Import Bank
Indebtedness.  Notwithstanding anything to the contrary in this Agreement, if
Agent shall determine that it is not satisfied that DNI’s financial condition
and financial performance are and could reasonably be expected to remain
sufficient for DNI to fully perform its obligations under the aforesaid guaranty
by DNI in favor of Korea Export-Import Bank, Agent shall provide the Borrowing
Agent written notice thereof and such Indebtedness shall continue to constitute
Permitted Korean Export-Import Bank Indebtedness (and Permitted Indebtedness
permitted under the provisions of Section 7.8) for forty-five (45) days after
the Borrower Agent’s receipt of such written notice.

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“Permitted LGU Indebtedness” shall mean, prior to and through (but not after)
June 18, 2019, shall mean, prior to June 18, 2019, unsecured Indebtedness of DNS
Korea owing to LG Uplus Corp. under that certain loan agreement dated as of June
11, 2018 between  LG Uplus Corp. and DASAN Network Solutions, Inc. and under any
promissory notes or other loan documents relating thereto, with an aggregate
maximum principal amount (exclusive of interest, fees, and other non-principal
amounts) not to exceed KRW Two Billion (₩2,000,000,000) outstanding at any one
time.

“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 Restricted Payments” shall mean:

(a)distributions and dividends payable by any Company to any other Company;

(b)distributions and dividends by any Company to DZSI to allow DZSI to make, and
distributions and dividends by DZSI to, former employees, officers or directors
of DZSI and its Subsidiaries (or any spouses, ex-spouses or estates of any of
the foregoing) on account of redemptions of Equity Interests of DZSI 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 to any
Revolving Advances to be requested to fund any part thereof); and (iii) the
aggregate amount of such Restricted Payments shall not exceed $3,000,000 during
the term of this Agreement; and

(c)distributions and dividends by DZSI to the holders of its Equity Interests in
an aggregate amount not to exceed $10,000,000 to the extent made solely from
(and substantially contemporaneously with receipt by DZSI of) the proceeds of
any Contemplated Rights Offering that yields Net Cash Proceeds of at least
$50,000,000, so long as both prior to and after giving effect thereto, no Event
of Default shall have occurred and remain outstanding.

“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 Company or any member of the Controlled Group or to
which any Company or any member of the Controlled Group is required to
contribute.

“Pledge Agreement” shall mean (i) the Share Pledge Agreement governed by German
law dated on or about the Closing Date by ZTI in favor of Agent and Ex-Im Agent
with respect to the Equity Interests in KeyMile, (ii) the Share Pledge Agreement
governed by German law dated on or about the Closing Date by KeyMile in favor of
Agent and Ex-Im Agent with respect to the

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Equity Interests in KeyMile Networks GmbH, (iii) the Share Keun-Pledge Agreement
governed by Korean law dated on or about the Closing Date, by and among Agent,
the Lenders and DNS, and (ii) any other pledge agreements executed subsequent to
the Closing Date by any Loan Party or other Person with respect to any
Subsidiary Stock and/or any other Investment Property of any Company to secure
the Obligations, including as applicable any such pledge agreement that
constitutes a Foreign Law Guaranty/Security Document, in each case as such
pledge agreement may be amended, modified, supplemented, renewed, restated or
replaced from time to time.

“Pledged Equity Interest Collateral” shall have the meaning set forth in Section
4.14(a) hereof.

“Pledged Issuer” shall mean any Subsidiary of any Loan Party in its capacity as
the “issuer” (as defined in the definition of “Equity Interest”) of any
Subsidiary Stock in which any Loan Party has any right, title or interest and
which is subject to a Lien in favor of Agent for the benefit of the Secured
Parties created under this Agreement or any Other Document.

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

“Projections” shall mean, for any fiscal year, the forecasted consolidated and
consolidating balance sheets, profit and loss/income statements, and cash flow
statements of DSZI and its Subsidiaries for such fiscal year on a quarterly
basis and the forecasted Undrawn Availability of Borrowers and Liquidity of
Domestic Loan Parties for such fiscal year on a quarterly basis , all prepared
on a basis consistent with such Borrower’s historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions.

“Properly Contested” shall mean, in the case of any Indebtedness, trade payable,
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, trade
payable, Lien or Taxes, as applicable, are being properly contested in good
faith by appropriate proceedings promptly instituted and diligently conducted
upon the Person’s actual notice thereof; (b) such Person has established
appropriate reserves as shall be required in conformity with GAAP; (c) the
non-payment of such Indebtedness, trade payable 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, trade payable 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

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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 amount of
unrestricted cash and Cash Equivalents of Loan Parties held in deposit accounts
or securities accounts in the United States which are (i) subject to the
perfected first-priority Lien of Agent and (ii) either (x) maintained with Agent
or (y) prior to the deadline under clause (y) of Section 8.3(b) for the transfer
of the primary cash management accounts and services of Domestic Loan Parties to
Agent, subject to a Control Agreement in favor of Agent satisfactory in form and
substance to Agent in its Permitted Discretion.

“Qualified ECP Loan Party” shall mean each Loan Party or other Guarantor 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.

“Quarterly Financials” shall mean, as to any fiscal quarter of Loan Parties, the
financial statements, related statements and reports, and related Compliance
Certificates required to be delivered by Loan Parties with respect to such
fiscal quarter to Agent under Section 9.9 hereof.

“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 real property assets (whether or not owned in
fee, leased or otherwise) of any Loan Party, together with all buildings,
fixtures, improvements, leases, licenses, permits and approvals of any Loan
Party with respect to any real estate asset, including all of the premises owned
and leased by the Loan Parties listed on Schedule 4.4 hereto or hereafter owned
or leased by any Loan Party.

“Receivables” shall mean and include, as to any Person, all of such Person’s
accounts (as defined in Article 9 of the Uniform Commercial Code) and all of
such Person’s contract rights, instruments (including those evidencing
indebtedness owed to such Person 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 Person 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.

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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 unsecured
Indebtedness, then the refinancing, renewal, or extension shall remain
unsecured,

(d)if the Indebtedness that is refinanced, renewed or extended was secured
Indebtedness, the refinancing, renewal or extension may (but need not) remain
secured by Liens on assets of the Companies identical in scope and nature to the
Liens on assets of the Companies securing the Indebtedness that is refinanced,
renewed or extended that were both (x) in existence and (y) constituted
Permitted Encumbrances at the time of such refinancing, renewal or extension,

(d)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

(e)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.

“Related Equity Interest Rights” shall have the meaning set forth in the
definition of “Equity Interests”.

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.

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

“Replacement Notice” shall have the meaning set forth in Section 3.11 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,

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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 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(c) of ERISA or the regulations promulgated thereunder.

“Required Lenders” shall mean Lenders (not including Swing Loan Lender (in its
capacity as such Swing Loan Lender) or any Defaulting Lender) holding more than
sixty-six and 66/00 percent (66.66%) of the aggregate of (x) the Revolving
Commitment Amounts of all Lenders (excluding any Defaulting Lender) (or, if the
Revolving Commitments hereunder have been terminated, the aggregate amount of
the outstanding principal balance of all Revolving Advances (other than
Revolving Advances held by any Defaulting Lender), the aggregate amount of the
outstanding Participation Commitments of all Revolving Lenders (excluding any
Defaulting Lender) with respect to all outstanding Swing Loans, and the
aggregate amount of the Participation Commitments of all Revolving Lenders
(excluding any Defaulting Lender) with respect to the Maximum Undrawn Amount of
all outstanding Letters of Credit), and (y) the outstanding principal amount of
the Term Loan; provided, however, if there are fewer than three (3) Lenders
(excluding any Defaulting Lender), Required Lenders shall mean all Lenders
(excluding any Defaulting Lender) and if there are at least two Lenders
(excluding any Defaulting Lender), Required Lenders must include at least two
(2) Lenders (provided that, for purposes of this proviso, all Lenders that are
Affiliates of each other shall be counted together as one Lender).

“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”).

“Reserves” shall mean reserves against the Maximum Revolving Advance Amount or
the Formula Amount as Agent may reasonably deem proper and necessary from time
to time in its Permitted Discretion.

“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 Company (including any payment in
connection with any merger or consolidation involving any Company) or to the
direct or indirect holders of Equity Interests issued by any Company in their
capacity as such holders (other than dividends or distributions payable in
Qualified Equity Interests issued by Holdings), (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) of any Equity Interests issued by any Company, 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 Company now or hereafter outstanding.  For the avoidance of doubt, payments
and repayments of the Permitted KeyMile Seller Working Capital Indebtedness in
accordance with the terms and conditions of the

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KeyMile Seller Working Capital Facility Agreement as provided for in the
exhibits to the KeyMile Purchase Agreement shall not constitute Restricted
Payments.

“Revolving Advances” shall mean all Advances other than Letters of Credit, the
Term Loan and the Swing Loans, and shall include all Advances made pursuant to
Section 2.1 and 2.2 hereof and all Out-of-Formula Loans and Protective Advances,
whether funded by Agent or the Revolving Lenders.

“Revolving Commitment” shall mean the obligation of each Revolving Lender 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 of such Revolving Lender.

“Revolving Commitment Amount” shall mean, as to any Revolving Lender, the
revolving loan commitment amount set forth opposite such Revolving Lender’s name
on Schedule 1.1 hereto (or, in the case of (x) any Revolving Lender that became
party to this Agreement after the Closing Date as a result of any assignment of
any Revolving Commitment to such Revolving Lender pursuant to Section 16.3(c) or
(d) hereof, the Revolving Commitment Amount of such Revolving Lender as set
forth in the applicable Commitment Transfer Supplement, or (y) in the case of
any Revolving Lender that become party to this Agreement after the Closing Date
as a New Lender pursuant to Section 2.24 hereof, the Revolving Commitment Amount
of such Revolving Lender as set forth on Schedule 1.1 hereto as amended and
restated at such time in accordance with Section 2.24] hereof); as such
Revolving Commitment Amount may be increased or decreased from time to time upon
any assignment of any Revolving Commitment by or to such Revolving Lender
pursuant to Section 16.3(c) or (d) hereof or any increase of the Revolving
Commitment of such Revolving Lenders as an Increasing Lender under and pursuant
to Section 2.24 hereof.

“Revolving Commitment Percentage” shall mean, as to any Revolving Lender prior
to the termination of the Revolving Commitment of such Revolving Lender and/or
the Revolving Commitments of all Revolving Lenders in accordance with the terms
hereof, the percentage equal to (a) the Revolving Commitment Amount of such
Revolving Lender divided by (b) the Maximum Revolving Advance Amount as in
effect at the applicable time of determination.

“Revolving Lender” shall mean each Lender that holds any Revolving Commitment
and/or any interest in any Revolving Advances; provided that, each Person that
is a Revolving Lender under this Agreement must also be an Ex-Im Lender under
the Ex-Im Subfacility Credit Agreement holding an Ex-Im Revolving Credit
Commitment with an Ex-Im Revolving Credit Percentage corresponding to its
Revolving Credit Percentage hereunder.

“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 (x) Revolving Advances
that are Domestic Rate Loans and (y) all Swing Loans, an interest rate per annum
equal to the sum of the Applicable Margin plus the Alternate Base Rate, and
(b) with respect to Revolving Advances that are accruing interest as a LIBOR
Rate Loans for any particular Interest Period, an interest rate per annum equal
to the sum of the Applicable Margin plus the LIBOR Rate for such LIBOR Rate Loan
for such Interest Period.

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“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.

“Secondary Collateral” shall mean all Collateral other than the Export-Related
Collateral.

“Secured Loan Parties” shall mean, collectively, all Domestic Loan Parties and
all Foreign Secured Loan Parties.

“Secured Parties” shall mean, collectively, Agent, Issuer, 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.

“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.

“Special Projects Costs” means, as to any Person, costs associated with or in
anticipation of, or preparation for:  (a) compliance with the requirements of
(i) with the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith, costs relating to compliance with the
provisions of the Securities Act and the Exchange Act, as applicable to
companies with equity or debt securities held by the public, and the rules of
national securities exchanges, as applicable to companies with listed equity or
debt securities, listing fees, independent directors’ compensation, fees and
expense reimbursement, costs relating to investor relations (including any such
costs in the form of investor relations employee compensation), shareholder
meetings and reports to shareholders or debtholders, directors’ and officers’
insurance, legal and other professional fees and/or other costs or expenses, in
each case, to the extent arising solely as a result of becoming or being a
public company; and (ii) ASC Topic 840 or 842; (b) any costs associated with
making the Keymile and its Subsidiaries compliant with GAAP; (c) moving the
headquarters of DZSI; (d) relocating any testing laboratories of the Loan
Parties; and (d) the costs, fees and expenses for the services of any
consultants, advisors and other professionals in connection with the foregoing.

“Specified Equity Contribution” shall mean any cash contribution to DZSI in
accordance with Section 6.5(d) in exchange for Equity Interests (other than
Disqualified Equity Interests).

“Specified Event of Default” shall mean (i) any Event of Default under Section
10.1 hereof, (ii) any Event of Default under Section 10.3 hereof, (iii) any
Event of Default under Section 10.7 hereof, (iv) any Event of Default under
Section 10.5 hereof resulting from any breach or violation

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of or failure to comply with any provision of Sections 6.5, 6.17, 7.3, 7.4, 7.5,
7.6, 7.7, 7.8, 7.10 (but, in the case of Sections 7.3, 7.4, 7.5, and 7.8, only
to the extent such breach or violation or failure to comply relates to any
guaranty of any Indebtedness, obligation or liability of any Company by another
Company, Investment in any Company by another Company, or Loan by any Company to
any other Company that is not expressly permitted to be made hereunder), 9.2,
9.7, 9.8, 9.9,and (v) any Event of Default under clause (a) of Section 10.11 as
a result of any Ex-Im Specified Event of Default.

“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 with respect to the Equity Interests issued to a
Loan Party by any Subsidiary, 100% of such issued and outstanding Equity
Interests; provided that, if (but only to the extent that) a pledge of all
and/or any of the particular Equity Interests of the Foreign Subsidiary of a
Loan Party shall be prohibited by Applicable Law (as demonstrated by Loan
Parties to the reasonable satisfaction of Agent in its Permitted Discretion),
the Equity Interests of such Foreign Subsidiary subject to such prohibition
shall not constitute Subsidiary Stock.  Notwithstanding the foregoing, the
parties hereto acknowledge that, due to restrictions under German law regarding
creating pledges under German law on the Equity Interests of non-German
entities, none of the Equity Interests held by any German Loan Party in any of
its Subsidiaries not organized under the laws of Germany shall constitute
Subsidiary Stock.

“Surplus Foreign Cash” shall mean, as of any date of determination, the
aggregate amount (as demonstrated by Loan Parties to the reasonable satisfaction
of Agent in its Permitted Discretion) of the cash and Cash Equivalents of each
of the Foreign Subsidiaries of DZSI at such time in excess of (x) the reasonably
foreseeable and anticipated cash operating needs of each such Foreign Subsidiary
(taking into account reasonably foreseeable and anticipated future cash receipts
and revenues of each such Foreign Subsidiary that would reasonably be expected
to be available to satisfy such future cash operating needs) and (y) to the
extent in excess of the foregoing clause (y), any cash and Cash Equivalents
required to be maintained by each such Foreign Subsidiary under (x) any minimum
capitalization requirements or other similar Applicable Laws of the jurisdiction
of organization of such Foreign Subsidiary or (y) Applicable Laws of the
jurisdiction of organization of such Foreign Subsidiary restricting the
repatriation of cash or Cash Equivalents outside of such jurisdiction by such
Foreign Subsidiary to any of the holders of its Equity Interests.

“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 Interest Rate Hedge, or a Lender-Provided Foreign Currency
Hedge.

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

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“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.

“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” shall have the meaning given thereto in Section 2.3(a) hereof (and,
if and to the extent the context may provide, may also mean any portion of such
Term Loan and/or of the advance in respect of such Term Loan made by any Term
Loan Lender)

“Term Loan Commitment” shall mean, as to any applicable Term Loan Lender, the
obligation of such Term Loan Lender to fund a portion of the Term Loan in an
aggregate principal amount equal to the Term Loan Commitment Amount of such Term
Loan Lender.

“Term Loan Commitment Amount” shall mean, as to any Term Loan Lender, the Term
Loan commitment amount set forth opposite such Term Loan Lender’s name on
Schedule 1.1 hereto, and the “Total Term Loan Commitment Amount” shall mean the
aggregate of all of the term loan commitment amounts of all Term Loan Lenders
reflected on Schedule 1.1 hereto.

“Term Loan Commitment Percentage” shall mean, as to any Term Loan Lender, prior
to the funding in full of the Term Loan on the Closing Date, the percentage
equal to (a) the Term Loan Commitment Amount of such Term Loan Lender set forth
on Schedule 1.1 hereto divided by (b) the Total Term Loan Commitment Amount.

“Term Loan Interest Rate” shall mean (a) with respect to any portion of the Term
Loan that is accruing interest as a Domestic Rate Loans, an interest rate per
annum equal to the sum of the Applicable Margin plus the Alternate Base Rate,
and (b) with respect to any portion of the Term Loan that are accruing interest
as a LIBOR Rate Loans for any particular Interest Period, an interest rate equal
to the sum of the Applicable Margin plus the greater of (i) the LIBOR Rate for
such LIBOR Rate Loan for such Interest Period, and (ii) one percent (1.00%).

“Term Loan Lender” shall mean each Lender that (x) prior to the funding in full
of the Term Loan on the Closing Date, each Lender holding a Term Loan
Commitment, and (y) at all times thereafter, each Lender holding any interest in
any portion of the Term Loan.

“Term Loan Note” shall mean, collectively and/or individually (as applicable),
the promissory notes and/or any one of them described in Section 2.3(a) hereof.

“Termination Event” shall mean: (a) a Reportable ERISA Event with respect to any
Plan; (b) the withdrawal of any Company or any member of the Controlled Group
from a 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 Plan in a distress termination described in
Section 4041(c) of ERISA; (d) the commencement of proceedings by the PBGC to
terminate a

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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 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
Company 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 Company or any member of the
Controlled Group.

“Tier I Foreign Material Subsidiary” means, at any date of determination, any
Foreign Subsidiary of DSZI (other than DNS Korea or KeyMile) that as of the last
day of the most-recently completed fiscal quarter for which Quarterly Statements
have been delivered to Agent as required under Section 9.8 hereof (each a
“Reference Quarter”), either (x) has EBITDA for the four fiscal quarter
measurement period ending with such Reference Quarter (when combined with the
EBITDA for the four fiscal quarter measurement period ending with such Reference
Quarter of such Subsidiary’s Subsidiaries, after eliminating intercompany
obligations) of fifteen percent (15.00%) or more of the EBITDA for Loan Parties
on a Consolidated Basis for such period, or (y) has Working Capital Assets (when
combined with the Working Capital Assets of such Subsidiary’s Subsidiaries,
after eliminating intercompany obligations) as of the last day of such Reference
Quarter fifteen percent (15.00%) or more of the Working Capital Assets of Loan
Parties on a Consolidated Basis.

“Tier II Foreign Material Subsidiary” means, at any date of determination, any
Foreign Subsidiary of DSZI (other than DNS Korea or KeyMile) that as of the last
day of the most-recently completed fiscal quarter for which Quarterly Statements
have been delivered to Agent as required under Section 9.8 hereof (each a
“Reference Quarter”), either (x) has EBITDA for the four fiscal quarter
measurement period ending with such Reference Quarter (when combined with the
EBITDA for the four fiscal quarter measurement period ending with such Reference
Quarter of such Subsidiary’s Subsidiaries, after eliminating intercompany
obligations) of five percent (5.00%) or more of the EBITDA for Loan Parties on a
Consolidated Basis for such period, or (y) has Working Capital Assets (when
combined with the Working Capital Assets of such Subsidiary’s Subsidiaries,
after eliminating intercompany obligations) as of the last day of such Reference
Quarter five percent (5.00%) or more of the Working Capital Assets of Loan
Parties on a Consolidated Basis.  

“Total Borrowing Availability” shall mean, at any time of determination, the
lesser of (i) the Maximum Revolving Advance Amount as in effect at such time,
less Reserves established hereunder as in effect at such time, less Ex-Im
Reserves established under the Ex-In Subfacility Credit Agreement as in effect
at such time, or (ii) the sum of (x) the Formula Amount (calculated without
giving effect to or making any deduction therefrom with respect to
Section 2.1(a)(y)(iii) hereof) as in effect at such time plus (y) the lesser of
(I) the Ex-Im Formula Amount (calculated without giving effect to or making any
deduction therefrom with respect to Section 2.1(a)(y)(iii) of the Ex-Im
Subfacility Credit Agreement) as in effect at such time or (II) the Ex-Im
Subfacility Maximum Amount as in effect at such time.

“Total Domestic Borrowing Availability” shall mean, at any time of
determination, the lesser of (i) the Maximum Revolving Advance Amount as in
effect at such time, less Reserves

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established hereunder as in effect at such time, less Ex-Im Reserves established
under the Ex-In Subfacility Credit Agreement as in effect at such time, less the
Ex-Im Subfacility Outstandings Amount at such time, or (ii) the Formula Amount
(calculated without giving effect to or making any deduction therefrom with
respect to Sections 2.1(a)(y)(iii) hereof) as in effect at such time.

“Toxic Substance” shall mean and include any material present on any Real
Property (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 to occur on or about the Closing Date
under and/or as contemplated by this Agreement, the Other Document, the Ex-Im
Subfacility Credit Agreement and the Ex-Im Subfacility Other Documents, the
incurrence of the Term Loan and the other initial Advances hereunder and this
initial Ex-Im Revolving Advances under the Ex-Im Subfacility Credit Agreement,
and the repayment of the Existing Wells Fargo Debt referenced in Section 8.1(o)
and other repayments of Indebtedness contemplated by Section 2.21(a) hereof.

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

“Undrawn Availability” at a particular date shall mean an amount equal to (a)
the lesser of (i) the sum of (x) the Formula Amount (calculated without giving
effect to or making any deduction therefrom with respect to
Sections 2.1(a)(y)(iii) hereof) as of such date plus (y) the lesser of (I) the
Ex-Im Subfacility Formula Amount (calculated without giving effect to or making
any deduction therefrom with respect to Section 2.1(a)(y)(iii) of the Ex-Im
Subfacility Credit Agreement) as of such date or (II) the Ex-Im Subfacility
Maximum Amount as in effect on such date or (ii) the amount equal to the Maximum
Revolving Advance Amount as in effect on such date less Reserves established
hereunder as in effect on such date less Ex-Im Reserves established under the
Ex-Im Subfacility Credit Agreement as in effect on such date, minus (b) the sum
of (i) the aggregate amount as of such date of the outstanding principal balance
of all Revolving Advances (including any Out-of-Formula Loans and Protective
Advances, whether funded by Agent or the Revolving Lenders) and all Swing Loans
and the Maximum Undrawn Amount of all outstanding Letters of Credit plus (ii)
the Ex-Im Subfacility Outstandings Amount as of such date plus (iii) all amounts
due and owing to any Company’s trade creditors as of such date which are
outstanding beyond normal trade terms and in any event more than seventy-five
(75) days past their due date (unless Properly Contested), plus (iv) for any
calculation of Undrawn Availability on the Closing Date, and without duplication
of clause (b)(i) and (ii) above, fees and expenses in connection with the
Transactions (including any such fees and expenses under this Agreement and the
Other Documents, and the Ex-Im Subfacility Credit Agreement and the other Ex-Im
Agreements and Ex-Im Subfacility Other Documents) for which Loan Parties are
liable but which have not been paid or charged to Borrowers’ Account (or, if
applicable and permitted under the Ex-Im Subfacility Credit Agreement, to the
“Borrowers’ Account” under the Ex-Im Subfacility Credit Agreement).

“Unfunded Capital Expenditures” shall mean, as to any Company, without
duplication, a Capital Expenditure funded (a) from such Loan Party’s internally
generated cash flow or (b) with the proceeds of a Revolving Advance or Swing
Loan.

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“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, renewed, extended or replaced.

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

“Valuation Date” shall mean, with respect to any Foreign Currency Letter of
Credit or any Ex-Im Foreign Currency Letter of Credit, each of the following:
(i) each date of issuance of such Foreign Currency Letter of Credit or Ex-Im
Foreign Currency Letter of Credit, (ii) each date of an amendment of Foreign
Currency Letter of Credit or Ex-Im Foreign Currency Letter of Credit having the
effect of increasing the amount thereof (solely with respect to the increased
amount), (iii) each date of any payment by the applicable Issuer under such
Foreign Currency Letter of Credit or Ex-Im Foreign Currency Letter of Credit,
(iv) the date any Borrowing Base Certificate is delivered, and (v) such
additional dates as the Agent or the Issuer shall determine in its Permitted
Discretion or the Required Lenders shall require in their Permitted Discretion.

“Wells Fargo Payoff Letter” shall have the meaning set forth in Section
8.1(o)(i).

"Working Capital Assets" shall mean, collectively as to any Person, the
Receivables, Inventory, and unrestricted cash and unrestricted Cash Equivalents
of such Person; provided that, for any calculation/determination as to whether
any Foreign Subsidiary organized under the laws of the Republic of India is a
Tier I Foreign Material Subsidiary or a Tier II Foreign Material Subsidiary,
when determining the amount of the Working Capital Assets of such Indian
Subsidiary (but not the amount of the Working Capital Assets of Loan Parties on
a Consolidated Basis ), Working Capital Asset shall consist only of the
unrestricted cash and unrestricted Cash Equivalents of such Indian Subsidiary.

“Write-Down and Conversion Powers” means, 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.

1.3Uniform 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”, “documents”, “equipment”,
“financial asset”, “fixtures”, “general intangibles”, “goods”, “instruments”,
“inventory”, “investment property”, “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.

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1.4Certain 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.  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 to which Agent is a
party, 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.  Unless otherwise provided, all
financial calculations shall be performed with Inventory valued on a first-in,
first-out basis.  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 best of Loan Parties’ knowledge” or words of similar import relating to
the knowledge or the awareness of 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, including the making of such reasonably specific
inquiries as may be necessary of the employees or agents of such Loan Party and
a good faith attempt to ascertain the existence or accuracy of the matter to
which such phrase relates.  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 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.

ARTICLE IIADVANCES, PAYMENTS.

2.1Revolving Advances.

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(a)Amount of Revolving Advances.  Subject to the terms and conditions set forth
in this Agreement including Sections 2.1(b), each Revolving Lender, severally
and not jointly, will make Revolving Advances to Borrowers in aggregate amounts
outstanding at any time equal to such Revolving Lender’s Revolving Commitment
Percentage of the lesser of (x) the Maximum Revolving Advance Amount as in
effect at such time, less the outstanding amount of Swing Loans at such time,
less the aggregate Maximum Undrawn Amount of all Letters of Credit outstanding
at such time, less Reserves established hereunder as in effect at such time,
less Ex-Im Reserves established under the Ex-Im Subfacility Credit Agreement as
in effect at such  time less the outstanding Ex-Im Subfacility Outstandings
Amount at such time, or (y) an amount equal to the Dollar Equivalent of sum of:

(i)up to 85% of Eligible Receivables (including Eligible Foreign Receivables),
plus

(ii)[RESERVED], minus

(iii)the Dollar Equivalent of the aggregate Maximum Undrawn Amount of all
outstanding Letters of Credit, minus

(iv)Reserves established hereunder, specifically including but not limited to
any reserves to reflect the risks, as determined by Agent in its Permitted
Discretion, of currency exchange rate fluctuations with respect to any of the
Approved Foreign Currencies in which the Eligible Receivables are denominated
and/or any of the Approved LC Foreign Currencies in which any Foreign Currency
Letters of Credit are denominated (provided that, no Reserve for currency
exchange rate Reserves shall be established with respect to Eligible Receivables
denominated in any Approved Foreign Currencies and/or Foreign Currency Letters
of Credit to the extent that Borrowers have entered into appropriate Foreign
Currency Hedges to protect against such risks).

The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii) above
minus (y) Sections 2.1(a)(y)(iii) and (iv) above at any time and from time to
time shall be referred to as the “Formula Amount”.  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.  Notwithstanding the foregoing or otherwise in this Agreement, (A) the
aggregate principal amount of Swing Loans and the Revolving Advances at any one
time outstanding plus the Dollar Equivalent of the Maximum Undrawn Amount of all
Letters of Credit outstanding at such time shall not exceed the Total Domestic
Borrowing Availability at such time, and (B) the aggregate principal amount of
Swing Loans and the Revolving Advances at any one time outstanding plus the
Dollar Equivalent of the Maximum Undrawn Amount of all Letters of Credit
outstanding at such time, plus the Ex-Im Subfacility Outstandings Amount at such
time shall not the Total Borrowing Availability at such time.  

For purposes of calculating the Dollar Equivalent of the aggregate Maximum
Undrawn Amount of all outstanding Foreign Currency Letters of Credit, the
Formula Amount, the Total Domestic Borrowing Availability, the Total Borrowing
Availability, or Ex-Im Subfacility Outstandings Amount at any time/as of any
date for any purpose under this Agreement (including, without limitation,
Sections 2.4, 2.7, 2.9, or 2.11(a) hereof) or the Ex-Im Subfacility Credit
Agreement, the Dollar Equivalent of each Foreign Currency Letter of Credit and
each Ex-Im Foreign Currency

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Letter of Credit at such time/as of such date shall be the Dollar Equivalent of
each such Foreign Currency Letter of Credit and each such Ex-Im Foreign Currency
Letter of Credit as of the most recent Valuation Date.

(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 Borrowing Agent.  The
rights of Agent under this subsection are subject to the provisions of Section
16.2(b) hereof.

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

(a)Borrowing Agent on behalf of Borrowers may notify Agent prior to 2:00 p.m. on
a Business Day of Borrowers’ 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, the 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
Borrowers 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
2:00 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 $500,000 and in integral multiples of $100,000 thereafter, and (iii) the
duration of the first Interest Period therefor.  Interest Periods for LIBOR Rate
Loans shall be for one, two or three 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.  Any Interest Period that begins on the last Business Day of a calendar
month (or a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period.  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 the Required Lenders, no LIBOR Rate Loan shall be
made available to any Borrower, and at Agent’s election, or the direction of the
Required Lenders, and upon notice to Borrowing Agent, all LIBOR Rate Loans in
effect during an Event of Default shall be converted to Domestic Rate
Loans.  After giving effect to each requested LIBOR Rate Loan, including those
which are converted from a Domestic Rate Loan under Section 2.2(e), there shall
not be outstanding more than three (3) Eurodollar Rate Loans, in the aggregate,
under this Agreement or more than two (2) Eurodollar Rate Loans, in the
aggregate, under the Ex-Im Subfacility Credit Agreement.

(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

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determined in accordance with the practice of the interbank market for offshore
Dollar deposits and no Interest Period shall end after the last day of the Term.

(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)
hereof or by its notice of conversion given to Agent pursuant to Section 2.2(e)
hereof, 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 2:00 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.

(e)Provided that no Default or 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 2:00 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 2:00 p.m. at least
three (3) Business Days prior to the date of such prepayment, Borrowers may,
subject to Section 2.2(g) and Section 2.20 hereof, 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 repayment.  Borrowers 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) hereof.

(g)Each Borrower 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 Borrowers to complete a borrowing of, a prepayment
of or conversion of or to a LIBOR Rate Loan after notice thereof has been given,
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

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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 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.

(i)Anything to the contrary contained herein notwithstanding, neither any Agent
nor any Lender, nor any of their participants, is required actually to acquire
LIBOR deposits to fund or otherwise match fund any Obligation as to which
interest accrues based on the LIBOR Rate.  The provisions set forth herein shall
apply as if each Lender or its participants had match funded any Obligation as
to which interest is accruing based on the LIBOR Rate by acquiring LIBOR
deposits for each Interest Period in the amount of the LIBOR Rate Loans.

2.3Term Loan.  Subject to the terms and conditions of this Agreement, each Term
Loan Lender, severally and not jointly, will make a term loan advance to
Borrowers in the amount equal to such Lender’s Term Loan Commitment Percentage
of the Total Term Loan Commitment Amount (all such advances, collectively, the
“Term Loan”).  The Term Loan shall be advanced on the Closing Date and shall be,
with respect to principal, payable as follows, subject to acceleration upon the
occurrence of an Event of Default under this Agreement or termination of this
Agreement:

Installment Due Date

Installment Amount

June 30, 2019

$625,000

September 30, 2019

$625,000

December 31, 2019

$625,000

March 31, 2020

$625,000

June 30, 2020

$625,000

September 30, 2020

$625,000

December 31, 2020

$625,000

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Installment Due Date

Installment Amount

March 31, 2021

$625,000

June 30, 2021 and the last day of each calendar quarter ending thereafter

$937,500

The last day of the Term

All remaining unpaid principal and accrued interest thereon

 

The Term Loan shall be evidenced by one or more secured promissory notes
(collectively, the “Term Loan Note”) in substantially the form attached hereto
as Exhibit 2.3(a) to the extent requested by the applicable Lender. The Term
Loan and any portion(s) thereof may consist of Domestic Rate Loans or LIBOR Rate
Loans, or a combination thereof, as Borrowing Agent may request; and in the
event that Borrowers desire to obtain or extend any portion of the Term Loan as
a LIBOR Rate Loan or to convert any portion of the Term Loan from a Domestic
Rate Loan to a LIBOR Rate Loan, Borrowing Agent shall comply with the
notification requirements set forth in Sections 2.2(b) and/or (e) hereof and the
provisions of Sections 2.2(b) through (i) hereof shall apply.

2.4Swing Loans.

(a)Subject to the terms and conditions set forth in this Agreement, and in order
to minimize the transfer of funds between Revolving Lenders and Agent for
administrative convenience, Agent, Revolving Lenders 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 last day of the
Term, in an aggregate principal amount up to but not in excess of the Maximum
Swing Loan Advance Amount, provided that the 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 less Reserves
established hereunder as in effect at such time less Ex-Im Reserves established
under the Ex-Im Credit Agreement as in effect at such time less the Ex-Im
Subfacility Outstandings Amount at such time, or (ii) the Formula Amount as in
effect at such time.  All Swing Loans shall be Domestic Rate Loans
only.  Borrowers may borrow (at the option and election of Swing Loan Lender),
repay and reborrow (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 hereto as Exhibit 2.4.  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

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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 (x) any request by Borrowing Agent for a Revolving Advance made
pursuant to Section 2.2(a) hereof or (y) the occurrence of any deemed request by
Borrowers for a Revolving Advance pursuant to the provisions 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.

(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 Revolving Lender 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 Revolving Lenders 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 Revolving Lender is required to fund, and funds, its
participation in any Swing Loans purchased hereunder, Agent shall promptly
distribute to such Revolving 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 Revolving Lender shall be
obligated in any event to make Revolving Advances in an amount outstanding at
any time in excess of its Revolving Commitment Amount as in effect at such time
minus its Participation Commitment (taking into account any reallocations under
Section 2.22 hereof) of the Dollar Equivalent of the Maximum Undrawn Amount of
all Letters of Credit outstanding at such time minus its Ex-Im Revolving
Commitment Percentage of the Ex-Im Subfacility Outstandings Amount at such time.

2.5Disbursement 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 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
Borrowers or deemed to have been requested by Borrowers under Sections 2.2(a),
2.14, or 2.22 hereof shall, (i) with respect to requested Revolving Advances, to
the extent Revolving Lenders make such Revolving Advances in accordance with
Sections 2.2(a), 2.14, or 2.22 hereof, and with respect to Swing Loans made upon
any request or deemed 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 Borrowers on the day so requested by way of
credit to Borrowers’ operating account at Agent, 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 Borrowers or Swing Loans
made upon any deemed request for a Revolving Advance by Borrowers, 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

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Swing Loans by borrowing, prepaying and reborrowing, all in accordance with the
terms and conditions hereof.

2.6Making and Settlement of Advances.

(a)Each borrowing of Revolving Advances shall be advanced according to the
applicable Revolving Commitment Percentages of the respective Revolving Lenders
(subject to any contrary terms of Section 2.22 hereof).  The Term Loan shall be
advanced on the Closing Date according to the applicable Term Loan Commitment
Percentages of the respective Term Loan Lenders.  Each borrowing of Swing Loans
shall be advanced by the 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, with respect to
Revolving Advances, 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 the Revolving Lenders of its receipt of such request
specifying the information provided by Borrowing Agent and the apportionment
among Revolving Lenders of the requested Revolving Advance as determined by
Agent in accordance with the terms hereof.  Each Revolving 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 Revolving 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 Revolving 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 Revolving Lender on
such borrowing date, and such Revolving 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 Revolving Lender that such Revolving 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 Revolving 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 Revolving Lender has not in fact made its applicable Revolving
Commitment Percentage of the requested Revolving Advance available to Agent,
then the applicable Revolving 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 Revolving 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 or
the Term Loan Interest Rate for the portion of the Term Loan consisting of
Domestic Rate Loans, as applicable.  If such Revolving Lender pays its share of
the applicable Revolving Advance to Agent, then the amount so paid shall
constitute such Revolving Lender’s Revolving Advance.  Any

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payment by Borrowers shall be without prejudice to any claim Borrowers may have
against a Revolving Lender that shall have failed to make such payment to
Agent.  A certificate of Agent submitted to any Revolving 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 Revolving Lenders 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 Revolving Lenders of such requested Settlement by facsimile,
telephonic or electronic transmission no later than 2:00 p.m. on the date of
such requested Settlement (the “Settlement Date”).  Subject to any contrary
provisions of Section 2.22 hereof, each Revolving Lender shall transfer the
amount of such Revolving 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 2:00 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 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 Revolving Lenders accruing interest as Domestic Rate
Loans.  If any such amount is not transferred to Agent by any Revolving Lender
on such Settlement Date, Agent shall be entitled to recover such amount on
demand from such Revolving 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.

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2.7Maximum Advances.  Notwithstanding anything to the contrary set forth in
Section 2.1(a) hereof or otherwise in this Agreement, (A) the aggregate
principal amount of Swing Loans and the Revolving Advances at any one time
outstanding plus the Dollar Equivalent of the Maximum Undrawn Amount of all
Letters of Credit outstanding at such time shall not exceed the Total Domestic
Borrowing Availability at such time, and (B) the aggregate principal amount of
Swing Loans and the Revolving Advances at any one time outstanding plus the
Dollar Equivalent of Maximum Undrawn Amount of all Letters of Credit outstanding
at such time, plus the Ex-Im Subfacility Outstandings Amount at such time shall
not exceed the Total Borrowing Availability at such time.  Notwithstanding
anything to the contrary in any of the foregoing or otherwise herein or in the
Ex-Im Subfacility Credit Agreement, at no time may (I) the Dollar Equivalent of
the sum of (x) the aggregate principal amount of Swing Loans and the Revolving
Advances at any one time outstanding plus the Dollar Equivalent of the Maximum
Undrawn Amount of all Letters of Credit outstanding at such time, plus (y) the
Ex-Im Subfacility Outstandings Amount at such time exceed (II) the Maximum
Revolving Advance Amount as in effect at such time, less Reserves established
hereunder as in effect at such time, less Ex-Im Reserves established under the
Ex-In Subfacility Credit Agreement as in effect at such time, and no Advance
shall be made hereunder (including the issuance of any Letter of Credit) at any
time if, after giving effect to the making (or issuance) thereof, the foregoing
provisions of this sentence would be violated.

2.8Manner and Repayment of Advances.

(a)The Revolving Advances and Swing Loans shall be due and payable in full on
the last day of the Term subject to earlier prepayment as herein provided.  The
Term Loan shall be due and payable as provided in Section 2.3(a) hereof and
shall be due and payable in full on the last day of the Term, subject to
mandatory prepayments 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.  Subject to the provisions of Sections 4.8(h) and 11.5 hereof,
each payment (including each prepayment) by on behalf of any Loan Party on
account of the principal of and/or interest on the Advances (other than the Term
Loan and the Letters of Credit) shall be applied, first to the outstanding Swing
Loans, and next, to the Revolving Advances pro rata according to the applicable
Revolving Commitment Percentages of the Revolving Lenders (subject to any
contrary provisions of Section 2.22 hereof).  Subject to the provisions of
Sections 2.20 and 11.5 hereof, each payment (including each prepayment) by or on
behalf of any Loan Party on account of the principal of and/or interest on the
Term Loan shall be applied to the Term Loan pro rata according to the ratable
interests of the Lenders therein, and, with respect to any such prepayment of
principal, in the inverse order of maturities of the scheduled principal
amortization with respect to the Term Loan.  

(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,

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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.  Borrowers further agree that 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 2:00 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 Borrowers 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 2:00 p.m., in Dollars and in immediately available funds.

2.9Repayment of Excess Advances.  If at any time the aggregate balance of
outstanding Revolving Advances, Swing Loans, Term Loan, 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 (specifically including
without limitation, if at any time (A) the aggregate principal amount of Swing
Loans and the Revolving Advances at any one time outstanding plus the Dollar
Equivalent of the Maximum Undrawn Amount of all Letters of Credit outstanding at
such time exceeds the Total Domestic Borrowing Availability at such time, or (B)
the aggregate principal amount of Swing Loans and the Revolving Advances at any
one time outstanding plus the Dollar Equivalent of the Maximum Undrawn Amount of
all Letters of Credit outstanding at such time, plus the Ex-Im Subfacility
Outstandings Amount at such time exceeds the Total Borrowing Availability at
such time), 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.

2.10Statement 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 and the other Loan Parties 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’ specific exceptions thereto within thirty (30) days after such
statement is received by Borrowing Agent.  

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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.

2.11Letters of Credit.

(a)Subject to the terms and conditions hereof, Issuer shall issue or cause the
issuance of standby and/or trade letters of credit denominated in Dollars or an
Approved LC Currency (“Letters of Credit”, and any Letter of Credit denominated
in any currency other than Dollars is a “Foreign Currency Letter of Credit”) for
the account of any Borrower except to the extent that the issuance thereof would
then cause any of (A) the sum of (i) the outstanding Revolving Advances plus
(ii) the outstanding Swing Loans, plus (iii) the Dollar Equivalent of the
Maximum Undrawn Amount of all outstanding Letters of Credit, plus (iv) the
Dollar Equivalent of the Maximum Undrawn Amount of the Letter of Credit to be
issued to exceed Total Domestic Borrowing Availability, or (B) the sum of (i)
the outstanding Revolving Advances plus (ii) the outstanding Swing Loans, plus
(iii) the Dollar Equivalent of the Maximum Undrawn Amount of all outstanding
Letters of Credit, plus (iv) the Ex-Im Subfacility Outstandings Amount plus (v)
the Dollar Equivalent of the Maximum Undrawn Amount of the Letter of Credit to
be issued to exceed Total Borrowing Availability.  The Dollar Equivalent of 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, Issuer shall not 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 Issuer from issuing any Letter of Credit, or any Law
applicable to Issuer or any request or directive (whether or not having the
force of law) from any Governmental Body with jurisdiction over Issuer shall
prohibit, or request that Issuer refrain from, the issuance of letters of credit
generally or the Letter of Credit in particular or shall impose upon Issuer with
respect to the Letter of Credit any restriction, reserve or capital requirement
(for which Issuer is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon Issuer any unreimbursed loss, cost or expense
which was not applicable on the Closing Date, and which Issuer in good faith
deems material to it, or (ii) the issuance of the Letter of Credit would violate
one or more policies of Issuer applicable to letters of credit generally.

2.12Issuance 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 Issuer, with a copy
to Agent at the Payment Office, prior to 2:00 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
satisfaction of Agent and Issuer; and, such other certificates, documents and
other papers and information as Agent or Issuer may reasonably request.  Issuer
shall not issue any requested

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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.

(b)Each Letter of Credit shall, among other things, (i) provide for the payment
of sight drafts, other written demands for payment, or acceptances of usance
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 the last day of the Term (provided that, any
Issuer may, in its sole discretion, agree from time to time to issue any one
and/or more Letters of Credit with a term longer than  twelve (12) months but
not extending beyond the last day of the Term, and further provided that, any
Issuer may, in its sole discretion, agree from time to time to issue any one
and/or more Letters of Credit with customary “evergreen” provisions providing
that the applicable Letter of Credit will automatically renew at the end of the
initial term thereof (and at the end of any subsequent renewal term) for a
stated renewal term unless such Issuer shall deliver a notice of non-renewal to
the beneficiary thereof by a stated deadline prior to the expiration of any such
initial and/or renewal term (but in any such case, no Issuer shall allow any
such Letter of Credit to be extended for a renewal term that would expire after
the last day of the Term as in effect at the time of any applicable deadline
under any such “evergreen” Letter of Credit for such Issue to give such a notice
of non-renewal).  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 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.

2.13Requirements For Issuance of Letters of Credit.

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

(b)In connection with all trade Letters of Credit issued or caused to be issued
by Issuer under this Agreement, each Loan Party hereby appoints Issuer, or its
designee, as its attorney, with full power and authority if an Event of Default
shall have occurred: (i) to sign and/or endorse such Loan Party’s name upon any
warehouse or other receipts, and acceptances; (ii) to sign such Loan Party’s
name on bills of lading; (iii) to clear Inventory through the United States of
America Customs Department (“Customs”) in the name of such Loan Party or Issuer
or Issuer’s designee, and to sign and deliver to Customs officials powers of
attorney in the name of such Loan Party for

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such purpose; and (iv) to complete in such Loan Party’s name or Issuer’s, or in
the name of Issuer’s designee, any order, sale or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds
thereof.  Neither Agent, 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, Issuer’s or their respective attorney’s willful misconduct.  This
power, being coupled with an interest, is irrevocable as long as any Letters of
Credit remain outstanding.

2.14Disbursements, Reimbursement.

(a)Immediately upon the issuance of each Letter of Credit, each Revolving Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from 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 Dollar Equivalent 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, Issuer will promptly notify Agent and
Borrowing Agent.  Regardless of whether Borrowing Agent shall have received such
notice, Borrowers shall reimburse (such obligation to reimburse Issuer shall
sometimes be referred to as a “Reimbursement Obligation”) Issuer prior to 2:00
p.m. on each date that an amount is paid by Issuer under any Letter of Credit
(each such date, a “Drawing Date”) in an amount in Dollars equal to the Dollar
Equivalent of the amount so paid by Issuer (the “Dollar Equivalent Drawing
Amount”).  In the event Borrowers fail to reimburse Issuer for the full Dollar
Equivalent Drawing Amount of any drawing under any Letter of Credit by 2:00 p.m.
on the Drawing Date, Issuer will promptly notify Agent and each Revolving Lender
thereof, and Borrowers shall be automatically deemed to have requested that a
Revolving Advance in Dollars in the amount of the applicable Dollar Equivalent
Drawing Amount maintained as a Domestic Rate Loan be made by Lenders to be
disbursed on the Drawing Date under such Letter of Credit, and Revolving Lenders
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) hereof.  Any notice given by 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 Revolving Lender shall upon any notice pursuant to Section 2.14(b)
hereof make available to 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 Dollar
Equivalent Drawing Amount, whereupon the participating Lenders shall (subject to
Section 2.14(d) hereof) each be deemed to have made a Revolving Advance in
Dollars maintained as a Domestic Rate Loan to Borrowers in that amount.  If any
Revolving Lender so notified fails to make available to Agent, for the benefit
of Issuer, the amount of such Lender’s Revolving Commitment Percentage of such
Dollar Equivalent Drawing Amount by 5:00 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

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Advances maintained as a Domestic Rate Loan on and after the fourth day
following the Drawing Date.  Agent and Issuer will promptly give notice of the
occurrence of the Drawing Date, but failure of Agent or Issuer to give any such
notice on the Drawing Date or in sufficient time to enable any Revolving Lender
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 Issuer of a drawing.

(d)With respect to any unreimbursed drawing that is not converted into a
Revolving Advance in Dollars in the amount of the applicable Dollar Equivalent
Drawing Amount maintained as a Domestic Rate Loan to Borrowers in whole or in
part as contemplated by Section 2.14(b) hereof, because of Borrowers’ failure to
satisfy the conditions set forth in Section 8.2 hereof (other than any notice
requirements) or for any other reason, Borrowers shall be deemed to have
incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in Dollars
in the amount of the applicable Dollar Equivalent Drawing Amount.  Such Letter
of Credit Borrowing shall be due and payable in Dollars on demand (together with
interest) and shall bear interest at the rate per annum applicable to a
Revolving Advance in Dollars in the amount of the applicable Dollar Equivalent
Drawing Amount maintained as a Domestic Rate Loan and, until paid shall be part
of the Obligations secured by the Collateral.  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) Issuer ceases 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 uncancelled; and (z) all Persons (other than Borrowers) have
been fully reimbursed for all payments made under or relating to Letters of
Credit.

2.15Repayment of Participation Advances.

(a)Upon (and only upon) receipt by Agent for the account of Issuer of
immediately available funds in Dollars from Borrowers (i) in reimbursement of
any payment made by 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 Issuer or Agent under such a Letter of
Credit, Agent will pay to each Revolving Lender, 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 Revolving Lender that did not make a
Participation Advance in respect of such payment by Agent (and, to the extent
that any of the other Revolving Lenders 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 Issuer or Agent is required at any time to return to any Loan Party, or to
a trustee, receiver, liquidator, custodian, or any official in any Insolvency
Proceeding, any portion of the

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payments made by Borrowers or any other Loan Party to 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 Issuer or Agent the amount of its Revolving
Commitment Percentage of any amounts so returned by Issuer or Agent plus
interest at the Federal Funds Effective Rate.

2.16Documentation.  Each Loan Party agrees to be bound by the terms of the
Letter of Credit Application and by Issuer’s interpretations of any Letter of
Credit issued on behalf of any Borrower and by Issuer’s written regulations and
customary practices relating to letters of credit, though Issuer’s
interpretations may be different from such Loan Parties’ own.  In the event of a
conflict between the 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), Issuer shall not be liable for
any error, negligence and/or mistakes, whether of omission or commission, in
following Borrowing Agent’s or any Loan Party’s instructions or those contained
in the Letters of Credit or any modifications, amendments or supplements
thereto.

2.17Determination to Honor Drawing Request.  In determining whether to honor any
request for drawing under any Letter of Credit by the beneficiary thereof,
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.

2.18Nature of Participation and Reimbursement Obligations.  The obligation of
each Revolving Lender 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 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 Loan Party, as the case may be, may have against Issuer, Agent,
any Loan Party or 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 Loan Party, Agent,
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 Loan Party, Agent, 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

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of the proceeds thereof (or any Persons for whom any such transferee or assignee
may be acting), 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 Loan
Party or any Subsidiaries of such Loan Party and the beneficiary for which any
Letter of Credit was procured);

(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 Issuer or any of Issuer’s
Affiliates has been notified thereof;

(vi)payment by 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 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 Issuer or any of Issuer’s Affiliates to issue any Letter of
Credit in the form requested by Borrowing Agent, unless Agent and Issuer have
each received written notice from Borrowing Agent of such failure within three
(3) Business Days after Issuer shall have provided 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
Commitments have been terminated;

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(xiv)with respect to any Foreign Currency Letter of Credit, any fluctuation in
the Exchange Rates between Dollars and the Approved LC Foreign Currency in which
such Foreign Currency Letter of Credit over time and from time to time is
denominated; and

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

2.19Liability for Acts and Omissions.

(a)As between Loan Parties and Issuer, Swing Loan Lender, Agent and Lenders,
each Loan Party 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, Issuer shall not
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 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 Loan Party against any beneficiary of such Letter of Credit, or any
such transferee, or any dispute between or among any Loan Party 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 Issuer, including any Governmental Acts, and
none of the above shall affect or impair, or prevent the vesting of, any of
Issuer’s rights or powers hereunder.  Nothing in the preceding sentence shall
relieve Issuer from liability for 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 Issuer or
Issuer’s Affiliates be liable to any Loan Party 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, Issuer and each of its
Affiliates: (i) may rely on any oral or other communication believed in good
faith by 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

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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 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 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.

(c)In furtherance and extension and not in limitation of the specific provisions
set forth above, any action taken or omitted by 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 Issuer under any resulting liability to
any Loan Party, Agent or any Lender.

2.20Prepayments

(a)Voluntary Prepayments.

(i)Voluntary Prepayments of the Revolving Advances.  Borrowers may voluntarily
prepay the Swing Loans and Revolving Advances outstanding hereunder at any time
in whole or in part, without any penalty or premium.  Any and all voluntary
prepayments of the Swing Loans and Revolving Advances under this Section
2.20(a)(i) shall be applied: first, to the repayment in full of the outstanding
principal amount of any Out-of-Formula Loans and any Protective Advances made by
Agent, second, to the repayment in full of the outstanding amount of any Swing
Loans, third, ratably, to the repayment in full of the outstanding principal
amount of all other Revolving Advances (shared among the Revolving Lenders on a
pro rata basis in accordance with their respective Revolving Commitment
Percentages), and fourth, if any Event of Default shall have occurred and be
continuing, the cash collateralization in full of all outstanding Letters of
Credit in accordance with the requirement of Section 3.2(b) hereof, all subject
to Borrowers’ ability to reborrow Revolving Advances and request Letters of
Credit in accordance with the terms hereof.

(ii)Voluntary Prepayments of the Term Loan. At its option and upon written
notice given to Agent prior to 2:00 p.m. at least three (3) Business Days’ prior
to the date of such prepayment, the Borrowers may voluntarily prepay the Term
Loan in whole at any time or in part; provided that any such prepayment of Term
Loan shall be in a principal amount of $1,000,000 or a whole multiple of
$500,000 in excess thereof (or, if less, the entire principal amount thereof
then outstanding).  Each such notice shall specify the date and amount of such
prepayment.  Agent will promptly notify each Lender of its receipt of each such
notice, and of the amount of such Lender’s

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applicable pro rata share of such prepayment.  Notwithstanding the foregoing or
anything else in this Agreement, the Borrowers may revoke, rescind or extend a
notice relative to proposed prepayment in full of the Obligations with the
proceeds of third party Indebtedness or other transactions if the closing for
such issuance or incurrence of Indebtedness or other transactions does not
happen on the date of the proposed prepayment.  Subject to the foregoing, if
such notice is given by the Borrowers, the Borrowers shall make such prepayment
and the payment amount specified in such notice shall be due and payable on the
date specified therein together with all accrued and unpaid interest thereon,
and any voluntary prepayment of the Term Loan shall be accompanied by all
accrued interest on the amount prepaid, together with any applicable fee(s) or
other amounts payable under the Fee Letter in connection with or with respect to
such voluntary prepayment.  In the event that any prepayment of a LIBOR Rate
Loan shall occur in connection with any such voluntary prepayment of the Term
Loan on a date other than the last Business Day of the then current Interest
Period, the Borrowers shall indemnify Agent and the Lenders therefor in
accordance with Section 2.2(g) hereof.  Each voluntary prepayment of the Term
Loan shall be applied to the remaining scheduled payments in respect of the Term
Loan as provided for under Section 2.3 hereof (including the final scheduled
payment due and payable on the last day of the Term) in the inverse order of the
maturity thereof, and shall be shared among the Term Loan Lenders on a pro rata
basis in accordance with their respective Term Loan Commitment Percentages.

(b)Mandatory Prepayments.

(i)When any Domestic Loan Party or Foreign Secured Loan Party makes any
Disposition of any Collateral (other than (A) Export-Related Collateral or (B)
any Disposition permitted by Sections 7.1, excluding Dispositions of other than
Export-Related Collateral permitted by clause (a) of the definition of Permitted
Dispositions, which shall be subject to the provisions of this Section
2.20(b)(i)) or any Casualty Proceeds Event occurs with respect to the Collateral
(other than Export-Related Collateral) of any Domestic Loan Party or Foreign
Secured Loan Party, Borrowers shall repay the Advances in an amount equal to one
hundred percent (100%) of the Net Cash Proceeds of such Disposition or Casualty
Proceeds Event, such repayments to be made promptly but in no event more than
five (5) Business Days following receipt of such Net Cash Proceeds, and until
the date of payment, such proceeds shall be held in trust for Agent; provided
however that, no such mandatory prepayment shall be required under this Section
2.20(b)(i) with respect to (x) any such Disposition or Casualty Proceeds Event
with respect to the Collateral (other than Export-Related Collateral) of any
Domestic Loan Party to the extent that the aggregate amount of all Net Cash
Proceeds of all Dispositions and Casualty Proceeds Events with respect to all
Collateral (other than Export-Related Collateral) of Domestic Loan Parties in
any fiscal year shall not exceed $250,000, and (y) any such Disposition or
Casualty Proceeds Event with respect to the Collateral of any Foreign Secured
Loan Party to the extent that the aggregate amount of all Net Cash Proceeds of
all Dispositions and Casualty Proceeds Events with respect to all Collateral of
Foreign Secured Loan Parties in any fiscal year shall not exceed $1,000,000, and
further provided, however, with respect to Net Disposition Proceeds which would
otherwise give rise to a prepayment under this Section 2.20(b)(i) (taking into
account the preceding proviso), so long as no Event of Default shall have
occurred and be continuing and the Borrowing Agent shall have notified Agent
within five (5) Business Days following receipt of such Net Cash Proceeds of the
applicable Domestic Loan Party’s or Foreign Secured Loan Party’s election to
reinvest all or any portion of such Net Cash Proceeds (the “Reinvestment
Proceeds”) in fixed or capital assets or

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other assets useful to the business of such Loan Party that will be Collateral
for the Obligations, the Borrowers shall not be required to make such prepayment
out of the Reinvestment Proceeds so long as within one hundred eighty (180) days
after the initial receipt of such Reinvestment Proceeds, such reinvestment shall
have been consummated (and, for the avoidance of doubt, to the extent such
reinvestment is not so consummated, Borrowers shall make a mandatory prepayment
of the Obligations under this Section 2.20(b)(i) in the amount of such
Reinvestment Proceeds that is not so reinvested on the one hundred eighty-first
(181st) day after the initial receipt of such Reinvestment Proceeds).  The
foregoing shall not be deemed to be implied consent to any Disposition or other
transaction prohibited by the terms and conditions of this Agreement or any
Other Document.

(ii)Commencing with the year ending December 31, 2019 and for each fiscal year
ending thereafter, Borrowers shall prepay the outstanding amount of the Advances
in an amount equal to the Excess Cash Flow Percentage of Excess Cash Flow for
such fiscal year, payable within fifteen (15) days after delivery to Agent of
the Annual Audited Financials for such fiscal year, but in any event not later
than fifteen (15) days after the date such Annual Audited Financials are
required to be delivered under Section 9.7 hereof.  In the event that the Annual
Audited Financials for any fiscal year are not so delivered by the date required
to be delivered under Section 9.7 hereof, then a calculation based upon
estimated amounts and the Quarterly Financials delivered for such year (to the
extent delivered) shall be made by Agent upon which calculation and notice
thereto Borrowers shall make the prepayment required by this Section
2.20(b)(ii), subject to adjustment when such required to be delivered under
Section 9.7 hereof are delivered to Agent as required hereby.  The calculation
made by Agent shall not be deemed a waiver of any rights Agent or any Lender may
have as a result of the failure by Borrowers to deliver such financial
statements.

(iii)In the event of any issuance or other incurrence of Indebtedness (other
than Permitted Indebtedness) by any Company, Borrowers shall, no later than
three (3) Business Days after the receipt by the applicable Company of the Net
Cash Proceeds thereof, repay the Advances in an amount equal to one hundred
percent (100%) of such Net Cash Proceeds; provided that, notwithstanding
anything to the contrary provided for in the foregoing or otherwise in this
Agreement, with respect to any Contemplated Rights Offering, none of the Net
Cash Proceeds of such Contemplated Rights Offering shall be subject to this
Section 2.20(b)(iii).

(iv)In the event of any receipt by ZTI of either (x) any proceeds under the
policy of Warranty and Indemnity Liability Insurance issued to ZTI by Pembroke
Syndicate in connection with the KeyMile Acquisition as contemplated by Exhibit
9.1.3 of the KeyMile Purchase Agreement, (y) any payment under or in connection
with the KeyMile Purchase Agreement and/or the KeyMile Acquisition in respect of
a purchase price adjustment, working capital adjustment, release from escrow, or
similar payment, or (z) any indemnification payment under or in connection with
the KeyMile Purchase Agreement and/or the KeyMile Acquisition (excluding any
indemnification payment that is paid (either directly by the indemnifying party
for the benefit of any Company or within three (3) Business Days after receipt
by ZTI for the benefit of any Company to any third-party claimant in respect of
which such indemnification payment is being made), Borrowers shall, no later
than five (5) Business Days after the receipt by ZTI thereof, repay the Advances
in an amount equal to one hundred percent (100%) of such proceeds/payment.

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(v)In the event of any issuance or other sale of Equity Interests of, or receipt
of cash proceeds of an equity contribution to, any Company (other than (1)
issuances to and cash contributions from (x) another Company in accordance with
the provisions of this Agreement and (y) employees, officers or directors of any
Loan Party or Subsidiary thereof pursuant to an equity incentive plan approved
by the board of directors of such Loan Party or Subsidiary thereof and (2)
issuance or other sale of Equity Interests by DZSI the Net Cash Proceeds of
which are to be used for a Permitted Acquisition or Permitted Investment),
Borrowers shall, no later than three (3) Business Days after the receipt by the
applicable Loan Party or Subsidiary thereof of such Net Issuance Proceeds, repay
the Advances in an amount equal to fifty percent (50%) of such Net Issuance
Proceeds; provided that, in connection with any Net Cash Proceeds received
pursuant to a Change of Control and any Net Cash Proceeds of any Specified
Equity Contribution, the Advances shall immediately be repaid in an amount equal
to one hundred percent (100%) of such Net Issuance; and provided further that,
notwithstanding anything to the contrary provided for in the foregoing or
otherwise in this Agreement, with respect to any Contemplated Rights Offering,
none of the Net Cash Proceeds of such Contemplated Rights Offering shall be
subject to this Section 2.20(b)(v):

(vi)Subject to the provisions of Section 11.5 hereof, each mandatory prepayment
under this Section 2.20 shall be applied to the Obligations as follows : first,
ratably, to the remaining scheduled payments in respect of the Term Loan as
provided for under Section 2.3 hereof (including the final scheduled payment due
and payable on the last day of the Term) in the inverse order of the maturity
thereof until repaid in full, second, to the repayment in full of the
outstanding principal amount of any Out-of-Formula Loans and any Protective
Advances made by Agent, third, to the repayment in full of the outstanding
amount of any Swing Loans, fourth, ratably, to the repayment in full of the
outstanding principal amount of all other Revolving Advances (shared among the
Revolving Lenders on a pro rata basis in accordance with their respective
Revolving Commitment Percentages), and fifth, if any Event of Default shall have
occurred and be continuing, the cash collateralization in full of all
outstanding Letters of Credit in accordance with the requirement of Section
3.2(b) hereof, all subject to Borrowers’ ability to reborrow Revolving Advances
and request Letters of Credit in accordance with the terms hereof.  However,
notwithstanding anything to the contrary provided for in any of the foregoing or
in any other provision of this Agreement

(A) with respect to any mandatory prepayment under Section 2.20(b)(ii) hereof or
under Section 2.20(b)(v) hereof with respect to the Net Cash Proceeds of any
Specified Equity Contribution, to the extent that, as of the close of business
on the Business Day immediately preceding the date such mandatory prepayment is
paid in accordance herewith, Borrowers shall have Undrawn Availability of less
than the minimum amount of Undrawn Availability required under Section 6.5(c)
hereof, the funds representing such mandatory prepayment shall first be applied,
to the extent of the positive difference of (x) the minimum amount of Undrawn
Availability required under Section 6.5(c) hereof minus (y) the actual Undrawn
Availability (prior to giving effect to such prepayment) as of the close of
business on the Business Day immediately preceding the date such mandatory
prepayment is paid (such amount, the “Availability Shortfall”), to the repayment
of the Revolving Advances and Swing Loans outstanding under this Agreement (in
accordance with clauses second through fourth of the first sentence of this
Section 2.20(b)(vi)) (and, to the extent that the aggregate amount of the
Revolving Advances and Swing Loans

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outstanding under this Agreement at the time of any such prepayment under this
sentence is less than the Availability Shortfall, then after prepayment in full
of the Revolving Advances and Swing Loans outstanding under this Agreement, the
funds of any such prepayment under this sentence shall be applied next to the
repayment of the Ex-Im Revolving Advances and Ex-Im Swing Loans (in accordance
with the provisions of Section 2.20(a)(i) of the Ex-Im Subfacility Agreement) to
the extent of the excess of the Availability Shortfall over such aggregate
amount of the Revolving Advances and Swing Loans outstanding under this
Agreement ), and thereafter to the extent of any remaining funds representing
such mandatory prepayment as follows : first, ratably, to the remaining
scheduled payments in respect of the Term Loan as provided for under Section 2.3
hereof (including the final scheduled payment due and payable on the last day of
the Term) in the inverse order of the maturity thereof until repaid in full,
second, to the repayment in full of the outstanding principal amount of any
Out-of-Formula Loans and any Protective Advances made by Agent, third, to the
repayment in full of the outstanding amount of any Swing Loans, fourth, ratably,
to the repayment in full of the outstanding principal amount of all other
Revolving Advances (shared among the Revolving Lenders on a pro rata basis in
accordance with their respective Revolving Commitment Percentages), and fifth,
if any Event of Default shall have occurred and be continuing, the cash
collateralization in full of all outstanding Letters of Credit in accordance
with the requirement of Section 3.2(b) hereof, all subject to Borrowers’ ability
to reborrow Revolving Advances and request Letters of Credit in accordance with
the terms hereof; and

(B)with respect to any mandatory prepayment under Section 2.20(b)(iv) hereof,
the funds representing such mandatory prepayment shall first be applied to the
repayment of the Revolving Advances and Swing Loans outstanding under this
Agreement (in accordance with clauses second through fourth of the first
sentence of this Section 2.20(b)(vi)) (and, to the extent that the aggregate
amount of the Revolving Advances and Swing Loans outstanding under this
Agreement at the time of any such prepayment under this sentence is greater than
the total amount of the Revolving Advances and Swing Loans outstanding under
this Agreement, then after prepayment in full of the Revolving Advances and
Swing Loans outstanding under this Agreement, the funds of any such prepayment
under this sentence shall be applied next to the repayment of the Ex-Im
Revolving Advances and Ex-Im Swing Loans (in accordance with the provisions of
Section 2.20(a)(i) of the Ex-Im Subfacility Agreement)), and thereafter to the
extent of any remaining funds representing such mandatory prepayment, such
remaining funds shall be remitted to ZTI.

2.21Use of Proceeds.

(a)Borrowers shall use the proceeds of the Advances hereunder (i) on the Closing
Date, to repay the Existing Wells Fargo Debt referenced in Section 8.1(o), (ii)
repay the Indebtedness outstanding under those certain bank loan facilities of
DNS Korea and DNS Japan listed on Schedule 2.21(a) attached hereto, (iii) repay
a portion of the outstanding principal under the Permitted Korean Export-Import
Bank Indebtedness in an amount equal to the outstanding principal amount of the
Permitted LGU Indebtedness as of the Closing Date, together with the interest
thereon, (iv) repay all Indebtedness, obligations, and liabilities owing by DZSI
to DNI as lender under that certain loan agreement dated as of September 9, 2015
(with an original maximum principal loan amount thereunder of $5,000,000), and
(v) pay fees and expenses relating to the

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Transactions, and (v) provide for working capital needs of the Borrowers and
reimburse drawings under Letters of Credit. Borrowers shall not use the proceeds
of any Revolving Advance to voluntarily prepay the Term Loan.

(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 Borrower or Guarantor, intends to use nor
shall they use any portion of the proceeds of the Advances, directly or
indirectly, for any purpose in violation of Applicable Law.

2.22Defaulting Lenders.

(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, Revolving
Advances shall be made pro rata from Revolving Lenders 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.  Amounts received in respect of
principal of any type of Revolving Advances shall be applied to reduce such type
of Revolving Advances of each Revolving Lender (other than any Defaulting
Lender) 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).  Amounts payable to a Defaulting
Lender that is a Revolving Lender (a “Defaulting Revolving Lender”) shall
instead be paid to or retained by Agent.  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 Revolving 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 Letter of Credit Obligations (or
drawings under any Letter of Credit for which Issuer has not been reimbursed)
are outstanding or exist at the time any Revolving Lender becomes a Defaulting
Lender, then:

(A)such 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 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 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 plus such Lender’s Ex-Im Revolving Commitment Percentage of the Ex-Im
Subfacility Outstandings Amount (after giving effect to any reallocation under
Section 2.22 of the Ex-Im

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Subfacility Credit Agreement of such Lender’s Participation Commitment (as
defined in the Ex-Im Subfacility Credit Agreement) of any Ex-Im Swing Loans or
Ex-Im 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 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 for so long as such Obligations are outstanding;

(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 such Defaulting Lender’s Participation Commitment in the Maximum Undrawn
Amount of all Letters of Credit is reallocated pursuant to clause (A) above,
then the Letter of Credit Lender Fees payable to Revolving Lenders pursuant to
Section 3.2(a) hereof shall be adjusted and reallocated to Non-Defaulting
Lenders 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 clause (A) or (B) above, then, without prejudice
to any rights or remedies of Issuer or any other Lender hereunder, all Letter of
Credit Lender 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 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

(F)so long as any Revolving Lender is a Defaulting Lender, Swing Loan Lender
shall not be required to fund any Swing Loans and Issuer shall not 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 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)(ii)(A) above
(and such Defaulting Lender shall not participate therein).

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(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 or any Term Loan Commitment,
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.

(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, and, if such Defaulting Lenders is a
Revolving Lender, Swing Loan Lender and Issuer, agree in writing that a
Defaulting Lender has adequately remedied all matters that caused such Lender to
be a Defaulting Lender, then Agent (A) will so notify the parties hereto, and
(B) if such cured Defaulting Lender is a Revolving Lender, then the
Participation Commitments of all Revolving Lenders (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 cured Defaulting
Lender is a Revolving Lender shall purchase at par such of the Revolving
Advances of the other Revolving 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.

(f)If Swing Loan Lender or Issuer has a good faith belief that any Revolving
Lender has defaulted in fulfilling its obligations under one or more other
agreements in which such Lender commits to extend credit, Swing Loan Lender
shall not be required to fund any Swing Loans and Issuer shall not be required
to issue, amend or increase any Letter of Credit, unless Swing Loan Lender or
Issuer, as the case may be, shall have entered into arrangements with Borrowers
or such Lender, satisfactory to Swing Loan Lender or Issuer, as the case may be,
to defease any risk to it in respect of such Lender hereunder.

2.23Payment 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 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)

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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 (or, if applicable, Swing Loans) 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.

2.24Increase in Maximum Revolving Advance Amount.

(a)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:

(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, but in the event all
current Lenders elect, in their sole discretion, to participate in any such
requested increase in an amount, as to each of them, equal to or greater than
their respective Revolving Commitment Percentages (prior to giving effect to the
requested increase) of the requested increase, the current Lenders shall
participate in such requested increase on a pro rata basis in accordance with
such respective Revolving Commitment Percentages;

(ii)Borrowers must provide the current Lenders with written notice of any such
requested increase at least thirty (30) days prior to the date requested by the
Borrowers as the deadline for a response from each such current Lender regarding
its participation in such requested increase, in order to allow sufficient time
for the credit review and credit approval process of the Lenders, and Borrowers
may not request the addition of a New Lender unless (and then only to the extent
that) there is insufficient participation (after giving effect to such 30 day
notice period) on behalf of the existing Lenders in the increased Revolving
Commitments being requested by Borrowers;

(iii)no Event of Default shall exist on the effective date of such increase
after giving effect to such increase;

(iv)both prior to and after giving pro forma effect to the requested increase,
the Leverage Ratio of Loan Parties on a Consolidated Basis as of the most
recently ended fiscal quarter for which the Quarterly Financials have been
delivered by Loan Parties shall not be greater than 3.75 to 1.00;

(v)after giving effect to such increase, the Maximum Revolving Advance Amount
shall not exceed $25,000,000;

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(vi)Borrowers may not request an increase in the Maximum Revolving Advance
Amount under this Section 2.24 more than two (2) 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 (and in additional increments of $1,000,000 in
excess thereof);

(vii)Loan Parties shall deliver to Agent on or before the effective date of such
increase the following documents in form and substance 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 Loan Parties, (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 Loan Party herein and in the Other Documents are true and complete in all
respects with the same force and effect 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), (3) such other agreements, instruments
and information (including supplements or modifications to this Agreement and/or
the Other Documents) executed by Loan Parties 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 satisfactory to Agent which shall cover such
matters related to such increase as Agent may reasonably require and each Loan
Party hereby authorizes and directs such counsel to deliver such opinions to
Agent and Lenders;

(viii)Borrowers shall execute and deliver (1) to each Increasing Lender a
replacement Revolving Credit Note reflecting the new amount of such Increasing
Lender’s Revolving Commitment Amount after giving effect to the increase (and
the prior Revolving Credit Note issued to such Increasing Lender shall be deemed
to be cancelled) and (2) to each New Lender a Revolving Credit Note reflecting
the amount of such New Lender’s Revolving Commitment Amount;

(ix)any New Lender shall be subject to the approval of Agent and Issuer
following not less than five (5) Business Days written notice from Borrowers’ to
Agent and Issuer of the identity of such New Lender; and

(x)each New Lender shall execute a lender joinder in form and substance
reasonably satisfactory to Agent 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 joinder.

(b)On the effective date of such increase, (i) unless the increase shall be
effected by the pro rata participation of the current Lenders in accordance with
their respective Revolving Commitment Percentages (prior to giving effect to the
requested increase), 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, and the
Revolving Commitment Percentages of Revolving Lenders (including each Increasing
Lender and/or New Lender) shall be recalculated such that each such Lender’s
Revolving Commitment Percentage is

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equal to (x) the Revolving Commitment Amount of such Lender divided by (y) the
aggregate of the Revolving Commitment Amounts of all Lenders; (ii) 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 any recalculation of the
Revolving Commitment Percentages contemplated by this Section 2.24; and
(iii) 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 (iv) each reference in any provision hereof to a minimum amount of Undrawn
Availability to be maintained (including Section 6.5 hereof) and/or to a minimum
dollar threshold of Undrawn Availability as a condition precedent to some other
action being permitted hereunder that is set forth in this Agreement shall be
automatically increased to an amount such that the ratio of Undrawn Availability
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, unless the increase shall be effected
by the pro rata participation of the current Lenders in accordance with their
respective Revolving Commitment Percentages (prior to giving effect to the
requested 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 effectuate the foregoing,
each existing Revolving Lender 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 Revolving Lender
(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 costs and
expenses incurred by Agent and by each Increasing Lender and New Lender 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 and/or Increasing Lenders and 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 fees and expenses of counsel to
Agent).

ARTICLE IIIINTEREST AND FEES.

3.1Interest.  Interest on Advances shall be payable in arrears (a) on the first
day of each month with respect to Domestic Rate Loans, and (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, provided that all accrued and unpaid
interest shall be due and payable at the end of the Term.  Interest

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charges shall be computed on the actual principal amount of Advances outstanding
for each day during the month and/or any applicable Interest Period at a rate
per annum equal to (i) with respect to Revolving Advances, the applicable
Revolving Interest Rate, (ii) with respect to Swing Loans, the Revolving
Interest Rate for Domestic Rate Loans, and (iii) with respect to the Term Loan
and/or any applicable portion(s) thereof, as applicable, the applicable Term
Loan Interest Rate (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 with respect to any Domestic Rate Loans 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 with respect to any LIBOR Rate Loans 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 interest
rate applicable to the Revolving Advances, the Term Loan, and/or any other
Obligations (or, in the case of any Event of Default under Section 10.7 hereof,
all Obligations) shall be at rate per annum equal to the applicable Contract
Rate per annum plus an additional two percent (2.00%) (200 basis points) per
annum (as applicable, the “Default Rate”).

3.2Letter of Credit Fees.

(a)Borrowers shall pay (x) to Agent, for the ratable benefit of Revolving
Lenders, fees for 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, equal to the aggregate daily Maximum Undrawn Amount of all
outstanding Letters of Credit multiplied by the Applicable Margin for Letters of
Credit, 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 last day of the Term, and (y) to Issuer, a
fronting fee of one quarter of one percent (0.25%) per annum times the aggregate
daily face amount of all outstanding Letters 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 last day of the Term (all of the foregoing fees, the
“Letter of Credit Fees”).  In addition, Borrowers shall pay to Agent, for the
benefit of 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 Issuer and the 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 Issuer’s prevailing charges for that type of
transaction.  Upon and after the occurrence of an Event of Default, and

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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) (the
“Letter of Credit Lender Fees”) shall be increased by an additional two percent
(2.00%) (200 basis points) per annum (as to such Letter of Credit Fees, the
“Letter of Credit Default Rate”).

(b)At any time following the occurrence 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 upon the last day of the Term 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 provided
to Agent, to be held by 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, which may be held by Agent in one or more general
ledger accounts of Agent, and each Borrower (and each Guarantor that may provide
any cash collateral under its Guaranty) hereby irrevocably authorizes Agent, in
its discretion, on such Loan Party’s behalf and in such Loan Party’s name, to
fund any such required cash collateral to be held by Agent out of the proceeds
of Receivables or other Collateral or out of any other funds of such Loan Party
coming into any Lender’s possession at any time.  Agent may hold such cash
collateral in any one or more general ledger accounts of Agent, and Agent shall
have no obligation (and Loan Parties hereby waive any claim) under Article 9 of
the Uniform Commercial Code or under any other Applicable Law to pay interest on
such cash collateral being held by Agent.  No Loan Party may withdraw amounts
credited to any such account except upon the occurrence of all of the following:
(x) Payment in Full of all Obligations; (y) expiration of all Letters of Credit;
and (z) termination of this Agreement.  Loan Parties hereby assign, pledge and
grant to Agent, for its benefit and the ratable benefit of the Secured Parties,
a continuing security interest in and to and Lien on any such cash collateral
and any right, title and interest of Loan Parties in any deposit account,
securities account or investment account into which such cash collateral may be
deposited and/or in which such cash collateral may be held by Agent from time to
time to secure the Obligations, specifically including all Obligations with
respect to any Letters of Credit.  Loan Parties 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.

3.3Facility Fee.

(a)[RESERVED].  

(b)Facility Fee.  If, for any day in each calendar quarter during the Term, the
daily unpaid balance of the sum of Revolving Advances outstanding on such day
plus Swing Loans outstanding on such day plus the Maximum Undrawn Amount of all
Letters of Credit outstanding on such day plus the Ex-Im Subfacility
Outstandings Amount for such day (the “Usage Amount”) 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 the Revolving Lenders
based on their Revolving Commitment Percentages, a fee at a rate equal to
one-half of one percent (0.50%) per annum on the amount by which the Maximum
Revolving Advance Amount on such day exceeds

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such Usage Amount (the “Facility Fee”).  Such Facility Fee shall be due and
payable to Agent in arrears on the first Business Day of each calendar quarter
with respect to each day in the previous calendar quarter and on the last day of
the Term with respect to the period from the end of the previous calendar
quarter through and including the last day of the Term.

3.4Fee Letter; Collateral Evaluation Fees.

(a)Fee Letter.  Without duplication of any amount paid with respect to the Ex-Im
Subfacility Credit Agreement, Borrowers shall pay each amount payable to the
applicable Secured Party as, if, and when due under the Fee Letter.

(b)[RESERVED].

(c)Field Examinations.  Borrowers shall pay to Agent, for its sole and separate
account and not the account of any Lender, promptly at the conclusion of any
Field Examination conducted in accordance with the terms of Section 4.6 hereof
(whether such examination is performed by Agent’s employees or by a third party
retained by Agent), a collateral evaluation fee in an amount equal to (x) $1,500
per day (or such other amount customarily charged by Agent to its customers) per
day for each person employed and/or retained by Agent to perform such evaluation
(based on an eight (8) hour day and subject to adjustment if additional hours
are worked), plus (y) a per examination field examination management fee in the
amount of $2,500 (for a new facility) for each such Field Examination and $1,500
for each recurring Field Examination (or, in each case, such other amount
customarily charged by Agent to its customers), plus (z) all out-of-pocket costs
and disbursements incurred by Agent and its employees and agents in the
performance of such Field Examination (all collectively as to any Field
Examination, the “Field Examination Fees and Costs”), in full and without any
deduction, off-set or counterclaim by Borrowers; provided that, notwithstanding
the foregoing or anything to the contrary in this Agreement, in the absence of
the occurrence and continuance of any Event of Default, Borrowers shall not be
required to pay the Field Examination Fees and Costs for more than four (4) such
Field Examinations in any Fiscal Year; but also provided further that the
limitations set forth in the immediately foregoing proviso (1) shall not apply
to any Field Examination initiated after the occurrence and during the
continuance of any Event of Default (and any Field Examination conducted in
Agent’s Permitted Discretion and at Borrowers’ expense after the occurrence and
during the continuance of any Event of Default shall not be counted against such
limitations), (2) shall not apply with respect to any Field Examination
conducted by Agent with respect to any assets acquired by Loan Parties in any
Acquisition (including with respect to the asset of any target acquired in any
such Acquisition (and any appraisal obtained at Borrowers’ expense in connection
with an Acquisition shall not be counted against such limitations), and (3)
shall not limit the right of Agent in its Permitted Discretion to conduct
additional Field Examinations in any Fiscal Year at its own cost and expense
pursuant to Section 4.6 hereof.

(d)Appraisals.  Borrowers shall pay to Agent, for its sole and separate account
and not the account of any Lender, promptly at the conclusion of any appraisal
of any Loan Parties’ assets obtained by Agent in accordance with the terms of
Section 4.7, the out-of-pocket costs and expenses incurred by Agent in obtaining
such appraisal (as to any such appraisal, the “Appraisal Costs”), in full and
without deduction, off-set or counterclaim by Borrowers; provided that,
notwithstanding the foregoing or anything to the contrary otherwise in this
Agreement, in the

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absence of the occurrence and continuance of any Event of Default, Borrowers
shall not be required to pay the Appraisal Costs for more than one (1) such
appraisals in any fiscal year; but also provided further that the limitations
set forth in the immediately foregoing proviso (1) shall not apply after the
occurrence and during the continuance of any Event of Default, (and any
appraisal obtained at Borrowers’ expense after the occurrence and during the
continuance of any Event of Default shall not be counted against such
limitations), (2) shall not apply with respect to any appraisal conducted by
Agent with respect to any assets acquired by Loan Parties in any Acquisition
(including with respect to the asset of any target acquired in any such
Acquisition (and any appraisal obtained at Borrowers’ expense in connection with
an Acquisition shall not be counted against such limitations), and (3) shall not
limit the rights of Agent in its discretion to obtain any appraisal at its own
expense and cost subject to the provisions of Section 4.7 hereof.  

3.5Computation of Interest and Fees.  Interest and fees hereunder shall be
computed on the basis of a year of 360 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.

3.6Maximum 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.

3.7Increased Costs.  In the event that any Applicable Law or 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 Issuer and the
office or branch where Agent, Swing Loan Lender, any Lender or 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:

(a)subject Agent, Swing Loan Lender, any Lender or 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 Issuer in
respect thereof (except for Indemnified Taxes or Other Taxes covered by Section
3.10 hereof and the imposition of, or any change in the rate of, any Excluded
Tax payable by Agent, Swing Loan Lender, such Lender or 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

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Loan Lender, 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 Issuer, 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 Issuer of making, converting to, continuing, renewing
or maintaining its Advances hereunder by an amount that Agent, Swing Loan
Lender, such Lender or 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 Issuer
deems to be material, then, in any case Borrowers shall promptly pay Agent,
Swing Loan Lender or such Lender or Issuer, upon its demand, such additional
amount as will compensate Agent, Swing Loan Lender, such Lender or 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 Issuer shall
certify the amount of such additional cost or reduced amount to Borrowing Agent,
and such certification shall be conclusive absent manifest error.

3.8Alternate Rate of Interest.

3.8.1.Interest Rate Inadequate or Unfair.  In the event that Agent or any Lender
shall have determined that:

(a)reasonable means do not exist for ascertaining the LIBOR Rate applicable
pursuant to Section 2.2 hereof for any Interest Period;

(b)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;

(c)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 LIBOR Rate will not adequately and fairly reflect the cost to such Lender
of the establishment or maintenance of any LIBOR Rate Loan,

then Agent shall give Borrowing Agent prompt written or telephonic notice of
such determination.  If such notice is given prior to a LIBOR Termination Date
(as defined below) or prior to the date on which Section 3.8.2(a)(ii) hereof
applies, (i) any such requested LIBOR Rate Loan shall be made as a Domestic Rate
Loan, unless Borrowing Agent shall notify Agent no later than 2:00 p.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

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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 2:00 p.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 2:00 p.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.

3.8.2.

Successor LIBOR Rate Index.

(a)If Agent determines (which determination shall be final and conclusive,
absent manifest error) that either (i) (A) the circumstances set forth in
Section 3.8.1(a) hereof have arisen and are unlikely to be temporary, or (B) the
circumstances set forth in Section 3.8.1(a) hereof have not arisen but the
applicable supervisor or administrator (if any) of the LIBOR Rate or a
Governmental Body having jurisdiction over Agent has made a public statement
identifying the specific date after which the LIBOR Rate shall no longer be used
for determining interest rates for loans (either such date, a “LIBOR Termination
Date”), or (ii) a rate other than the LIBOR Rate has become a widely recognized
benchmark rate for newly originated loans in Dollars in the U.S. market, then
Agent may (in consultation with Borrowing Agent) choose a replacement index for
the LIBOR Rate and make adjustments to applicable margins and related amendments
to this Agreement as referred to below such that, to the extent practicable, the
all-in interest rate based on the replacement index will be substantially
equivalent to the all-in LIBOR Rate-based interest rate in effect prior to its
replacement.

 

(b)Agent and the Loan Parties shall enter into an amendment to this Agreement to
reflect the replacement index, the adjusted margins and such other related
amendments as may be appropriate, in the discretion of Agent, for the
implementation and administration of the replacement index-based
rate.  Notwithstanding anything to the contrary in this Agreement or the Other
Documents (including, without limitation, Section 16.2 hereof), such amendment
shall become effective without any further action or consent of any other party
to this Agreement at 5:00 p.m. on the tenth (10th) Business Day after the date a
draft of the amendment is provided to the Lenders, unless Agent receives, on or
before such tenth (10th) Business Day, a written notice from the Required
Lenders stating that such Lenders object to such amendment.

 

(c)Selection of the replacement index, adjustments to the applicable margins,
and amendments to this Agreement (i) will be determined with due consideration
to the then-current market practices for determining and implementing a rate of
interest for newly originated loans in the United States and loans converted
from a LIBOR Rate-based rate to a replacement index-based rate, and (ii) may
also reflect adjustments to account for (x) the effects of the transition from
the LIBOR Rate to the replacement index and (y) yield- or risk-based differences
between the LIBOR Rate and the replacement index.

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(d)Until an amendment reflecting a new replacement index in accordance with this
Section 3.8.2 hereof is effective, each advance, conversion and renewal of a
LIBOR Rate Loan will continue to bear interest with reference to the LIBOR Rate;
provided however, that if Agent determines (which determination shall be final
and conclusive, absent manifest error) that a LIBOR Termination Date has
occurred, then following the LIBOR Termination Date, all LIBOR Rate Loans shall
automatically be converted to Domestic Rate Loans until such time as an
amendment reflecting a replacement index and related matters as described above
is implemented.

 

(e)Notwithstanding anything to the contrary contained herein, if at any time the
replacement index is less than zero, at such times, such index shall be deemed
to be zero for purposes of this Agreement.

 

3.9Capital Adequacy.

(a)In the event that Agent, Swing Loan Lender, Issuer or any Lender shall have
determined that any Applicable Law or guideline regarding capital adequacy, or
any Change in Law 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, Issuer or any Lender (for purposes of this Section 3.9, the term
“Lender” shall include Agent, Swing Loan Lender, Issuer or any Lender and any
corporation or bank controlling Agent, Swing Loan Lender or any Lender and the
office or branch where Agent, Swing Loan Lender 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’s, Swing Loan Lender’s, Issuer’s 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, Issuer or such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration Agent’s, Swing Loan Lender’s, Issuer’s and each Lender’s
policies with respect to capital adequacy) by an amount deemed by Agent, Swing
Loan Lender, Issuer or any Lender to be material, then, from time to time,
Borrowers shall pay upon demand to Agent, Swing Loan Lender, Issuer or such
Lender such additional amount or amounts as will compensate Agent, Swing Loan
Lender, Issuer or such Lender for such reduction.  In determining such amount or
amounts, Agent, Swing Loan Lender, 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, 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, Issuer or such Lender setting
forth such amount or amounts as shall be necessary to compensate Agent, Swing
Loan Lender or such Lender with respect to Section 3.9(a) hereof when delivered
to Borrowing Agent shall be conclusive absent manifest error.

3.10Taxes.

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(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 Loan
Parties 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)
Agent, Swing Loan Lender, Lender, Issuer or Participant, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Loan Parties shall make such deductions and
(iii) Loan Parties shall timely pay the full amount deducted to the relevant
Governmental Body in accordance with Applicable Law.

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

(c)Each Loan Party shall indemnify Agent, Swing Loan Lender, each Lender, Issuer
and any Participant, as soon as practicable 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 Agent, Swing Loan Lender, such Lender, Issuer, or such
Participant, as the case may be, and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto.  A certificate as to the
amount of such payment or liability delivered to Loan Parties by any Lender,
Swing Loan Lender, Participant, or Issuer (with a copy to Agent), or by Agent on
its own behalf or on behalf of Swing Loan Lender, a Lender or Issuer, shall be
conclusive absent manifest error.  If any Indemnified Taxes or Other Taxes were
in a Loan Party’s reasonable judgment incorrectly or illegally imposed or
asserted by a relevant Governmental Body, Agent, Swing Loan Lender, Lender,
Issuer or Participant, as the case may be, shall not be indemnified for such
Indemnified Taxes or Other Taxes by the Loan Party.

(d)As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by any Loan Party to a Governmental Body, Loan Parties 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 Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which any Loan Party 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 Loan Parties (with a copy to Agent), at the time or times prescribed
by Applicable Law or reasonably requested by Loan Parties 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.  Notwithstanding the submission of such documentation claiming a
reduced rate of or exemption from U.S. withholding tax, Agent shall be entitled
to withhold United States federal income taxes at the full 30% withholding rate
if in its reasonable judgment it is required to do so under the due diligence
requirements imposed upon a withholding agent under §1.1441-7(b) of the United
States Income Tax Regulations or other Applicable Law.  Further, Agent is
indemnified under §1.1461-1(e) of the United States Income Tax Regulations
against any claims and demands of any Lender,

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Issuer or assignee or participant of a Lender or Issuer for the amount of any
tax it deducts and withholds in accordance with regulations under §1441 of the
Code.  In addition, any Lender, if requested by Loan Parties or Agent, shall
deliver such other documentation prescribed by Applicable Law or reasonably
requested by Loan Parties or Agent as will enable Loan Parties or Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements.  Without limiting the generality of the
foregoing, in the event that any Loan Party is resident for tax purposes in the
United States of America, any Foreign Lender (or other Lender) shall deliver to
Loan Parties 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 (or other
Lender) becomes a Lender under this Agreement (and from time to time thereafter
upon the request of Loan Parties or Agent, but only if such Foreign Lender (or
other Lender) is legally entitled to do so), whichever of the following is
applicable:

(i)two (2) duly completed valid originals of IRS Form W-8BEN or W-8BEN-E
claiming eligibility for benefits of an in-force income tax treaty to which the
United States of America is a party,

(ii)two (2) duly completed valid originals 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 Loan Parties
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) two
duly completed valid originals of IRS Form W-8BEN or W-8BEN-E,

(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 Loan Parties to determine the withholding or deduction
required to be made, or

(v)to the extent that any Lender is not a Foreign Lender, such Lender shall
submit to Agent two (2) originals of an IRS Form W-9 or any other form
prescribed by Applicable Law demonstrating that such Lender is not a Foreign
Lender.

(f)If a payment made to a Lender, Swing Loan Lender, Participant, Issuer, or
Agent under this Agreement or any Other Document would be subject to U.S.
federal withholding Tax imposed by FATCA if such Person fails 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 Lender, Swing Loan Lender,
Participant, Issuer, or Agent shall deliver to Agent (in the case of Swing Loan
Lender, a Lender, Participant or Issuer) and Loan Parties (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 Loan Party sufficient for Agent and Loan Parties to comply with
their obligations under FATCA and to determine that Swing Loan Lender, such
Lender, Participant, Issuer, or Agent has complied with such applicable
reporting requirements.

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(g)If Agent, Swing Loan Lender, a Lender, a Participant or Issuer 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 Loan Parties or with respect
to which Loan Parties have paid additional amounts pursuant to this Section, it
shall pay to Loan Parties an amount equal to such refund (but only to the extent
of indemnity payments made, or additional amounts paid, by Loan Parties under
this Section with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund); net of all out-of-pocket expenses of Agent, Swing Loan Lender,
such Lender, Participant, or Issuer, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Body with respect to
such refund), provided that Loan Parties, upon the request of Agent, Swing Loan
Lender, such Lender, Participant, or Issuer, agrees to repay the amount paid
over to Loan Parties (plus any penalties, interest or other charges imposed by
the relevant Governmental Body) to Agent, Swing Loan Lender, such Lender,
Participant or Issuer in the event Agent, Swing Loan Lender, such Lender,
Participant or Issuer is required to repay such refund to such Governmental
Body.  This Section shall not be construed to require Agent, Swing Loan Lender,
any Lender, Participant, or Issuer to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to Loan
Parties or any other Person.  This Section shall also not be construed to
require Loan Parties to make available their tax returns (or any other
information relating to their Taxes that they deem confidential) to Agent, Swing
Loan Lender, any Lender, Participant, or Issuer or to any other Person.

3.11Replacement 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 or 3.9 hereof, (b) is unable to make or maintain
LIBOR Rate Loans as a result of a condition described in Section 2.2(h) hereof,
(c) is a Defaulting Lender, or (d) denies any consent requested by Agent
pursuant to Section 16.2(b) hereof, Borrowers may, within ninety (90) days of
receipt of such demand, notice (or the occurrence of such other event causing
Borrowers to be required to pay such compensation or causing Section 2.2(h)
hereof to be applicable), or such Lender becoming a Defaulting Lender or denial
of a request by Agent pursuant to Section 16.2(b) hereof, as the case may be, by
notice (a “Replacement 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, if and as applicable, its Revolving Commitment
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 their
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, if and as
applicable, its Revolving Commitment  then such Affected Lender shall assign, in
accordance with Section 16.3 hereof, all of its Advances and, if and as
applicable, its Revolving Commitment, 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
including for any breakage fee pursuant to Section 2.2(g) (as though such
payment constituted a prepayment) and any Prepayment Premium or Make-Whole
Amount, as applicable.

ARTICLE IVCOLLATERAL: GENERAL TERMS

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4.1Security Interest in the Collateral.  To secure the prompt payment and
performance to Agent and each other Secured Party of the Obligations, each
Domestic Loan Party hereby assigns, pledges and grants to Agent for its benefit
and for the ratable benefit of 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 wherever located.  Each
Domestic Loan Party shall mark its books and records as may be necessary or
appropriate to evidence, protect and perfect Agent’s security interest and shall
cause its financial statements to reflect such security interest.  Each Domestic
Loan Party shall provide Agent with written notice of each commercial tort claim
which involves or would reasonably be expected to involve claims in excess of
$500,000 promptly upon any senior executive officer of any Domestic Loan Party
becoming aware of 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 Domestic 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
Domestic Loan Party shall provide Agent with written notice promptly upon
becoming the beneficiary under any letter of credit or otherwise obtaining any
right, title or interest in any letter of credit rights, and at Agent’s request
shall take such actions as they may reasonably request for the perfection of
Agent’s security interest therein.

4.2Perfection of Security Interest.  Each Loan Party (excluding any Foreign
Unsecured Loan Party) shall take all action that may be necessary or desirable,
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, (a)
immediately discharging all Liens other than Permitted Encumbrances,
(b) obtaining Lien Waiver Agreements, (c) 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 credit and advices thereof and documents evidencing or
forming a part of the Collateral, (d) entering into warehousing, lockbox, and
other custodial arrangements reasonably satisfactory to Agent, and (e) executing
and delivering, as applicable, 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 Domestic Loan Party hereby authorizes Agent to file, and
ratifies any such filings made prior to the date hereof,  against such Domestic
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 Domestic Loan Party).  All
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 Loan Parties to Agent for its benefit and for
the ratable benefit of Lenders immediately upon demand, and upon such demand,
may be charged to Borrowers’ Account as provided for in Section 2.23;

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provided that, promptly following any such demand and/or charge (and in no event
later than the next delivery of the statement of account provided for in Section
2.10 hereof), Agent shall provide Borrowers with a reasonable description of
such charges, expenses and fees so demanded and/or charged.

4.3Preservation of Collateral.  Following the occurrence of a Default or an
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) 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)
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) 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 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 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 as provided for
in Section 2.23; provided that, promptly following any such demand and/or charge
(and in no event later than the next delivery of the statement of account
provided for in Section 2.10 hereof), Agent shall provide Borrowers with a
reasonable description of such charges, expenses and fees so demanded and/or
charged.

4.4Ownership 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 the sole owner of and
fully authorized and able to sell, transfer, pledge and/or grant a first
priority security interest in 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) each document and agreement executed by
each Loan Party or delivered to Agent or any Lender in connection with this
Agreement shall be true and correct in all respects; (iii) 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 (iv) each Loan Party’s equipment and Inventory shall be maintained at the
locations set forth on Schedule 4.4 hereto (as such Schedule may be updated from
time to time in accordance with this Agreement), 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 or the disposition of
equipment to the extent permitted in Section 7.1(b) hereof.

(b)(i) There is no location at which any Loan Party (excluding any Foreign
Unsecured Loan Party) has any Inventory (except for Inventory in transit) or
other tangible Collateral with a value equal to the Dollar Equivalent of
$500,000 or greater other than those locations listed on Schedule 4.4 hereto (as
such Schedule may be updated from time to time in accordance with this
Agreement); (ii) Schedule 4.4 hereto (as such Schedule may be updated from time
to time in accordance with this Agreement) contains a correct and complete list
of the legal names and

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addresses of all warehouses at which Inventory of any Loan Party (excluding any
Foreign Unsecured Loan Party) with a value equal to the Dollar Equivalent of
$500,000 or greater is stored; none of the receipts received by any such 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 (as such Schedule may be
updated from time to time in accordance with this Agreement) sets forth a
correct and complete list of (A) the chief executive office of each Loan Party,
(B) each business location at which any unique books and records (not duplicated
at the applicable corporate headquarters of such Loan Party) of any Loan Party
are kept, and (C) each business location of any Loan Party (excluding any
Foreign Unsecured Loan Party) or third-party warehouse/bailee/processor of any
Loan Party (excluding any Foreign Unsecured Loan Party) at which tangible
Collateral with a fair market value, as to each such location, in excess of
$500,000 is located,  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 with a value equal to the Dollar Equivalent of
$500,000 or greater.

4.5Defense of Agent’s and Lenders’ Interests.  Until (a) Payment in Full of all
of the Obligations and (b) the termination of the Commitments and the
termination of this Agreement, Agent’s interests in the Collateral shall
continue in full force and effect to the extent not otherwise provided for under
Applicable Law.  During such period no Loan Party shall, without Agent’s prior
written consent, pledge, sell (except for sales or other 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
defend Agent’s interests in the Collateral against any and all Persons
whatsoever. At any time after the occurrence and during the continuance of an
Event of Default and following demand by Agent (at the direction of itself) for
payment of all Obligations, Agent shall have the right, to the extent permitted
by Applicable Law, to take possession of the indicia of the Collateral and the
Collateral in whatever physical form contained, including: labels, stationery,
documents, instruments and advertising materials.  If Agent exercises this right
to take possession of the Collateral, each Loan Party 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, instruct all
suppliers, carriers, forwarders, warehousemen 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.

4.6Inspection of Premises.  At all reasonable times and from time to time as
often as Agent shall elect in its sole discretion, in each case following
commercially reasonable advance notice from Agent to Borrowing Agent (provided
that no such advance notice shall be required at any time when any Event of
Default shall have occurred and be continuing or at any time when Agent
reasonably suspects in its Permitted Discretion that there has been any
intentional fraud,

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willful misconduct or gross negligence in the preparation of any Borrowing Base
Certificate delivered to Agent under Section 9.2 hereof), 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, for
the purpose of inspecting the Collateral and any and all records pertaining
thereto and the operation of such Loan Party’s business.  Nothing in this
Section 4.6 shall contradict any of the provisions of Section 3.4(c) or the
limitations on Borrowers’ liability for Field Examination Fees and Costs set
forth therein.

4.7Appraisals.  Agent may, in its sole discretion, exercised in a commercially
reasonable manner, 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 then current
values of Loan Parties’ assets.  Unless an Event of Default shall have occurred
and be continuing at such time, Agent shall consult with Loan Parties as to the
identity of any such firm.  In the event the value of Loan Parties’ assets
included in the Formula Amount as so determined pursuant to 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,
Borrowers shall make mandatory prepayments of the then outstanding Revolving
Advances so as to eliminate the excess Advances.  Nothing in this Section 4.7
shall contradict any of the provisions of Section 3.4(d) or the limitations on
Borrowers’ liability for Appraisal Costs set forth therein.

4.8Receivables; Deposit Accounts and Securities Accounts.

(a)Each of the Receivables shall be a bona fide and valid account representing a
bona fide indebtedness incurred by the Customer therein named, for a fixed sum
as set forth in the invoice relating thereto (provided that immaterial or
unintentional invoice errors shall not be deemed to be a breach hereof, and
further provided that customary discount provisions offered by Loan Parties to
their Customers in the Ordinary Course of Business consistent with past
practices shall not be deemed to be a breach hereof so long as the amount/terms
of such discount(s) are clearly set forth on the invoice and the amount of such
Receivable as reported on any Borrowing Base Certificate shall reflect the
lowest potential amount thereof assuming application of all such discount(s)
available with respect to such Receivable) with respect to an absolute sale or
lease and delivery of goods upon stated terms of a Loan Party, or work, labor or
services theretofore rendered by a Loan Party as of the date each Receivable is
created.  Same shall be due and owing in accordance with the applicable Loan
Party’s standard terms of sale without dispute, setoff or counterclaim except as
may be stated on the accounts receivable schedules delivered by Loan Parties to
Agent.

(b)Each Customer, to each Loan Party’s actual knowledge, as of the date each
Receivable is created, is and will be solvent and 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.

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(c)Each Loan Party’s chief executive office is located as set forth on
Schedule 4.4 hereto.  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)Domestic 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 Account(s) 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 Domestic Loan Party
directly receives any remittances upon Receivables, such Domestic Loan Party
shall, at such Domestic 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 Domestic Loan Party’s funds or use the same except to pay
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(s) and/or Depository Account(s).  Each Domestic 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.

(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.  Thereafter, Agent shall have the sole right to collect the
Receivables, take possession of the Collateral, or both.  Agent’s actual
collection expenses, including, but not limited to, stationery and postage,
telephone and facsimile, 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.

(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 acceptances, checks, drafts, money orders or other
evidences of payment or Collateral received by the Agent; (B) to sign such Loan
Party’s name on any drafts against Customers, assignments and verifications of
Receivables; (C) to send verifications of Receivables to any Customer; and
(D) to sign such Loan Party’s name on all agreements, 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 (ii) at any time
following the occurrence 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

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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; (J) as part of the services offered under to
receive, open and dispose of all mail addressed to any Loan Party at any post
office box/lockbox maintained by Agent for Loan Parties or at any other business
premises of Agent, (J) to sign such Loan Party’s name on any invoice or bill of
lading relating to any of the Receivables, and (K) to do all other acts and
things necessary to carry out this Agreement.  All acts of such attorney or
designee are hereby ratified and approved, and such 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, with willful
misconduct, 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.

(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)Subject to the provisions of Section 8.3(b), all proceeds of Collateral shall
be deposited by Domestic 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 bank or banks as are
acceptable to Agent (each such bank, a “Blocked Account Bank” and collectively,
the “Blocked Account Banks”) pursuant to an arrangement with such Blocked
Account Bank as may be acceptable to Agent or (ii) a lockbox account, dominion
account or other “blocked account” depository accounts (“Depository Accounts”)
established at Agent for the deposit of such proceeds.  Each applicable Domestic
Loan Party, Agent and each Blocked Account Bank shall enter into a Control
Agreement in form and substance satisfactory to Agent that is sufficient to give
Agent “control” (for purposes of Articles 8 and 9 of the Uniform Commercial
Code) over such Blocked Accounts and which directs such Blocked Account Bank to
transfer such funds so deposited on a daily basis (or at such other times
acceptable to Agent) to Agent, either to any account maintained by Agent at such
Blocked Account Bank or by wire transfer to appropriate account(s) maintained
with Agent by the Domestic Loan Parties as Agent may elect.  All funds deposited
in such 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 Secured Parties, and Borrowing Agent shall obtain the agreement by such
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 arrangement, including any claim of accord and satisfaction or
release with respect to deposits accepted by any Blocked Account Bank
thereunder.  Subject to the provisions of Section 11.5 hereof, 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 the
Letters of Credit in accordance with Section 3.2(b) hereof) in such order as
Agent shall determine in its sole discretion, provided that, in the absence of
any Event of Default, Agent shall apply all such funds representing collection
of Receivables

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first to the prepayment of the principal amount of any Out-of-Formula Loans and
Protective Advances funded by Agent and not funded by the Revolving Lenders, if
any, second, the Swing Loans, if any, and third, then to the Revolving Advances.

(i)No Loan Party will, without Agent’s consent, compromise or adjust any
Receivables (or extend the time for payment thereof) or accept any 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 as of
the Closing Date are set forth on Schedule 4.8(j).  No Borrower shall open any
new deposit account, securities account or investment account (other than an
Excluded Account) unless (i) Borrowers shall have given at least ten (10) days
prior written notice to Agent and (ii) if such account is to be maintained with
a bank, depository institution or securities intermediary that is not the Agent,
such bank, depository institution or securities intermediary, each applicable
Borrower and Agent shall first have entered into an account control agreement in
form and substance reasonably satisfactory to Agent sufficient to give Agent
“control” (for purposes of Articles 8 and 9 of the Uniform Commercial Code) over
such account (and, if such account is a Blocked Account, such account control
agreement shall also comply with the requirements of Section 4.8(h)).

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

4.10Maintenance of Equipment.  Except for Equipment Disposed of in accordance
with the terms hereof, equipment of Loan Parties 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 so that the value
and operating efficiency of the equipment shall be maintained and preserved.  No
Loan Party shall use or operate its equipment in violation of any law, statute,
ordinance, code, rule or regulation.

4.11Exculpation 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.

4.12Financing Statements.  Except 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.

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4.13Investment Property Collateral.  Except as set forth in Article XI and, with
respect to Subsidiary Stock, Section 4.14(h) hereof, (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.  In
the event any additional Equity Interests (other than Excluded Property) are
issued to or acquired by any Loan Party, whether as a result of any new purchase
by or transfer or assignment to such Loan Party, as a result of 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, any certificates evidencing any such additional Equity Interests will
be delivered to Agent within ten (10) Business Days 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 of such Loan Party on the Closing
Date.

4.14Provisions Regarding Pledged Equity Interests.  Without limiting the
generality of Sections 4.1 or 4.13 hereof or of any Pledge Agreement that may
from time to time be in effect, and as a supplement to and expansion of (and
without any intention to limit or contradict) the other provisions of this
Article IV and/or any provisions of any such Pledge Agreement:

(a)Each Domestic Loan Party, for the purpose of granting a continuing lien and
security interest to secure the Obligations for the benefit of Agent and each
other Secured Party, does hereby collaterally assign to Agent (for the benefit
of Agent and each other Secured Party), and pledge to Agent (for the benefit of
Agent and each other Secured Party), and grant such a continuing lien and
security interest to Agent (for the benefit of Agent and each other Secured
Party) in, all of such Domestic Loan Party’s right, title and interest in and to
all of the following property, together with any additions, exchanges,
replacements and substitutions therefor, dividends and distributions with
respect thereto, and the proceeds thereof (collectively, as to all Domestic Loan
Parties, the “Pledged Equity Interest Collateral”; provided that,
notwithstanding anything to the contrary provided in this Section 4.14, the
Pledged Equity Interest Collateral shall not at any time include any Excluded
Property):

(i)all Equity Interests of any Person of any kind or nature held by such
Domestic Loan Party consisting of Subsidiary Stock, whether now owned or
hereafter acquired by such Domestic Loan Party or in which such Domestic Loan
Party now or hereafter has any rights, options or warrants, including without
limitation: (1) all of the capital stock, capital shares and other Equity
Interests in those Subsidiaries consisting of corporations, companies and other
business entities (other than the business entities of the types listed in the
following clauses (2) and (3)), including such corporations, companies and
entities listed on Schedule 4.14 hereto (as such Schedule may be amended and/or
updated from time to time in accordance herewith), (2) all of the partnership
interests and other Equity Interests in those Subsidiaries consisting of limited
partnerships and general partnerships, including such partnerships listed on
Schedule 4.14 hereto (as such Schedule may be amended and/or updated from time
to time in accordance herewith), and (3) all of the membership/limited liability
company interests and other Equity Interests in those Subsidiaries consisting of
limited liability companies, including such limited liability companies listed
on Schedule 4.14 hereto (as such Schedule may be amended and/or updated from
time to time in accordance herewith), in each case (1) through (3) together

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with all certificates representing such Equity Interests and all rights (but
none of the obligations) under or arising out of the applicable Organizational
Documents of such Subsidiaries, and specifically including without limitation,
with respect to each such partnership Subsidiary, all rights and remedies of
such Domestic Loan Party as a general partner or limited partner with respect to
the respective partnership interests and other Equity Interests of such Domestic
Loan Party in each such partnership Subsidiary under the respective
Organizational Documents of such partnership and under the partnership laws of
the state in which each such partnership is organized, and, with respect to each
such limited liability company Subsidiary, all rights and remedies of the such
Domestic Loan Party as a member or manager or managing member with respect to
the respective membership interests and other Equity Interests of such Domestic
Loan Party in each such limited liability company Subsidiary under the
respective Organizational Documents of such limited liability company and under
the limited liability company laws of the state in which each such limited
liability company is organized); and

(ii)all Related Equity Interest Rights related to any such Equity Interests
described in the foregoing clause (i).

(b)The pledge and security interest described in this Section 4.14 shall
continue in effect to secure all Obligations under this Agreement and the Other
Documents from time to time incurred or arising (a) for so long as this
Agreement is in effect and (b) until the Commitments have terminated and the
Obligations are Paid in Full.

(c)Pledge Representations and Warranties:  Each Domestic Loan Party hereby
represents and warrants as follows:

(i)Such Domestic Loan Party has not sold, assigned, transferred, pledged or
granted any option or security interest in or otherwise hypothecated the Pledged
Equity Interest Collateral in any manner whatsoever, and the Pledged Equity
Interest Collateral is pledged herewith free and clear of any and all Liens,
encumbrances, claims, pledges, restrictions, legends, options and other claims
and charges, other than Permitted Encumbrances of the type described in clauses
(a), (b) and (e) of the definition thereof.

(ii)The execution, delivery and performance of this Agreement and the pledge of
the Pledged Equity Interest Collateral referred to herein, and all other terms
and provisions hereof (specifically including Section 4.14(h) hereof and the
powers and proxies granted to Agent thereunder) are not in violation of and
shall not create any default under any Organizational Documents of any Pledged
Issuer.

(iii)There are no restrictions upon the pledge or transfer of, nor on the voting
rights associated with, or the transfer of, any of the Pledged Equity Interest
Collateral, except as provided by applicable federal and state laws and the
terms of the Organizational Documents of the applicable Pledged Issuer and/or as
stated on the face of any applicable certificates evidencing any such Pledged
Equity Interest Collateral.

(iv)The Pledged Equity Interest Collateral has been validly authorized and
issued by each Pledged Issuer thereof and, if applicable, such Pledged Equity
Interest Collateral is fully paid for and non-assessable.

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(v)Subject to Section 8.3(g), each Domestic Loan Party has delivered to Agent
all certificates representing or evidencing the Pledged Equity Interest
Collateral, if any, accompanied by duly executed instruments of transfer or
assignments in blank, to be held by Agent.

(d)Each Domestic Loan Party, in its capacity as a pledgor of its Pledged Equity
Interest Collateral under this Section 4.14, hereby irrevocably instructs each
of its direct Subsidiaries, in such direct Subsidiary’s present and/or future
capacity (if, as, and when applicable) as a Pledged Issuer that has issued or at
any time and/or from time to time hereafter may issue any Pledged Equity
Interest Collateral now or hereafter held by such pledging Domestic Loan Party,
to comply with any instructions originated by Agent with respect to the
interests of such pledging Domestic Loan Party in any such Pledged Equity
Interest Collateral now or hereafter issued by such Pledged Issuer that is now
or at any time and/or from time to time hereafter held by such pledging Domestic
Loan Party without further consent of such pledging Domestic Loan Party and each
such pledging Domestic Loan Party agrees that each such Pledged Issuer shall be
fully protected in so complying.  Each Domestic Loan Party that is a direct
Subsidiary of another Domestic Loan Party, in present and/or future capacity
(if, as, and when applicable) as a Pledged Issuer that has issued or at any time
and/or from time to time hereafter may issue any Pledged Equity Interest
Collateral to any one or more other Domestic Loan Parties, hereby irrevocably
agrees to comply with any such instructions originated by Agent with respect to
any interests of any other Domestic Loan Party in any such Pledged Equity
Interest Collateral now or hereafter issued by such Domestic Loan Party as such
a Pledged Issuer that is now or at any time and/or from time to time hereafter
held by any such pledging Domestic Loan Party without further consent of such
pledging Domestic Loan Party.  However, Agent agrees it shall not issue any such
instructions with respect to the Pledged Collateral held by any Domestic Loan
Party in any Pledged Issuer unless an Event of Default shall have occurred and
be continuing.  Each Domestic Loan Party acknowledges and agrees that Agent
shall be authorized at any time to provide a copy of this Agreement to any
Pledged Issuer as evidence that such Domestic Loan Party has given the foregoing
instructions.

(e)In addition to all other rights granted to Agent in this Agreement or any
Other Document, under the Uniform Commercial Code or otherwise available at law
or in equity, Agent shall have the following rights, each of which may be
exercised at Agent’s Permitted Discretion (but without any obligation to do so),
at any time following the occurrence and during the continuance of an Event of
Default hereunder, without further consent of any Domestic Loan Party: (i)
transfer the whole or any part of the Pledged Equity Interest Collateral into
the name of Agent or its nominee or to conduct a sale of the Pledged Equity
Interest Collateral pursuant to the Uniform Commercial Code or pursuant to any
other applicable law; (ii) vote the Pledged Equity Interest Collateral in whole
or in part as more fully provided for in Section 4.14(h) hereof; (iii) notify
the persons obligated on any of the Pledged Equity Interest Collateral to make
payment to Agent of any amounts due or to become due thereon; and (iv) release,
surrender or exchange any of the Pledged Equity Interest Collateral at any time,
or to compromise any dispute with respect to the same.  Agent may proceed
against the Pledged Equity Interest Collateral, or any other Collateral securing
the Obligations, in any order, and against any Domestic Loan Party pledging any
of the Pledged Equity Interest Collateral and any other obligor (including
without limitation, any one or more other Domestic Loan Parties), jointly and/or
severally, in any order to satisfy the Obligations.  Each Domestic Loan Party
waives and releases any right to require Agent to first collect any of the
Obligations secured by the Pledged Equity Interest Collateral from any other

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Collateral of such Domestic Loan Party or any other party (including without
limitation, any one or more other Domestic Loan Parties) securing the
Obligations under any theory of marshalling of assets, or otherwise.  Any and
all dividends, distributions, interest declared, distributed or paid and any
proceeds of the Pledged Equity Interest Collateral which are received by any
Domestic Loan Party following the occurrence and continuance of an Event of
Default under this Agreement shall be received in trust for the benefit of Agent
and the Secured Parties; segregated from the other property and funds of such
Domestic Loan Party; and forthwith upon demand delivered to Agent as Pledged
Equity Interest Collateral in the same form as received (with any necessary
documents, endorsements or assignments in blank with guaranteed
signatures).  All rights and remedies of Agent are cumulative, not
alternative.  For so long as this Agreement is in effect and until the
Commitments have been terminated and the Obligations have been Paid in Full,
each Domestic Loan Party hereby irrevocably appoints Agent, or Agent’s nominee
or any other person whom Agent may designate, as such Domestic Loan Party’s
attorney‑in‑fact, subject to the terms of this Section 4.14, following the
occurrence and during the continuance of an Event of Default, with the power, at
Agent’s option, (i) to effectuate the transfer of any of the Pledged Equity
Interest Collateral on the books of each Pledged Issuer thereof to the name of
Agent or to the name of Agent’s nominee, designee or transferee; (ii) to endorse
and collect checks payable to such Domestic Loan Party representing
distributions or other payments on any of the Pledged Equity Interest
Collateral; and (iii) to carry out the terms and provisions of this Section
4.14.  Each Domestic Loan Party acknowledges and agrees that Agent shall be
authorized at any time to provide a copy of this Agreement to any Pledged Issuer
as evidence that Agent has been given the foregoing power of attorney.  

(f)Each Domestic Loan Party recognizes that Agent may be unable to effect, or
may effect only after such delay which would adversely affect the value that
might be realized from the Pledged Equity Interest Collateral, a public sale of
all or part of the Pledged Equity Interest Collateral by reason of certain
prohibitions contained in the Securities Act or other applicable securities
legislation in any other applicable jurisdiction and may be compelled to resort
to one or more private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof.  Each Domestic Loan Party agrees that any such private sale may be at
prices and on terms less favorable to Agent or the seller than if sold at public
sales, and therefore recognizes and confirms that such private sales shall not
be deemed to have been made in a commercially unreasonable manner solely because
they were made privately.  Each Domestic Loan Party agrees that Agent has no
obligation to delay the sale of any such securities for the period of time
necessary to permit any Pledged Issuer of such securities to register such
securities for public sale under the Securities Act or other applicable
securities legislation in any other applicable jurisdiction.

(g)In the event that (x) any Domestic Loan Party shall acquire any Equity
Interests of any kind or nature in any new direct Subsidiary formed or acquired
by such Domestic Loan Party after the Closing Date), or (y) any stock dividend,
reclassification, readjustment or other change is made or declared in the
capital structure of any direct Subsidiary or any Domestic Loan Party acquires
or in any other manner receives additional shares of stock, membership/limited
liability company interests, partnership interests or other Equity Interests in
any Subsidiary, or any option included within the Pledged Equity Interest
Collateral with respect to the stock, membership/limited liability company
interests, partnership interests or other Equity Interests of

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any direct Subsidiary is exercised, then any and all such new Equity Interests
(together with all Related Equity Interest Rights associated therewith) so
acquired, other than any Excluded Property, and any and all such new,
substituted or additional Equity Interests (together with all Related Equity
Interest Rights associated therewith) issued by reason of any such change or
exercise to such Domestic Loan Party, other than any Excluded Property, shall
immediately and automatically become subject to this Agreement specifically
including this Section 4.14 and the pledge and grant of a security interest
created by each Domestic Loan Party hereunder and each Domestic Loan Party
hereby grants a security interest in any such future Equity Interests of any
Subsidiary (together with all Related Equity Rights associated therewith) other
than any Excluded Property, to Agent for the benefit of Secured Parties to
secure the Obligations.  Any and all certificates issued to such Domestic Loan
Party with respect to any such new, substituted or additional Equity Interests,
accompanied by duly executed instruments of transfer or assignments in blank,
shall be delivered to and held by Agent in the same manner as the Pledged Equity
Interest Collateral originally pledged hereunder.  Promptly upon the acquisition
by any Domestic Loan Party of any such new, substituted or additional Equity
Interests, Domestic Loan Parties shall deliver written notice of such new,
substituted or additional Equity Interests to Agent, which such written notice
shall include an updated and amended Schedule 4.14 to this Agreement, which
shall upon delivery be deemed to have amended and restated the previously
effective version of such Schedule 4.14.

(h)Until the earlier of (x) the time after the occurrence and during the
continuance of any Event of Default hereunder that Agent shall give notice in
writing to any Domestic Loan Party (which such notice shall be automatically
effective immediately upon such Domestic Loan Party’s receipt thereof) of the
exercise of Agent’s rights under this Section 4.14(h), or (y) the commencement
of any proceeding of the type described in clause (x) or clause (y) of
Section 10.7 hereof with respect to any Domestic Loan Party (in which case no
notice or other affirmative action shall be required by Agent, unless Agent
shall affirmatively elect at such time to forego the effectiveness of this
clause (y)) (a “Triggering Equity Event”), each Domestic Loan Party shall retain
the sole right to vote the Pledged Equity Interest Collateral belonging to it
and to exercise all Related Equity Interests Rights with respect to the Pledged
Equity Interest Collateral belonging to it for all purposes not in violation of
the terms hereof.  Upon any such Triggering Equity Event as to any Domestic Loan
Party, such Domestic Loan Party shall have no further rights to, and shall not,
exercise any such Related Equity Interest Rights with respect to the Pledged
Equity Interest Collateral belonging to it, and all such Related Equity Interest
Rights with respect to the Pledged Equity Interest Collateral belonging to it
shall be thereafter exercisable only by Agent (regardless of whether Agent shall
have taken title to such Pledged Equity Interest Collateral and/or otherwise
exercised any of its other rights and remedies with respect to such Pledged
Equity Interest Collateral and even prior to any such exercise).  Without
limiting the generality of the foregoing, with respect to any Pledged Issuer
that is a limited liability company or partnership, the Related Equity Interest
Rights which Agent may exercise upon exercise of its rights under this Section
4.14(h) shall include (i) the right to replace any “managing member” or
“manager” and/or any “general partner”, as applicable, of any such limited
liability company or partnership Pledged Issuer and/or to replace any one or
more of the members of any board of members/managers/partners/directors (or
similar board) that may at any time have any rights to manage and direct the
business and affairs of the applicable Pledged Issuer under its Organizational
Documents as in effect from time to time (including in any such case under this
clause (i), the right to replace the pledging Domestic Loan Party in any such
capacity, and each Domestic Loan Party

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hereby agrees that, notwithstanding anything to the contrary provided for in
Organizational Documents of any such Pledged Issuer, upon any exercise by Agent
of any such right under this clause (i) resulting in the replacement of such
Domestic Loan Party in any such capacity, such Domestic Loan Party shall
immediately and automatically be deemed to have resigned from such capacity
without the need of any further or affirmative action of such Domestic Loan
Party), and, if necessary in connection with the foregoing, the power to amend
the limited liability company operating agreement or partnership agreement, as
applicable, of any such limited liability company or partnership Pledged Issuer
to effectuate such replacement; and (ii) if the pledging Domestic Loan Party is
a general partner or managing member of any such limited liability company or
partnership Pledged Issuer, to act as such general partner or managing member of
any such Pledged Issuer with respect to any and all business matters relating to
the applicable Pledged Issuer and/or its property and businesses for all
purposes under the Organizational Documents of such Pledged Issuer and/or under
the applicable limited liability company or partnership laws of the jurisdiction
of organization of such Pledged Issuer.

(i)In furtherance of the foregoing and (a) for so long as this Agreement is in
effect and (b) until the Commitments have been terminated and the Obligations
have been Paid in Full, each Domestic Loan Party hereby irrevocably appoints
Agent, or Agent’s nominee or any other person whom Agent may designate, as such
Domestic Loan Party’s attorney in fact with full power of substitution and in
the name of such Domestic Loan Party, and hereby gives and grants to Agent an
irrevocable and exclusive proxy for and in such Domestic Loan Party’s name,
place and stead, to exercise under such power of attorney and/or under such
proxy any and all voting or other ownership and/or management rights and other
Related Equity Interest Rights with respect to the Pledged Equity Interest
Collateral of any Pledged Issuer belonging to it (including any such exercise of
any Related Equity Interest Rights with respect to any and all business matters
relating to any applicable Pledged Issuer and/or its property and businesses),
in each case exercisable only following (but at all times during the continuance
of) the occurrence and continuance of any Triggering Equity Event.  The power of
attorney and proxy granted and appointed in this Section 4.14(h)(i) shall
include the right to sign each Domestic Loan Party’s name (as a holder of any
Equity Interest of any Subsidiary and/or as a shareholder of or member or
partner in any applicable Pledged Issuer) to any consent, certificate or other
document relating to the exercise of any such voting or other ownership and/or
management rights and other Related Equity Interest Rights with respect to the
Pledged Equity Interest Collateral belonging to such Domestic Loan Party that
Applicable Law or the Organizational Documents of the applicable Pledged
Issuer(s) may permit or require, to cause the Pledged Equity Interest Collateral
belonging to such Domestic Loan Party to be voted and/or such other ownership
and/or management rights or other Related Equity Right to be exercised in
accordance with the preceding sentence.  Each Domestic Loan Party hereby
represents and warrants that there are no other proxies and powers of attorney
with respect to the Pledged Equity Interest Collateral of any Pledged Issuer
belonging to such Domestic Loan Party that such Domestic Loan Party may have
granted or appointed; and no Domestic Loan Party will give a subsequent proxy or
power of attorney or enter into any other voting agreement with respect to the
Pledged Equity Interest Collateral of any Pledged Issuer belonging to such
Domestic Loan Party and any attempt to do so shall be void and of no
effect.  Each Domestic Loan Party agrees that each Pledged Issuer shall be fully
protected in complying with any instructions given by Agent under such power of
attorney granted under this Section 4.14(h)(i) and/or recognizing and honoring
any exercise by Agent of such proxy granted under this Section 4.14(h)(i).  Each
Domestic Loan Party acknowledges and agrees that Agent shall be authorized at
any time to

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provide a copy of this Agreement to any Pledged Issuer as evidence that Agent
has been given the foregoing power of attorney and proxy.  The proxies and
powers of attorney granted by each Domestic Loan Party pursuant to this Section
4.14(h)(i) are coupled with an interest and are given to secure the performance
of the Obligations and shall continue and be irrevocable (a) for so long as this
Agreement is in effect and (b) until the Commitments have been terminated and
all of the Obligations have been Paid in Full.

(j)To the extent that Agent shall reasonably determine that any amendments to
the Organizational Documents of any Pledged Issuer that is a wholly-owned
Subsidiary of Holdings and its Subsidiaries are necessary in order for Agent to
be granted the collateral assignment, pledge and Liens in the Pledged Equity
Interest Collateral issued by such Pledged Issuer provided for herein, and/or to
exercise the rights and remedies, or to be granted and to exercise the proxies
and powers of attorney, provided for in herein (specifically including without
limitation under Sections 4.14(h) hereof) with respect to the Pledged Equity
Interest Collateral issued by such Pledged Issuer in accordance with the terms
hereof (whether because of any contrary provisions of such Organization
Documents or any requirement of the Applicable Laws governing corporations,
limited liability companies, partnerships or professional corporations (as
applicable) in the jurisdiction of organization of such Pledged Issuer, or
otherwise), each Domestic Loan Party shall, within fifteen (15) days of such
Domestic Loan Party’s receipt of Agent’s written request therefor (or such
longer period as may be agreed by the Agent, in Agent’s sole discretion), adopt
such amendments to such Organizational Documents of such Pledged Issuer as Agent
may reasonably request.  Domestic Loan Parties hereby further acknowledge and
agree that, with respect to any Subsidiary whose Equity Interests are owned only
by one or more Domestic Loan Parties, if and to the extent that any provision of
the Organizational Documents of any such Subsidiary should be deemed to be
inconsistent with or to prohibit the granting of the collateral assignment,
pledge and Liens to Agent by Domestic Loan Parties in the Pledged Equity
Interest Collateral issued by such Subsidiary provided for herein, or the
exercise of any of the rights and remedies of and/or proxies or powers of
attorney granted to Agent under this Section 4.14, such Organizational Documents
of such Pledged Issuer are hereby amended as necessary to allow for such grant
and to allow the full exercise by Agent of all such rights and remedies and/or
proxies or powers of attorney, and this Agreement shall constitute and be deemed
for all purposes and under all circumstances to be an amendment to any such
applicable Organizational Document of such Pledged Issuer.

4.15Agreements Regarding Korean Collateral.  

(a)Without limiting the generality of Section 4.2 and/or Section 7.12 hereof,
not more frequently than quarterly, (I) Agent may request, and promptly
following such request DNS Korea shall deliver, (x) updated schedules of DNS
Korea’s Receivables, and (y) updated schedules of DNS Korea’s machinery and
equipment and other “moveables” (as such term is used in Korean secured lending
practice), other than Inventory, and (II) following receipt of such updated
schedules, Agent may request, and promptly following such request DNS Korea
shall execute and deliver further and/or supplemental and/or updated security
agreements/assignments/instruments of pledge governed by Korean law regarding
DNS Korea’s Receivables and/or DNS Korea’s machinery and equipment and other
“moveables”; provided, that DNS Korea shall not be required to prepare or send
any notices to, or requests for waivers or consents from its customers relating
to any Receivables except as provided in clauses (b) and (c) below.  Subject to
the express

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provisions of the Closing Date Korean Yangdo-Dambo providing for exceptions to
the following, DNS Korea shall “mark” DNS Korea’s machinery and equipment and
other “moveables” as necessary to perfect and protect the priority of Agent’s
Liens in such Collateral.

(b)Upon the occurrence and during the continuance of a Specified Event of
Default, Agent may request, and promptly following such request, DNS Korea shall
prepare, execute and deliver undated but stamped Korean Law Customer Notices
corresponding to the Receivables of DNS Korea covered by the Korean Law
Guarantee and Security Documents then in effect. Agent may deliver such any
Korean Law Customer Notices after receipt thereof.  

(c)Upon the occurrence and during the continuance of a Specified Event of
Default, upon Agent’s request, DNS Korea shall use all commercially reasonable
efforts to obtain waivers/consents from each of its Customers with respect to
any restrictions contained in the contracts, purchase orders, or invoices
between DNS Korea and such Customer on the assignment of DNS Korea’s Receivables
from such Customer that are legally enforceable against a collateral
assignment/assignment of such Receivables in favor of a secured creditor (any
Receivables of DNS Korea, if and to the extent covered by such a legally
enforceable restriction against a collateral assignment in favor of a secured
creditor, an “Excluded Korean Receivable”).

(d)Notwithstanding anything to the contrary provided for herein or in any Other
Document, in the event that, for whatever reason, the Inventory of DNS Korea
shall no longer be subject to the Permitted Korean Export-Import Bank
Indebtedness Liens (either because the Permitted Korean Export-Import Bank
Indebtedness has been satisfied, because the Export-Import Bank of Korea shall
have agreed to release such Permitted Korean Export-Import Bank Indebtedness
Liens as to the Inventory of DNS Korea, or for any other reason), Loan Parties
shall (x) promptly, and in any event, within ten (10) Business Days, notify
Agent of such occurrence, and (y) within forty-five (45) days of such
occurrence, take all actions reasonably requested by Agent and Ex-Im Agent to
create valid, enforceable, perfected, first-priority Liens in favor of Agent and
Ex-Im Agent securing the Obligations on all of the Inventory of DNS Korea.

ARTICLE VREPRESENTATIONS AND WARRANTIES.

Each Loan Party represents and warrants as follows:

5.1Authority.  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 (x) such
enforceability may be limited by any Insolvency Law and/or (y) qualified in a
legal opinion delivered to the Agent under Article VIII.  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, and are not in contravention of the terms of such Loan
Party’s Organizational Documents, (b) will not conflict with or violate any
Applicable Law, 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 those Consents set forth on Schedule 5.1
hereto, all of which will have

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been duly obtained, made or compiled prior to the Closing Date and which are in
full force and effect, and except for the Korean Law Customer Notices, and (d)
will not conflict with or be in contravention of, 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 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 the KeyMile Acquisition Documents.

5.2Formation and Qualification.

(a)Each Company is duly incorporated or formed, as applicable, and, except as
permitted under Section 8.3(i) hereof, is continuing in existence and, where
such concept is relevant, in good standing as a legal entity under the laws of
its jurisdiction of incorporation listed on Schedule 5.2(a) hereto and is
qualified to do business and is in good standing in the states listed on
Schedule 5.2(a) hereto which constitute all states in which qualification and
good standing are necessary for such Company to conduct its business and own its
property and where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect on such Company.  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.

(b)As of the Closing Date, the only Subsidiaries of each Loan Party are listed
on Schedule 5.2(b) hereto.

5.3Survival of Representations and Warranties.  All representations and
warranties of such Loan Party set forth in this Agreement and the Other
Documents to which it is a party shall be true in all material respects (except
in the case of any such representation or warranty that is qualified as to
materiality or as to the occurrence of (or the absence of the occurrence of) a
Material Adverse Effect (specifically including without limitation the
representations set forth in Section 5.5(d) hereof), which shall be true and
correct in all respects) at the time of such Loan Party’s execution of this
Agreement and the Other Documents to which it is a party, and shall survive the
execution, delivery and acceptance thereof by the parties thereto and the
closing of the transactions described therein or related thereto.

5.4Tax Returns.  Each Loan Party’s federal tax identification number or
equivalent under Applicable Law is set forth on Schedule 5.4 hereto.  Each
Company has filed all federal, state and material local tax returns and other
reports each is required by law to file and has paid all taxes, assessments,
fees and other governmental charges that are due and payable under such returns
and other reports and all other material Taxes, assessments, fees and other
governmental charges that are due and payable, in each case except to the extent
Properly Contested.  The provision for Taxes on the books of each Company 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 material deficiency or
additional material assessment in connection therewith not provided for on the
books of the Companies.

5.5Financial Statements.

(a)[RESERVED]

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(b)The cash flow and balance sheet projections of DZSI and its Subsidiaries on a
Consolidated Basis on a quarterly basis for fiscal years 2019 and 2020, and on
an annual basis for fiscal year 2021, copies of which have been delivered to
Agent (the “Initial Projections”) were prepared by the Chief Financial Officer
of DZSI, are based on underlying assumptions which provide a reasonable basis
for the projections set forth therein and reflect Loan Parties’ judgment based
on present circumstances of the most likely set of conditions and course of
action for the projected period.

(c)The (x) audited consolidated balance sheets of DZSI and its Subsidiaries, and
such other Persons described therein, as of December 31, 2017, and the related
audited consolidated statements of income, changes in stockholder’s equity, and
cash flows for the fiscal year ended on such date, all accompanied by reports
thereon containing unqualified opinions by independent certified public
accountants, and (y) interim management-prepared unaudited consolidated balance
sheets of DZSI and its Subsidiaries, and such other Persons described therein,
as of December 31, 2018, and the related interim management-prepared unaudited
statements of income and cash flows for the respective quarterly and year to
date periods ended on each such date, copies of which have been delivered to
Agent, have been prepared in accordance with GAAP, consistently applied (except
for changes in application to which such accountants have performed pre-issuance
reviews, and subject to, in the case of the unaudited interim financial
statements, normal year-end adjustments, the lack of footnote disclosures and
non-material quarter-end adjustments) and present fairly in all material
respects the financial position of DZSI and its Subsidiaries on a Consolidated
Basis at such dates and the results of their operations for such periods.  To
the best of Loan Parties’ knowledge, the (A) “Financial Statements” of KeyMile
and its Subsidiaries as of December 31, 2017, as referenced in Section 9.6 to
the KeyMile Purchase Agreement and attached as Exhibit 9.6-1 of the KeyMile
Purchase Agreement, fairly present, in all material respects, the assets and
liabilities, financial condition and results of operation of each of KeyMile and
its Subsidiaries (as applicable) as of, and for the period ended on December 31,
2017, and the management accounts for KeyMile and its Subsidiaries for the
period from January 1, 2018 through August 31, 2018, as referenced in Section
9.6 to the KeyMile Purchase Agreement and attached as Exhibit 9.6-2 of the
KeyMile Purchase Agreement, have been prepared generally in accordance with IFRS
(with certain exceptions, in particular those set out in Exhibit 9.3-3 of the
KeyMile Purchase Agreement) and fairly represent the assets and liabilities of
KeyMile and its Subsidiaries as at the dates and in respect of the periods to
which they relate.

(d)Since (i) September 30, 2018 with respect to KeyMile and (ii) December 31,
2017, with respect to all other Loan Parties, there has not occurred any event,
condition or state of facts which could reasonably be expected to have a
Material Adverse Effect.

(e)DZSI and its Subsidiaries on a Consolidated Basis have no material
Indebtedness or other material liabilities, direct or contingent, except to the
extent (i) set forth in the most recent of (A) the financial statements
referenced in Sections 5.5(a), 5.5(b) or 5.5(c) and (B) the financial statements
most recently delivered pursuant to Sections 9.7, 9.8 or 9.9 or (ii)
Indebtedness under the terms of this Agreement and the Indebtedness under the
KeyMile Seller Working Capital Credit Facility.

5.6Entity Names.  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

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except as set forth on Schedule 5.6 hereto, 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, except as set forth on Schedule 5.6.

5.7O.S.H.A.; Environmental Compliance; Flood Insurance.  Other than in instances
in which any noncompliance, failure or other circumstances are not reasonably
likely to have a Material Adverse Effect:

(a)Each Company is in compliance 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
Company or relating to its business, assets, property, leaseholds or equipment
under any such laws, rules or regulations.

(b)Each Company has been issued all required 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.

(c) (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
Company, 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
Company, except for such underground storage tanks or polychlorinated biphenyls
that are present in compliance with Environmental Laws; (iii) the Real Property
owned, leased or occupied by any Company has never been used by any Company to
dispose of Hazardous Materials, except as authorized by Environmental Laws; and
(iv) no Hazardous Materials are managed by Company on any Real Property
including any premises owned, leased or occupied by any Company, 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 Company or of its tenants.

(d) All Real Property owned by Companies 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 Company in accordance
with prudent business practice in the industry of such Company.  Each Company
has taken all actions required under the Flood Laws and/or 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 located upon any Real
Property that will be subject to a Mortgage in favor of Agent, for the benefit
of Lenders, and, to the extent required, obtaining flood insurance for such
property, structures and contents prior to such property, structures and
contents becoming Collateral.

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

(a)(i) After giving effect to the Transactions, DZSI and its Subsidiaries on a
consolidated basis are and will be solvent, is and will be able to pay its debts
as they mature, has

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and will have capital sufficient to carry on its business and all businesses in
which it is about to engage, (ii) as of the Closing Date, the fair present
saleable value of the assets of DZSI and its Subsidiaries on a consolidated
basis, calculated on a going concern basis, is in excess of the amount of the
liabilities of DZSI and its Subsidiaries on a consolidated basis, and (iii)
subsequent to the Closing Date, the fair saleable value of the assets of DZSI
and its Subsidiaries on a consolidated basis (calculated on a going concern
basis) will be in excess of the amount of the liabilities of DZSI and its
Subsidiaries on a consolidated basis.

(b)Except as set forth on Schedule 5.8(b) hereto, no Company has any pending or
threatened 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 or to otherwise have a Material Adverse
Effect.

(c)No Company 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 Company in material violation of any order
of any court, Governmental Body or arbitration board or tribunal.

(d)No Company or any member of the Controlled Group maintains or is required to
contribute to any Plan other than those listed on Schedule 5.8(e) hereto.  Each
Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Applicable Laws. (i) Each Company 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 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 Company 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 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 Plan exceeds the present value of the
accrued benefits and other liabilities of such Plan and neither any Company 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 Company 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 which could reasonably be expected to have a Material
Adverse Effect, and no fact exists which could give rise to any such liability;
(vii) neither any Company nor any member of the Controlled Group nor any
fiduciary of, nor any trustee to, any Plan, has engaged in a “prohibited
transaction” described in Section 406 of ERISA or Section 4975 of the Code which
could reasonably be expected to have a Material Adverse Effect nor taken any
action which would constitute or result in a Termination Event with respect to
any such Plan which is subject to ERISA; (viii) no Termination Event has
occurred or is reasonably expected to occur; (ix) there exists no event
described in Section 4043 of ERISA, for which the thirty (30) day notice period
has not been waived; (x) neither any

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Company nor any member of the Controlled Group has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA; (xi) neither any Company
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; (xii) neither any Company 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 (xiii) 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 which could reasonably be expected to have a
Material Adverse Effect.

5.9Intellectual Property. All Intellectual Property owned or utilized by any
Company that is material to the operation of the businesses and/or the revenues
of such Company: (a) is set forth on Schedule 5.9 hereto (as such Schedule may
be updated from time to time in accordance with this Agreement); (b) is valid
and has been duly registered or filed with all appropriate Governmental Bodies;
and (c) constitutes all of the intellectual property rights which are material
to the operation of its businesses and/or its revenues.  There is no objection
to, pending challenge to the validity of, or proceeding by any Governmental Body
to suspend, revoke, terminate or adversely modify, any such material
Intellectual Property and no Company is aware of any grounds for any challenge
or proceedings, except as set forth on Schedule 5.9 hereto (as such Schedule may
be updated from time to time in accordance with this Agreement).  All such
material Intellectual Property owned or held by any Company consists of original
material or property developed by such Company or was lawfully acquired by such
Company from the proper and lawful owner thereof.  Each of such material
Intellectual Property items has been maintained so as to preserve the value
thereof from the date of creation or acquisition thereof.

5.10Licenses and Permits.  Each Company (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 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 procure such
licenses or permits could reasonably be expected to have a Material Adverse
Effect.

5.11[RESERVED].  

5.12No Default.  No Default or Event of Default has occurred and is continuing.

5.13No Burdensome Restrictions.  No Company is party to any contract or
agreement the performance of which could reasonably be expected to have a
Material Adverse Effect.  Each Company 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 Company 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.

5.14No Labor Disputes.  No Company is involved in any material labor dispute;
there are no strikes or walkouts or union organization of any Company’s
employees threatened or in

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existence and no labor contract is scheduled to expire during the Term other
than as set forth on Schedule 5.14 hereto.

5.15Margin Regulations.  No Company 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.

5.16Investment Company Act.  No Company 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.

5.17Delivery of DNI Agreements.  Agent have received true, complete, and correct
copies of (i) the agreements evidencing and/or governing the Permitted DNI
Subordinated Loans, including the DNI Closing Date Loan Amendment and (ii) the
DNI/DNS Korea Guarantee Fee Agreement.  None of such documents and agreements
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 and, with respect to any such amendment,
supplement, or waiver occurring after the Closing Date, in accordance with the
terms of this Agreement.

5.18Delivery of KeyMile Acquisition Documents.  Agent have received true,
correct and complete copies of the KeyMile Acquisition Documents, including the
KeyMile Seller Working Capital Facility Agreement and the KeyMile Seller Working
Capital Facility Guaranty, including as to each such agreement or document all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any, and all amendments thereto, waivers relating thereto
and other side letters or agreements affecting the terms thereof.  None of
KeyMile Acquisition Documents, including the KeyMile Seller Working Capital
Facility Agreement and the KeyMile Seller Working Capital Facility Guaranty, 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 and, with respect to any such amendment,
supplement, or waiver occurring after the Closing Date, in accordance with the
terms of this Agreement.  Each of the representations made by each Loan Party
that is a party to the KeyMile Acquisition Documents was true and correct in all
material respects on January 3, 2019.

5.19Swaps.  No Company is a party to, nor will it be a party to, any swap
agreement whereby such Company 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.

5.20Business and Property of Loan Parties.

(a)Upon and after the Closing Date, the Companies (excluding ZTI, Premisys,
Zhone Technologies, Paradyne Networks, Paradyne Corporation and DNS) do not
propose to engage in any business other than being a global provider of network
access solutions and communications equipment for service provider and
enterprise networks and activities necessary to conduct the

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foregoing.  On the Closing Date, each Company will own all the property and/or
possess all of the rights and Consents reasonably necessary for the conduct of
the business of such Loan Party.

(b)None of ZTI, Premisys, Zhone Technologies, Paradyne Networks, Paradyne
Corporation, and DNS (i) engages in any business or other commercial activities,
(ii) owns any assets or property, (iii) is liable with respect to any
Indebtedness or material Contractual Obligations, or (iv) has granted any Liens
over any of its assets or property, in any such case under clauses (i) through
(iv) other than: (A) ownership of the Equity Interests of its Subsidiaries
existing on the Closing Date and formed or acquired thereafter in accordance
with the Agreement, and, in the case of Paradyne Corporation, ownership of
Intellectual Property, (B) the maintenance of its corporate existence, and
activities and contractual rights incidental thereto and incidental to its
status as a holding company; (C) guarantee obligations in favor of Secured
Parties with respect to the Obligations, (D) the incurrence of Indebtedness and
guarantee obligations and performance of its obligations under the KeyMile
Working Capital Facility Guaranty as in effect on the Closing Date or as amended
in accordance with the provisions of this Agreement, and (E) the incurrence of
obligations and liabilities (including indemnification obligations and
liabilities) under the KeyMile Acquisition Documents as in effect on the Closing
Date or as amended in accordance with the provisions of this Agreement.

(c)[RESERVED].

(d)No Dormant Subsidiary (i) renders any services to any Customer (other than
another Company) that results in the creation of any Receivable or otherwise
currently engages in any business of any kind (other than with any other
Company), or (ii) owns any property or assets (other than any asserts of
property of de minimus value, which may include the Equity Interests of any
other Dormant Subsidiary).

(e)As of the Closing Date, there are no Tier II Material Subsidiaries or Tier I
Material Subsidiaries.

5.21Ineligible Securities.  Loan Parties do not intend to use and shall not use
any portion of the proceeds of the Advances, directly or indirectly, to purchase
during the underwriting period, or for 30 days thereafter, Ineligible Securities
being underwritten by a securities Affiliate of Agent or any Lender.

5.22Equity Interests.  The authorized and outstanding Equity Interests of each
Loan Party and each issuer of Pledged Equity Interest Collateral (collectively,
the “Disclosure Parties”), and each legal and beneficial holder thereof as of
the Closing Date, are as set forth on Schedule 5.22(a) hereto (as such Schedule
may be updated from time to time in accordance with this Agreement).  All of the
Equity Interests of each Disclosure 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 5.22(b) (as such Schedule may be
updated from time to time in accordance with this Agreement), there are no
subscriptions, warrants, options, calls, commitments, rights or agreement by
which any Disclosure Party or any of the shareholders of any Disclosure 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

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respect to the Equity Interests of Disclosure Parties.  Except as set forth on
Schedule 5.22(c) (as such Schedule may be updated from time to time in
accordance with this Agreement), Disclosure 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.

5.23Commercial Tort Claims.  No Loan Party has any commercial tort claims except
as set forth on Schedule 5.23 hereto (as such Schedule may be updated from time
to time in accordance with this Agreement).

5.24Letter of Credit Rights.  No Loan Party has any letter of credit rights not
constituting supporting obligations except as set forth on Schedule 5.24 hereto
(as such Schedule may be updated from time to time in accordance with this
Agreement).

5.25Material Contracts.  Schedule 5.26 hereto sets forth all Material Contracts
of Loan Parties as of the Closing Date.  All Material Contracts are in full
force and effect and no material defaults currently exist thereunder.  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.

5.26Affiliate Transactions.  Except as permitted by Section 7.10 hereof, no
Company nor any of its Subsidiaries is a party to or bound by any agreement or
arrangement (whether oral or written) to which any Affiliate of any Company or
any Subsidiary of any Company is a party.

5.27Certificate of Beneficial Ownership.  The Certificate of Beneficial
Ownership executed and delivered to Agent and Lenders for each Loan Party on or
prior to the date of this Agreement, as updated from time to time in accordance
with this Agreement, is accurate, complete and correct as of the date hereof and
as of the date any such update is delivered.  Each Loan Party acknowledges and
agrees that the Certificate of Beneficial Ownership is one of the Other
Documents.

5.28Disclosure.  No representation or warranty made by any Loan Party in this
Agreement, the Other Documents, the Ex-Im Subfacility Credit Agreement, or the
Ex-Im Subfacility Other Documents, or in any financial statement, report,
certificate or any other document delivered in connection herewith or therewith
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements herein or therein not misleading.  There
is no fact known to any Loan Party or which reasonably should be known to such
Loan Party which such Loan Party has not disclosed to Agent in writing with
respect to the KeyMile Acquisition or the Transactions which could reasonably be
expected to have a Material Adverse Effect.

ARTICLE VIAFFIRMATIVE COVENANTS.

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

6.1Compliance with Laws.  Comply with all Applicable Laws with respect to the
Collateral or any part thereof or to the operation of such Company’s business
the non-compliance

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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 Law(s) pursuant to another
standard).

6.2Conduct of Business and Maintenance of Existence and Assets.  Subject to
Section 8.3(i) hereof, (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), including all Intellectual
Property and take all commercially reasonable actions necessary to enforce and
protect the validity of any intellectual property right or other right included
in the Collateral; (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, or under any Applicable Law.

6.3Books and Records.  Keep proper books of record and account in which full,
true and correct entries 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 consistently applied in
the opinion of such independent public accountant as shall then be regularly
engaged by Companies.

6.4Payment of Taxes.  Pay, when due, all Taxes, assessments and other Charges
lawfully levied or assessed upon such Company 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.  If any Tax by any Governmental Body is or may be imposed on or as a
result of any transaction between any Company and Agent or any Lender which
Agent or any Lender may be required to withhold or pay or if any Taxes,
assessments, or other Charges remain unpaid after the date fixed for their
payment, or if any claim is made which, in the opinion of Agent, may possibly
create a valid Lien on the Collateral, Agent may without prior notice (but as
disclosed on the next statement of account delivered under Section 2.10 hereof)
to any Loan Party pay the taxes, assessments or other Charges and each Company
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 Company has Properly Contested those taxes, assessments or Charges;
provided that Agent shall not make any payment in respect of the taxes
underlying the state tax lien in Florida against DZSI referenced in Section
8.3(d) prior to the deadline provided for in such Section 8.3(d) with respect to
the termination and satisfaction of such state tax lien.  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 Companies shall provide 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 Companies’ credit and Agent shall retain its security interest in
and Lien on any and all Collateral held by Agent.

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6.5Financial Covenants.

(a)Fixed Charge Coverage Ratio. Cause Loan Parties on a Consolidated Basis to
maintain as of the end of each fiscal quarter set forth below, a Fixed Charge
Coverage Ratio of not less than the amount set forth below for the four (4)
fiscal quarter period ended as of the end of such fiscal quarter:

 

Fiscal Quarter Ending

Minimum Fixed Charge Coverage Ratio

March 31, 2019

1.10 to 1.00

June 30, 2019

1.10 to 1.00

September 30, 2019

1.10 to 1.00

December 31, 2019

1.25 to 1.00

March 31, 2020

1.50 to 1.00

June 30, 2020

1.50 to 1.00

September 30, 2020

1.75 to 1.00

December 31, 2020

1.75 to 1.00

March 31, 2021

1.75 to 1.00

June 30, 2021

2.00 to 1.00

September 30, 2021

2.00 to 1.00

December 31, 2021, and each fiscal quarter ending thereafter

2.00 to 1.00

 

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(b)Leverage Ratio.  Cause Loan Parties on a Consolidated Basis to maintain as of
the end of each fiscal quarter set forth below, a Leverage Ratio of not greater
than the amount set forth below for the four (4) fiscal quarter period ended as
of the end of such fiscal quarter:

 

Fiscal Quarter Ending

Maximum Leverage Ratio

March 31, 2019

4.50 to 1.00

June 30, 2019

4.25 to 1.00

September 30, 2019

4.25 to 1.00

December 31, 2019

3.25 to 1.00

March 31, 2020

3.25 to 1.00

June 30, 2020

3.00 to 1.00

September 30, 2020

2.50 to 1.00

December 31, 2020

2.25 to 1.00

March 31, 2021

2.25 to 1.00

June 30, 2021

2.00 to 1.00

September 30, 2021

2.00 to 1.00

December 31, 2021, and each fiscal quarter ending thereafter

2.00 to 1.00

 

(c)Liquidity.  Cause (x) Borrowers to maintain at all times Liquidity of at
least $6,000,000, consisting of at least $3,000,000 in Undrawn Availability and
at least $3,000,000 in Qualified Cash, and (y) the Foreign Subsidiaries of DZSI
to maintain at all times Foreign Cash Liquidity of at least $3,000,000 in the
aggregate.

(d)Cure Provisions.  

(i)Notwithstanding any provision to the contrary set forth in Sections 6.5(a)
and 6.5(b) or otherwise in this Agreement, in the event that Loan Parties fail
to comply with the requirements of Sections 6.5(a) or 6.5(b) as of and/or for
any fiscal measurement period ending on the last day of any fiscal quarter (each
an “Applicable Quarter”), until the tenth (10th) Business Day after the day on
which the Quarterly Statements for such Applicable Quarter are required to be
delivered pursuant to Section 9.8 (such ten (10) Business Day period, the “Cure
Period”), DZSI shall have the right (the “Cure Right”) to receive (directly or
indirectly) a Specified Equity Contribution, which Specified Equity Contribution
shall be included in the calculation of EBITDA solely for purposes of
determining compliance with the Fixed Charge Coverage Ratio covenant set forth
in Section 6.5(a) above for the applicable fiscal measurement period ending on
the last day

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of such Applicable Quarter and the Leverage Ratio covenant set forth in Section
6.5(b) above as of the last day of such Applicable Quarter and for applicable
subsequent fiscal measurement periods/measurement date relevant to Section
6.5(a) and (b) which include such Applicable Quarter; provided that: (i) no
later than ten (10) Business Days after the date on which the Quarterly
Financials for the Applicable Quarter are required to be delivered pursuant to
Section 9.8 hereof, the Net Cash Proceeds of the Specified Equity Contribution
are actually received by DZSI and remitted to Agent for application to the
Obligations as required under Section Error! Reference source not found., (ii)
such Net Cash Proceeds of the Specified Equity Contribution do not exceed the
aggregate amount necessary to add to EBITDA (in any such case, the “Cure
Amount”) to cure the Event of Default arising from the applicable failure to
comply with Section 6.5(a) and/or (b) (for the avoidance of doubt, if Loan
Parties fail to comply with the requirements of both Sections 6.5(a) and 6.5(b)
above, the Specified Equity Contribution shall be in an amount required to cause
Loan Parties to be in compliance with both Sections 6.5(a) and 6.5(b) above),
(iii) in each four (4) consecutive fiscal quarter period, there shall be at
least two (2) fiscal quarters in respect of which no Specified Equity
Contribution is made, (iv) no Specified Equity Contribution shall be made with
respect to consecutive fiscal quarters, (v) not more than four (4) Specified
Equity Contributions shall be made during the Term, and (vi) the increase to
EBITDA and repayment of the Obligations in connection with the proceeds of any
Specified Equity Contributions be disregarded for all calculations under this
Agreement (including any covenant or other provision herein that is subject to
compliance with a Leverage Ratio or Fixed Charge Coverage Ratio) except for
purposes of determining compliance with the Leverage Ratio and the Fixed Charge
Coverage Ratio under Sections 6.5(a) and 6.5(b) above as of any relevant
measurement date/for any relevant measurement period including the Applicable
Quarter.

If, after giving effect to the addition of the Cure Amount to EBITDA for the
Applicable Quarter, the Loan Parties are in compliance with the financial
covenants set forth in this Section 6.5(a) and (b) for such measurement period,
the Loan Parties shall be deemed to have satisfied the requirements of this
Section 6.5(a) and (b) for such measurement period with the same effect as
though there had been no such failure to comply with this Section 6.5(a) and/or
(b), and the applicable Default and Event of Default otherwise arising from the
original failure to comply with this Section 6.5(a) and/or (b) for the
Applicable Quarter shall be deemed not to have occurred for purposes of this
Agreement.  Upon receipt by Agent of written notice, prior to the expiration of
the Cure Period referred to above (the “Cure Deadline”), that the Loan Parties
intend to exercise the Cure Right, Agent and the Lenders shall not be permitted
to accelerate the Obligations, impose the Default Rate or Letter of Credit
Default Rate or to exercise any other rights or remedies against the Collateral
on the basis of a failure to comply with the requirements of this Section 6.5(a)
and/or (b) until such failure is not cured pursuant to the exercise of the Cure
Right on or prior to the Cure Deadline; provided, that, a Default shall be
deemed to exist under this Agreement for all other purposes (including Section
8.2) unless and until the Cure Right is exercised on or prior to the Cure
Deadline.

(ii)Notwithstanding any provision to the contrary set forth in Section 6.5(c) or
otherwise in this Agreement, in the event that Loan Parties fail to comply with
the requirements of Sections 6.5(c) as of the close of business on any day, then
Loan Parties

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shall, no later than the fifth (5th) Business Day following the date of the
occurrence of such violation of Section 6.5(c) (the “Liquidity Cure Deadline”),
cause one or more of the Foreign Subsidiaries of DZSI to repatriate (by means of
dividends and distributions from the applicable respective Foreign Subsidiaries
to the applicable respective Domestic Loan Parties) Surplus Foreign Cash of such
Foreign Subsidiaries to be applied to the repayment of the Revolving Advances
and Swing Loans hereunder and the Ex-Im Revolving Advances and Ex-Im Swing Loans
under the Ex-Im Subfacility Credit Agreement (ratably as between the Revolving
Advances and Swing Loans hereunder on the one hand (and as among such, subject
to Section 11.5, in accordance with Section 2.20(a)(i) hereof), and the Ex-Im
Revolving Advances and Ex-Im Swing Loans under the Ex-Im Subfacility Credit
Agreement on the other (and as among such, subject to Section 11.5 of the Ex-Im
Subfacility Credit Agreement, in accordance with Section 2.20(a)(i) of the Ex-Im
Subfacility Credit Agreement)) and/or deposited into the deposit accounts of
Domestic Loan Parties as necessary to cause the Loan Parties to once again be in
compliance with the requirements of Section 6.5(c).  If in any such case Loan
Parties shall comply with their obligations under the foregoing sentence and,
after giving effect to such repatriation of Surplus Foreign Cash and to the
repayment of the Domestic Obligations and Ex-Im Obligations and/or deposits into
the deposit accounts of Domestic Loan Parties as provided for in the foregoing
sentence, the Loan Parties are in compliance with the requirements set forth in
Section 6.5(c), the Loan Parties shall be deemed to have satisfied the
requirements of Section 6.5(c) at all times prior to the date of such
repatriation and application with the same effect as though there had been no
such failure to comply with Section 6.5(c), and the applicable Default and Event
of Default otherwise arising from the original failure to comply with Section
6.5(c) shall be deemed not to have occurred for purposes of this
Agreement.  Upon receipt by Agent of written notice, prior to the applicable
Liquidity Cure Deadline, that the Loan Parties intend to comply with their
obligations under this Section 6.5(d)(ii) with respect to any violation of
Section 6.5(c), Agent and the Lenders shall not be permitted to accelerate the
Obligations, impose the Default Rate or Letter of Credit Default Rate or to
exercise any other rights or remedies against the Collateral on the basis of a
failure to comply with the requirements of this Section 6.5(c) until such
failure is not cured pursuant to this Section 6.5(d)(ii) prior to the Liquidity
Deadline; provided, that, a Default shall be deemed to exist under this
Agreement for all other purposes (including Section 8.2) unless and until such
failure is cured pursuant to this Section 6.5(d)(ii) prior to the Liquidity
Deadline

6.6Insurance.  

(a)(i) Keep all its insurable properties and properties in which such Company
has an interest insured against the hazards of fire, flood, sprinkler leakage,
those hazards covered by extended coverage insurance and such other hazards, and
for such amounts, as is customary in the case of companies engaged in businesses
similar to such Company’s including business interruption insurance; (ii)
maintain a bond in such amounts as is customary in the case of companies engaged
in businesses similar to such Company 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 Company 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

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injury, death or property damage suffered by others; (iv) maintain all such
worker’s compensation or similar insurance as may be required under the
Applicable Laws of any state or jurisdiction in which such Company is engaged in
business; and (v) provide Agent with (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) other than with respect to KeyMile and
its Subsidiaries, appropriate lender 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, other than with respect to KeyMile and its Subsidiaries,
(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
Company to make payment for such loss to Agent and not to such Company and Agent
jointly.  If any insurance losses are paid by check, draft or other instrument
payable to any Company and Agent jointly, Agent may endorse such Company’s name
thereon and do such other things as Agent may deem advisable to reduce the same
to cash.

(b)Each Domestic Loan Party shall take all actions required under the Flood Laws
and/or 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 in favor of
Agent, for the benefit of Lenders, 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)Following the occurrence and continuance of an Event of Default, Agent is
hereby authorized to adjust and compromise claims under insurance coverage as to
any Loan Party referred to in Sections 6.6(a)(i) and (iii) and 6.6(b)
above.  All loss recoveries received by Agent under any such insurance as to any
Loan Party shall be applied to the Obligations in accordance with Section
2.20(b)(i) hereof. 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.

6.7Payment of Indebtedness and Leasehold Obligations.  Pay, discharge or
otherwise satisfy (a) at or before maturity (subject, where applicable, to
specified grace periods) all its Indebtedness, except when the failure to do so
could not reasonably be expected to have a Material Adverse Effect or when the
amount or validity thereof is currently being Properly Contested, subject at all
times to any applicable subordination arrangement in favor of Lenders and (b)
when due its 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 subject to expiration of such
lease or termination of thereof by a Loan Party or any Subsidiary thereof.

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6.8Environmental Matters.

(a)Other than in instances in which any noncompliance, failure or other
circumstances which are not reasonably likely to have a Material Adverse Effect,
ensure that the Real Property owned or leased by any Company 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 by any Company in compliance with Environmental Laws.

(b)[RESERVED].

(c)Respond promptly to any material 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 Company shall fail to respond promptly to any material Hazardous Discharge
or Environmental Complaint or any Company shall fail to otherwise comply with
any of the requirements of any Environmental Laws to the extent such
noncompliance would be reasonably likely to have a Material Adverse Effect,
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 Real Property owned or leased by any Company (or
authorize third parties to enter onto such Real Property) and take such actions
as Agent (or such third parties as directed by Agent) deem reasonably necessary
or advisable, to remediate, remove, mitigate or otherwise manage with any such
Hazardous Discharge or Environmental Complaint.  All reasonable 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 Companies,
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 Company.

(d)Promptly upon the written request of Agent from time to time, Loan Parties
shall provide Agent, at Loan Parties’ expense, with an environmental site
assessment or environmental compliance audit report prepared by an environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with a
reasonable degree of certainty the existence of a material Hazardous Discharge
and the potential costs in connection with abatement, remediation and removal of
any Hazardous Materials found on, under, at or within the Real Property owned or
leased by any Company.  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 $100,000,
Agent shall have the right to require Companies to post a bond, letter of credit
or other security reasonably satisfactory to Agent a to secure payment of these
costs and expenses.

6.9Standards of Financial Statements.  Cause all financial statements referred
to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, and 9.13 hereof as to which GAAP
is applicable to be complete and correct in all material respects (subject, in
the case of interim financial statements, to normal year-end audit adjustments)
and to be prepared in reasonable detail and in accordance

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with GAAP applied consistently throughout the periods reflected therein (except
as disclosed therein and agreed to by such reporting accountants or officer, as
applicable).

6.10Federal Securities Laws.  Promptly notify Agent in writing if any Company or
any of their Subsidiaries after the Closing Date (a) is required to file
periodic reports under the Exchange Act (other than with respect to DZSI, which
is required to file periodic reports under the Exchange Act as of the Closing
Date), (b) registers any securities under the Exchange Act or (c) files a
registration statement under the Securities Act.

6.11Execution 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 reasonably request, in order that the full intent
of this Agreement may be carried into effect.

6.12Exercise of Rights.  To the extent commercially reasonable, or necessary to
remedy any Event of Default hereunder or under any Other Document and/or under
the Ex-Im Subfacility Credit Agreement or under any Ex-Im Subfacility Other
Document, or necessary to prevent or remedy the occurrence of any Material
Adverse Effect, enforce its applicable rights under the KeyMile Acquisition
Agreements and any indemnification provisions thereof and/or indemnification
agreement executed in connection therewith and pursue all remedies available to
it in connection with the foregoing with diligence and in good faith in
connection with the enforcement of any such rights.

6.13Government Receivables.  Upon the request of Agent, 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 with respect to, and deliver to Agent appropriately
endorsed, any instrument or chattel paper connected with any Receivable 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.

6.14Membership / Partnership Interests.  Designate and cause all of its Domestic
Subsidiaries that are limited liability companies or partnerships to designate
(a) their limited liability company membership interests or partnership
interests as the case may be, as securities as contemplated by the definition of
“security” in Section 8-102(15) and Section 8-103 of Article 8 of the Uniform
Commercial Code, and (b) certificate such limited liability company membership
interests and partnership interests, as applicable.  

6.15Keepwell.  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 6.15 for the maximum amount of
such liability that can be hereby incurred without rendering its obligations
under this Section 6.15, or otherwise under this Agreement or any Other
Document, voidable under Applicable Law, including Applicable Law relating to
fraudulent conveyance or

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fraudulent transfer, and not for any greater amount).  The obligations of each
Qualified ECP Loan Party under this Section 6.15 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 6.15 constitute, and this Section 6.15 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 for all purposes of
Section 1a(18(A)(v)(II) of the CEA.

6.16Certificate of Beneficial Ownership and Other Additional
Information.  Provide to Agent and the Lenders: (i) as may be requested by Agent
or any Lender from time to time, confirmation of the accuracy of the information
set forth in the most recent Certificate of Beneficial Ownership provided to the
Agent and Lenders; (ii) a new Certificate of Beneficial Ownership, in form and
substance acceptable to Agent and each Lenders, when the individual(s) to be
identified as a Beneficial Owner have changed; and (iii) such other information
and documentation as may reasonably be requested by Agent or any Lender from
time to time for purposes of compliance by Agent or such Lender with applicable
laws (including without limitation the USA Patriot Act and other “know your
customer” and anti-money laundering rules and regulations), and any policy or
procedure implemented by Agent or such Lender to comply therewith.

6.17Repatriation.  In the event that any Specified Event of Default has occurred
(after giving effect to any applicable provision of Section 6.5(d) hereof) and
remains continuing, upon written request of Agent (as elected by Agent or
Required Lender), Domestic Loan Parties shall cause all Foreign Subsidiaries of
DZSI to repatriate (by means of dividends and distributions from the respective
Foreign Subsidiaries to the respective Domestic Loan Parties) all Surplus
Foreign Cash as promptly as commercially reasonable and feasible (provided that
notwithstanding the foregoing, the Loan Parties shall not be required to cause
any particular Foreign Subsidiary to repatriate any Surplus Cash to the extent
(as demonstrated by Loan Parties to the reasonable satisfaction of Agent in its
Permitted Discretion) that doing so would result in any materially adverse tax
consequences to Loan Parties on a Consolidated Basis or in criminal or civil
liability of the management of a Loan Party), and (x) to the extent that such
repatriation was requested as a result of the occurrence of any Specified Event
of Default due to any Event of Default under Section 10.1 hereof resulting or
Ex-Im Specified Event of Default under Section 10.1 of the Ex-Im Subfacility
Credit Agreement, such repatriated cash and Cash Equivalents shall be used
immediately upon receipt thereof by the applicable Domestic Loan Parties to
satisfy the applicable defaulted payment obligations (provided that, for the
avoidance of doubt, such satisfaction of any such defaulted payment obligation
shall not constitute any cure or waiver or termination of the applicable Event
of Default or Ex-Im Event of Default), and (y) to the extent that, at the time
of such repatriation, any Event of Default shall exist under Section 6.5 hereof,
after giving effect to the provisions of the foregoing clause (x) to the extent
also applicable at such time, the Revolving Advances and Swing Loans hereunder
and the Ex-Im Revolving Advances and Ex-Im Swing Loans under the Ex-Im
Subfacility Credit Agreement shall be repaid ratably (as between the Revolving
Advances and Swing Loans hereunder on the one hand (and as among such, subject
to Section 11.5, in accordance with Section 2.20(a)(i) hereof), and the Ex-Im
Revolving Advances and Ex-Im Swing Loans under the Ex-Im Subfacility Credit
Agreement on the other (and as among such, subject to Section 11.5 of the Ex-Im
Subfacility Credit Agreement, in accordance with Section 2.20(a)(i) of the Ex-Im
Subfacility Credit Agreement)) until paid in full; provided that, Agent or
Required Lenders (as applicable), each in its sole discretion, may elect in any
case covered by this Section 6.17 to require the repatriation of less than all
of the Surplus Foreign Cash

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of the Foreign Subsidiaries of DZSI (and provided further that even in such a
case, all such Surplus Foreign Cash required to be repatriated shall be applied
as otherwise provided for in this Section 6.17).

ARTICLE VIINEGATIVE COVENANTS.

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

7.1Merger, 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 Secured Loan Party may merge, consolidate or reorganize with another Loan
Party or Company or acquire the assets or Equity Interests of another Loan Party
or Company so long as (A) in each case, Borrowing Agent shall provide Agent with
notice of such merger, consolidation, reorganization or acquisition no later
than ten (10) Business Days prior to the intended date for such transaction, (B)
in connection with any merger, consolidation or reorganization to which DZSI is
a party, DZSI must be the surviving entity of such merger, consolidation or
reorganization, (C) in the case of any such merger, consolidation or
reorganization involving a Company that is a Secured Loan Party at the time of
such merger, consolidation or reorganization and a Company that is not a Secured
Loan Party at the time of such merger, consolidation or reorganization, the
surviving entity of such merger, consolidation or reorganization must be, or
concurrently with the consummation of such merger, consolidation or
reorganization become, a Secured Loan Party (and all the conditions of Section
7.12 have been and/or are (substantially contemporaneously with the closing on
such merger, consolidation or reorganization) satisfied with respect to such
surviving entity as though such surviving entity was a newly acquired
Subsidiary), (D) in the case of any such merger, consolidation or reorganization
involving a Company that is a Domestic Loan Party (either as a Borrower or a
Guarantor) at the time of such merger, consolidation or reorganization and a
Company that is not a Domestic Loan Party at the time of such merger,
consolidation or reorganization, the surviving entity of such merger,
consolidation or reorganization must be, or concurrently with the consummation
of such merger, consolidation or reorganization become, a Domestic Loan Party
(either as a Borrower or a Guarantor (based on whether the Domestic Loan Party
to such merger, consolidation or reorganization was a Borrower or Guarantor
prior to such merger, consolidation or reorganization)) (and all the conditions
of Section 7.12 have been and/or are (substantially contemporaneously with the
closing on such merger, consolidation or reorganization) satisfied with respect
to such surviving entity as though such surviving entity was a newly acquired
Subsidiary), (E) in connection with any merger, consolidation or reorganization
to which a Borrower is, and DZSI 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
, (F) in connection with any merger, consolidation or reorganization

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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, (G) in the case of any such merger involving a Loan Party that is an
Ex-Im Borrower at the time of such merger and a Loan Party that is not an Ex-Im
Borrower at the time of such merger, Ex-Im Bank shall have provided its prior
written consent to such merger through an Ex-Im Waiver, and (H) 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 next delivery of quarterly
financial statements required to be delivered to Agent pursuant to Section 9.8
hereof occurring after the closing of such transaction,  

(ii)any Foreign Unsecured Loan Party may merge, consolidate or reorganize with
another Loan Party or Company or acquire the assets or Equity Interests of
another Loan Party or Company so long as (A) in each case, Borrowing Agent shall
provide Agent with notice of such merger, consolidation, reorganization or
acquisition no later than ten (10) Business Days prior to the intended date for
such transaction, (B)  in the case of any such merger, consolidation or
reorganization involving a Company that is a Foreign Unsecured Loan Party at the
time of such merger, consolidation or reorganization and a Company that is not a
Foreign Unsecured Loan Party at the time of such merger, consolidation or
reorganization, the surviving entity of such merger, consolidation or
reorganization must be, or concurrently with the consummation of such merger,
consolidation or reorganization become, a Foreign Unsecured Loan Party (and all
the conditions of Section 7.12 have been and/or are (substantially
contemporaneously with the closing on such merger, consolidation or
reorganization) satisfied with respect to such surviving entity as though such
surviving entity was a newly acquired Subsidiary), and (C) 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 next delivery of Quarterly
Financials pursuant to Section 9.8 hereof occurring after the closing of such
transaction,

(iii)any Company that is not a Loan Party may merge, consolidate or reorganize
with another Company that is not a Loan Party or acquire the assets or Equity
Interests of another Company that is not a Loan Party so long as (A) in each
case, Borrowing Agent shall provide Agent with notice of such merger,
consolidation, reorganization or acquisition no later than ten (10) Business
Days prior to the intended date for such transaction, and (B) 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 next delivery of quarterly
financial statements required to be delivered to Agent pursuant to Section 9.8
hereof occurring after the closing of such transaction

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

(v)a Loan Party may make Permitted Acquisitions;

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

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

(i)the liquidation or dissolution of a Borrower (other than DZSI) 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,

(ii)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 (through one or more transactions occurring on a
substantially contemporaneous basis) to a Loan Party that is not liquidating or
dissolving, and

(iii)the liquidation or dissolution of a Company 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.

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

7.3Guarantees.  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 set forth 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,
performance guarantee, and similar obligations, (d) unsecured guarantees arising
with respect to customary indemnification obligations to purchasers in
connection with Permitted Dispositions, (e) guarantees by any Company with
respect to the Permitted Indebtedness of any other Company, to the extent that
such guaranty by the guaranteeing Company constitutes a Permitted Intercompany
Investment, including, without limitation, the guarantees by DZSI and ZTI under
the KeyMile Seller Working Capital Facility Guaranty, and (f) guarantees of the
Ex-Im Obligations and/or the Obligations.

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

7.5Loans.  Make advances, loans or extensions of credit to any Person other than
advances, loans or extensions of credit that constitute Permitted Loans.

7.6Capital 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 $4,000,000; provided, however, in the event
Capital Expenditures during any fiscal year are less than the amount permitted
for such fiscal year, then the unused amount (the “Carryover Amount”) may be
carried over and used in the immediately succeeding fiscal year; provided,
further, that any Carryover Amount shall not exceed $2,000,000 and shall be
deemed to be the last amount spent in such succeeding fiscal year.

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7.7Restricted Payments.  Declare, pay or make any Restricted Payment other than
Permitted Restricted Payments.  

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

7.9Nature of Business.

(a)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.

(b)Without limiting the generality of the foregoing paragraph (a), in the case
of ZTI, Premisys, Zhone Technologies, Paradyne Networks, Paradyne Corporation
and DNS, take any actions, or omit any actions or allow any events or
circumstances to occur, that would cause any of the representations and
warranties in Section 5.20(b) hereof to become untrue.

(c)[RESERVED]

(d)Permit any Dormant Subsidiary to (i) render any services to any Customer
(other than another Company) that results in the creation of any Receivable or
otherwise engage in any business of any kind (other than with any other
Company), or (ii) own any property or assets (other than any asserts of property
of de minimus value, which may include the Equity Interests of any other Dormant
Subsidiary).

7.10Transactions 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 among Domestic Loan Parties and/or Foreign Secured Loan Parties
which are not expressly prohibited by the terms of this Agreement and which are
in the Ordinary Course of Business; (b) intercompany investments and
intercompany loans among the Companies which are expressly permitted under this
Agreement , including Permitted Intercompany Advances and Permitted Intercompany
Investments, (c) intercompany transactions and payments between/among Non-Core
Companies and Secured Loan Parties, which are in the Ordinary Course of Business
consistent with the Companies’ past practices and conduct, whereby (x) the
applicable Non-Core Compan(ies) provide research & development services,
marketing or sales services, and similar support services to or for the benefit
of Secured Loan Parties, and (y) in exchange for such services, (1) the
applicable Non-Core Compan(ies) invoice one or more Secured Loan Part(ies) for
the operating costs (such as salaries, wages, employee benefits, employee
allowances and employee reimbursable costs and expenses, employee commissions,
consultant fees of consultants retained by such Non-Core Compan(ies), office
rents, utilities, accounting and other professional services (but excluding
purchase of Inventory or purchases of fixed assets) of such Non-Core Compan(ies)
in providing such services plus a reasonable percentage (not to exceed a
cost-plus percentage on terms and conditions less favorable than terms and
conditions which would have been obtainable by Secured Loan Parties from a
Person other than an Affiliate), and (2) the invoiced Secured Loan Part(ies)
make payment on such invoices, so long as all such intercompany transaction and
payments are reflected in the calculation of the net income of the Companies on
a Consolidated Basis for any applicable fiscal measurement period (and for the

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avoidance of doubt, intercompany transactions and payments of the type described
and permitted under this clause (c) shall not constitute “Investments” for any
purpose under this Agreement), (d) payment by Loan Parties of Restricted
Payments permitted under Section 7.7 hereof; (e) payments of guarantee fees by
DNS Korea to DNI under the DNI/DNS Korea Guarantee Fee Agreement as in effect on
the Closing Date in respect of any guarantees given by DNI with respect to any
Permitted Korean Bank LC Indebtedness, the Permitted Korean Export-Import Bank
Indebtedness, and the Permitted Korean Development Bank Indebtedness to the
extent (but only to the extent) permitted under the DNI Subordination Agreement,
(f) payments and repayments of the Permitted DNI Subordinated Loans and the
Permitted DNI Reimbursement Obligations with respect to the Permitted Korean
Bank LC Indebtedness (but not the Permitted DNI Reimbursement Obligations with
respect to the Permitted Korean Export-Import Bank Indebtedness or the Permitted
Korean Development Bank Indebtedness) to the extent (but only to the extent)
permitted under the DNI Subordination Agreement, (g) Specified Equity
Contributions and other issuance of Equity Interests not constituting
Disqualified Equity Interests by DZSI, (h) transactions under the DNI IP
License, if any such DNI License shall be entered into in accordance with the
terms of this Agreement, and (i) transactions disclosed to Agent in writing,
which are in the Ordinary Course of Business, on an arm’s-length basis on terms
and conditions no less favorable than terms and conditions which would have been
obtainable from a Person other than an Affiliate; provided, however, that
neither the extension of credit to, nor the assumption, endorsement or guaranty
of any Indebtedness of, or making of any other any Affiliate (other than a Loan
Party) shall be deemed to be a transaction in the Ordinary Course of Business
for purposes of this Section 7.10.

7.11[RESERVED].  

7.12Subsidiaries.

(a)Form or acquire any Subsidiary unless the formation or acquisition of such
Subsidiary shall constitute a Permitted Investment and:

(i)subject to clauses (ii) and (iii) and Section 7.12(b) below, (x) such
Subsidiary shall, concurrently with the formation or acquisition thereof (or, in
the case of any Foreign Subsidiary, as soon as practicable thereafter, taking
into account the requirements of the Applicable Laws of the applicable
jurisdiction of organization of such Foreign Subsidiary), become either (as
Borrowing Agent may elect; provided that, notwithstanding anything to the
contrary contained in this Section 7.12 or this Agreement, (1) no Foreign
Subsidiary shall become a Borrower hereunder or an Ex-Im Borrower under the
Ex-Im Subfacility Credit Agreement, and (2) no Person shall become a Borrower
hereunder or an Ex-Im Borrower under the Ex-Im Subfacility Credit Agreement
without the consent of Agent granted or withheld in its Permitted Discretion and
the consent of the Ex-Im Bank) a Borrower or a Guarantor hereunder and under the
Other Documents and an Ex-Im Borrower or an Ex-Im Credit Agreement Guarantor
under the Ex-Im Subfacility Credit Agreement and the Ex-Im Subfacility Other
Documents, and become jointly and severally liable for, and grant first-priority
Liens (subject only to Permitted Encumbrances) in favor of Agent for the ratable
benefit of Secured Parties and in favor of Ex-Im Agent for the ratable benefit
of Ex-Im Secured Parties on all of its assets and property constituting
Collateral to secure, the Obligations (including the Ex-Im Obligations), all
pursuant to such joinder agreements and other legal documentation and such other
actions as Agent and Ex-Im Agent may each reasonably require in its Permitted
Discretion to establish compliance with the conditions set forth in this

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subparagraph (i) (which such legal documentation shall include the delivery of
such instruments, security agreements, certificates and customary legal opinions
as Agent and Ex-Im Agent may require in its Permitted Discretion in connection
with such a joinder transaction, and specifically including in the case of any
Foreign Subsidiary a Guaranty and Guarantor Security Agreements governed by of
and granting, creating, and perfecting Liens securing the Obligations (including
the Ex-Im Obligations) under the Applicable Laws of the jurisdiction of
organization of such Foreign Subsidiary, and customary legal opinions of local
foreign legal counsel regarding such Foreign Subsidiary and such Guaranty,
Guarantor Security Agreements, and Liens), and (y) concurrently with the
formation or acquisition thereof (or, in the case of any Foreign Subsidiary, as
soon as practicable thereafter, taking into account the requirements of the
Applicable Laws of the applicable jurisdiction of organization of such Foreign
Subsidiary), Agent and Ex-Im Agent shall each have received all legal
documentation (including the delivery of such instruments, security agreements,
certificates and legal opinions as Agent and Ex-Im Agent may each require in its
Permitted Discretion in connection with such a pledge and specifically including
in the case of any Foreign Subsidiary a pledge agreement governed by of and
granting, creating, and perfecting a pledge securing the Obligations (including
the Ex-Im Obligations) under the Applicable Laws of the jurisdiction of
organization of such Foreign Subsidiary, and customary legal opinions of local
foreign legal counsel regarding such Foreign Subsidiary and such pledge
agreement and pledge), and all actions shall have been taken, as Agent and Ex-Im
Agent may each require in its Permitted Discretion to create a Lien and pledge
in favor of Agent in the Subsidiary Stock of such Subsidiary to secure the
Obligations (including the Ex-Im Obligations); provided that, notwithstanding
anything to the contrary contained in the foregoing or otherwise in this
Agreement, no assets of any such new Subsidiary described in this subparagraph
(i) and joined to this Agreement as a Borrower shall be included in the Formula
Amount until Agent has received a Field Examination with respect to such
Subsidiary and its assets in form and substance, and with results, acceptable to
Agent in its Permitted Discretion (and further provided that, upon Borrowers’
written request, Agent shall complete such Field Examination as promptly as is
commercially reasonable following the earlier of (x) the acquisition or
formation of such Subsidiary, or (y) the time Borrowers shall obtain from any
Person to be acquired and/or whose assets are being acquired sufficient access
for Agent to commence such Field Examination) (and provided further that,
notwithstanding anything to the contrary in Sections 3.4(c) or 16.9, Borrowers
shall be liable for the Field Examination Fees and Costs of any such Field
Examination conducted under this paragraph, and such Field Examination Fees and
Costs shall not be subject to (and shall not be included in) any generally
applicable limitations on the number of Field Examinations, or the Borrowers’
liability for Field Examination Fees and Costs, under this Agreement);  

(ii)notwithstanding anything to the contrary provided for herein, no Dormant
Subsidiary or Foreign Legal Restrictions Subsidiary shall be required at any
time to become a Loan Party hereunder or an Ex-Im Borrower or Ex-Im Credit
Agreement Guarantor, and without limiting the generality of the foregoing, no
such Dormant Subsidiary or Foreign Legal Restrictions Subsidiary shall be
required at any time to (x) grant, create, and/or perfect any Liens under any
Applicable Laws of any jurisdiction in any of their assets to Agent (nor to
Ex-Im Agent) to secure any of the Obligations, or (y) give or execute and
deliver any Guaranty governed by Applicable Laws of any jurisdiction (nor, for
the avoidance of doubt, become a party to this Agreement as a Guarantor and/or
become bound by Article XVII hereof);

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(iii)notwithstanding anything to the contrary provided for herein, no Foreign
Subsidiary that is a Tier II Foreign Material Subsidiary shall be required at
any time to (x) grant, create, and/or perfect any Liens (either under the laws
of any jurisdiction within the United States or under the Applicable Laws of its
jurisdiction of organization) in any of its assets to Agent (nor to Ex-Im Agent)
to secure any of the Obligations, or (y) give or execute and deliver any
Guaranty governed by Applicable Laws of its jurisdiction of organization
(provided that nothing in this clause (y) shall in any way contract or limit or
affect in any way either (1) the obligations of any applicable Tier II Foreign
Material Subsidiary pursuant to Section 7.12(b) hereof to become a party to and
Guarantor and Loan Party under this Agreement or any of the provisions of
Article XVII hereof or (2) the guarantees and agreements of suretyship given by
and obligations and liabilities of any Foreign Unsecured Loan Party under such
Article XVII);

(iv)notwithstanding anything to the contrary provided for herein specifically
including clause (y) of Section 7.12(a)(i), in the case of any Foreign
Subsidiary that is the direct (or “first tier”) Subsidiary of any Loan Party, no
Loan Party shall be required at any time to provide any pledges with respect to
the Subsidiary Stock of such direct Foreign Subsidiary pursuant to a pledge
agreement or other appropriate security document governed by, and be perfected
under, the Applicable Laws of the jurisdiction in which such direct Foreign
Subsidiary is organized unless such direct Foreign Subsidiary is a Tier I
Foreign Material Subsidiary (provided that, with respect to each such direct
Foreign Subsidiary of any Domestic Loan Party that is not a Tier I Foreign
Subsidiary, the Subsidiary Stock of any such direct Subsidiary of any Domestic
Loan Party shall be included in the Collateral and shall be subject to the Liens
created under Article IV of this Agreement, but no actions beyond those
contemplated by Sections 4.1 and 4.14 shall be required with respect to the
creation and pledge of any Lien on the Subsidiary Stock of any such direct
Foreign Subsidiary of any Domestic Loan Party).

(b)Notwithstanding anything to the contrary provided for herein:

(i)with respect to (x) each Foreign Subsidiary of DZSI (other than DNS Korea and
KeyMile and any Excluded Subsidiaries) in existence on the Closing Date that is
not a Tier II Foreign Material Subsidiary on the Closing Date, and (y) each
Foreign Subsidiary of DZSI formed or acquired after the Closing Date that (as
determined as provided for in clause (iii) of this Section 7.12(b) below) is not
a Tier II Foreign Material Subsidiary at the time of such formation or
acquisition, in the event that any such Foreign Subsidiary shall constitute a
Tier II Foreign Material Subsidiary for two (2) (or, with respect to any Foreign
Subsidiary organized under the laws of the Republic of India, three (3))
consecutive fiscal quarters), then (1) Loan Parties shall give written notice to
Agent no later than ten (10) Business Days following the delivery by Loan
Parties of the Quarterly Financials for the second such fiscal quarter of such
fact (or in the case of any Foreign Subsidiary organized under the laws of the
Republic of India, the third such fiscal quarter), and(2) no later than thirty
(30) days (as such time period may be extended from time to time by Agent in its
sole discretion) after the delivery of such notice to Agent, such Tier II
Foreign Material Subsidiary shall (A) execute and deliver to Agent a joinder
agreement satisfactory in form and substance to Agent in its Permitted
Discretion pursuant to which such Tier II Foreign Material Subsidiary shall join
and become a party to this Agreement and the Other Documents as a Guarantor
hereunder, and (B) deliver to Agent a certificate of the type described in
Section 8.1(q) (including resolutions in form and substance satisfactory to
Agent, of the board of directors (or other equivalent governing body, member or
partner) of such Tier II Foreign Material Subsidiary

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authorizing such Tier II Foreign Material Subsidiary to make such joinder, give
a guaranty of the Obligations, and otherwise comply with and perform its
obligations under this Section 7.12 and this Agreement and the Other Documents
generally) provided that, (I) to the extent compliance with the requirements of
clause (2) of this paragraph with respect to such Tier II Foreign Material
Subsidiary and the Equity Interests would require consent, approval, license or
authorization of or any filing with or notice to a Governmental Body in such
Tier II Foreign Material Subsidiary’s jurisdiction of organization, Loan Parties
and such Tier II Foreign Material Subsidiary shall use their reasonably best
efforts to obtain such consent, approval, license or authorization or make such
filing or notice, and so long as Loan Parties and such Tier II Material
Subsidiaries shall be undertaking such reasonably best efforts, the deadline
under clause (2) shall be extended until such consent, approval, license or
authorization shall be obtained or such filing or notice requirement shall be
satisfied;

(ii)with respect to (x) each Foreign Subsidiary of DZSI (other than DNS Korea
and KeyMile and any Excluded Subsidiaries) in existence on the Closing Date that
is not a Tier I Foreign Material Subsidiary on the Closing Date, and (y) each
Foreign Subsidiary of DZSI formed or acquired after the Closing Date that (as
determined as provided for in clause (iii) of this Section 7.12(b) below) is not
a Tier I Foreign Material Subsidiary at the time of such formation or
acquisition, in the event that any such Foreign Subsidiary shall constitute a
Tier I Foreign Material Subsidiary for two (2) (or, with respect to any Foreign
Subsidiary organized under the laws of the Republic of India, three (3))
consecutive fiscal quarters), then (1) Loan Parties shall give written notice to
Agent no later than ten (10) Business Days following the delivery by Loan
Parties of the Quarterly Financials for the second such fiscal quarter of such
fact (or in the case of any Foreign Subsidiary organized under the laws of the
Republic of India, the third such fiscal quarter), (2) to the extent such Tier I
Foreign Material Subsidiary is not already a party to this Agreement as a
Guarantor, no later than thirty (30) days (as such time period may be extended
from time to time by Agent in its sole discretion) after the delivery of such
notice to Agent, such Tier I Foreign Material Subsidiary shall (A) execute and
deliver to Agent a joinder agreement satisfactory in form and substance to Agent
in its Permitted Discretion pursuant to which such Tier I Foreign Material
Subsidiary shall join and become a party to this Agreement as a Guarantor
hereunder and under the Other Documents, and (B) deliver to Agent a certificate
of the type described in Section 8.1(q) (including resolutions in form and
substance satisfactory to Agent, of the board of directors (or other equivalent
governing body, member or partner) of such Tier I Foreign Material Subsidiary
authorizing such Tier I Foreign Material Subsidiary to make such joinder, give a
guaranty of the Obligations, and otherwise comply with and perform its
obligations under this Section 7.12 and this Agreement and the Other Documents
generally), and (3) no later than forty-five (45) days (as such time period may
be extended from time to time by Agent in its sole discretion) after the
delivery of such notice to Agent, such Tier I Foreign Material Subsidiary and
the other Companies shall comply with all the other requirements of Section
7.12(a) with respect to such Tier I Foreign Material Subsidiary and the Equity
Interests of such Tier I Foreign Material Subsidiary; provided that, (I) to the
extent compliance with the requirements of clause (2) or (3) of this paragraph
with respect to such Tier I Foreign Material Subsidiary and/or the Equity
Interests of such Tier I Foreign Material Subsidiary would require consent,
approval, license or authorization of or any filing with or notice to a
Governmental Body in such Tier I Foreign Material Subsidiary’s jurisdiction of
organization, Loan Parties and such Tier I Foreign Material Subsidiary shall use
their reasonably best efforts to obtain such consent, approval, license or
authorization or make such filing or notice, and so long as Loan Parties and
such Tier II Material Subsidiaries shall be undertaking such

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reasonably best efforts, the deadline under clause (1) and/or (2) (as
applicable) shall be extended until such consent, approval, license or
authorization shall be obtained or such filing or notice requirement shall be
satisfied, and (II) notwithstanding anything to the contrary provided for in
Section 7.12(a) or otherwise in this Agreement, upon determination by Agent, in
its sole discretion, that under the Applicable Laws of the jurisdiction of
incorporation of such Tier I Foreign Material Subsidiary, either creation and/or
perfection of a Lien in any category(ies) of Collateral and/or specific item(s)
of Collateral of such Tier I Foreign Material Subsidiary (and/or of the pledge
over the Equity Interests of such Tier I Foreign Material Subsidiary under the
laws of the jurisdiction of organization of such Tier I Foreign Material
Subsidiary) is either not possible (either categorically or because Loan Parties
have been unable, after using their reasonably best efforts, to obtain any
required consent, approval, license or authorization of or any filing with or
notice to a Governmental Body in such Tier I Foreign Material Subsidiary’s
jurisdiction of organization) or would require efforts, costs and expenses, or
an effect on such Tier I Foreign Material Subsidiary’s business that would
outweigh the benefits to Secured Parties of obtaining or perfecting such Lien
(or pledge), Agent may, in its sole discretion, elect to either forgo taking
and/or perfecting any such Lien (or pledge) and/or agree that such Tier I
Foreign Material Subsidiary shall not be required to create and/or perfect any
such Lien (or pledge) until the occurrence of a Specified Event of Default.

(iii)In order to determine whether any Foreign Subsidiary being acquired is a
Tier I Foreign Material Subsidiary or Tier II Foreign Material Subsidiary at the
time of such acquisition, (x) the EBITDA for such acquired Foreign Subsidiary
for each of the twelve month fiscal measurement periods ending on the last two
fiscal quarter for which financial statement of such acquired Foreign Subsidiary
are available shall be compared to the pro forma EBITDA of Loan Parties on a
Consolidated Basis, including such EBITDA for such acquired Foreign Subsidiary,
for the same two fiscal measurement periods, and (y) the Working Capital Assets
of such acquired Foreign Subsidiary as at the end of the last two fiscal quarter
for which financial statement of such acquired Foreign Subsidiary are available
shall be compared to the pro forma Working Capital Assets of Loan Parties on a
Consolidated Basis, including such Working Capital Assets for such acquired
Foreign Subsidiary, as at the end of same two fiscal quarters.

(c)Enter into (x) any general partnership or limited partnership as a general
partner, or (y) any joint venture arrangement (other than as prohibited by the
foregoing clause (x) except to the extent entry into such joint venture
arrangement, and all Investments made in connection therewith, shall in each
case constitute a Permitted Investment).

7.13Fiscal Year and Accounting Changes.  Change its fiscal year from December
31, or make any significant change (a) in accounting treatment and reporting
practices except as required by GAAP or (b) in tax reporting treatment except as
required by law.

7.14Pledge of Credit.  Now or hereafter pledge Agent’s or any Lender’s credit on
any purchases, commitments or contracts or for any purpose whatsoever or use any
portion of any Advance in or for any business other than such Loan Party’s
business operations as conducted on the Closing Date.

7.15Amendment of Organizational Documents.  In the case of any Loan Party,
(a) change its legal name, (b) change its form of legal entity (e.g., converting
from a corporation

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to a limited liability company or vice versa), (c) change its jurisdiction of
organization or become (or attempt or purport to become) organized in more than
one jurisdiction, or (d) otherwise amend, modify or waive any term or material
provision of its Organizational Documents unless required by law, in any such
case without (x) giving at least thirty (30) days prior written notice of such
intended change to Agent, (y) having received from Agent confirmation that Agent
has taken all steps necessary for Agent to continue the perfection of and
protect the enforceability and priority of its Liens in the Collateral belonging
to such Loan Party and in the Equity Interests of such Loan Party (other than
DZSI) and (z) in any case under clause (d), having received the prior written
consent of Agent to such amendment, modification or waiver.

7.16Compliance with ERISA.  (a)(i) Maintain, or permit any member of the
Controlled Group to maintain, or (ii) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
Pension Benefit Plan, other than those Pension Benefit Plans set forth on
Schedule 5.8(e) hereto, (b) engage, or permit any member of the Controlled Group
to engage, in any non-exempt “prohibited transaction”, as that term is defined
in Section 406 of ERISA or Section 4975 of the Code which could reasonably be
expected to result in any material liability to DZSI and its Subsidiaries, (c)
terminate, or permit any member of the Controlled Group to terminate, any
Pension Benefit Plan where such event could result in any liability of any
Company or any member of the Controlled Group or the imposition of a lien on the
property of any Company 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  meet,
permit any member of the Controlled Group to fail to meet, or permit any Pension
Benefit 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 such plan, or (g) cause, or permit any member of
the Controlled Group to cause, a representation or warranty in Section 5.8(d)
hereof to cease to be true and correct to the extent such could reasonably be
expected to result in any material liability to DZSI and its Subsidiaries.

7.17Prepayment of Indebtedness; Repayment of Permitted Korean LGU Indebtedness

.  

(a)At any time, directly or indirectly, prepay any Indebtedness, or repurchase,
redeem, retire or otherwise acquire any Indebtedness of any Company prior to the
maturity thereof, except Borrowers may prepay the Obligations (including the
Ex-Im Obligations) to the extent permitted hereunder and under the Ex-Im
Subfacility Credit Agreement or in connection with any refinancing of such
Indebtedness permitted pursuant to this Agreement.  Without limiting the
generality of the foregoing, none of the Net Cash Proceeds from any Contemplated
Rights Offering may be used by DZSI or any Company to repay any Indebtedness of
any Company (other than any voluntary repayment, in the sole discretion of the
Loan Parties, of the Obligations/Ex-Im Obligations).  For avoidance of doubt,
the payment of the Permitted LGU Indebtedness at maturity shall not constitute a
prepayment and shall not be prohibited under the terms of this Agreement;

(b)Without limiting the generality of the foregoing Section 7.17(a), at any time
(i) fail to cause each of the Permitted Korean Export-Import Bank Indebtedness
and the Permitted Korean Development Bank Indebtedness to be refinanced or
renewed/extended at the end of any applicable term thereof such that, at no time
prior to the Payment in Full of the Obligations, shall any of the

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principal outstanding under either of the Permitted Korean Export-Import Bank
Indebtedness or the Permitted Korean Development Bank Indebtedness become due
and payable, or (ii) other than as contemplated under Section 2.21 with respect
to the Permitted Korean Development Bank Indebtedness, directly or indirectly,
pay, prepay, repurchase, redeem, retire or otherwise acquire, or make any
payment on account of, any principal of either of the Permitted Korean
Export-Import Bank Indebtedness or the Permitted Korean Development Bank
Indebtedness, except in connection with a refinancing thereof, (iii) directly or
indirectly make any payment on account of any Permitted DNI Reimbursement
Obligations in connection with either the Permitted Korean Export-Import Bank
Indebtedness and the Permitted Korean Development Bank Indebtedness, except as
permitted under the DNI Subordination Agreement, or (iv) subject to the
provisions of clauses (q) and (r) of the definition of Permitted Indebtedness
regarding a Permitted Refinancing with respect to the Permitted Korean
Export-Import Bank Indebtedness or the Permitted Korean Development Bank
Indebtedness, as applicable, after the Closing Date, obtain any additional loan
or advance or otherwise incur any additional principal Indebtedness under either
of the Permitted Korean Export-Import Bank Indebtedness or the Permitted Korean
Development Bank Indebtedness; and

(c)Notwithstanding anything to the contrary provided for in this Section 7.17 or
otherwise in this Agreement or any Other Document, fail to repay in full in cash
all of the then-outstanding Permitted Korean LGU Indebtedness by the close of
business (Korea time) on June 18, 2019.

7.18DNI Subordinated Debt and Obligations.  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, or any payment in respect of (i)
any Permitted DNI Subordinated Loan, (ii) any Permitted DNI Reimbursement
Obligations, or (iii) any fees payable under the DNI Guarantee Fee Agreement,
except as expressly permitted in the DNI Subordination Agreement and, in the
case of any voluntary prepayment, repurchase, redemption, retirement or
acquisition, with respect to any Permitted DNI Subordinated Loan in accordance
with the requirements of Section 7.17 hereof.]

7.19Amendments to Other Agreements.  Enter into (i) any amendment, waiver or
modification of the KeyMile Acquisition Documents (excluding the KeyMile Seller
Working Capital Facility Agreement and the KeyMile Seller Working Capital
Facility Guarantee) that is materially adverse to the interests of any Loan
Party or any Secured Party, or (ii) any amendment, waiver or modification of any
of (1) the KeyMile Seller Working Capital Facility Agreement and the KeyMile
Seller Working Capital Facility Guarantee, (2) the DNI Guarantee Fee Agreement,
(3) the agreements evidencing and/or governing the Permitted DNI Subordinated
Loans, the Permitted Korean LGU Indebtedness, the Permitted Korean Export-Import
Bank Indebtedness, or the Permitted Korean Development Bank Indebtedness, or (4)
the DNI IP License, if any such DNI License shall be entered into in accordance
with the terms of this Agreement, that, in any case under this clause (ii), is
adverse in any way to the interests of any Loan Party or any Secured Party.

ARTICLE VIIICONDITIONS PRECEDENT.

8.1Conditions 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

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Agent, immediately prior to or concurrently with the making of such Advances, of
the following conditions precedent:

(a)Loan Documents.  Agent shall have received on or before the Closing Date the
following, each in form and substance reasonably satisfactory to the Agent and,
unless indicated otherwise, dated as of the Closing Date:

(i)this Agreement, duly executed and delivered by each Credit Party;

(ii)the Notes;

(iii)the German Law Guarantees, the German Law Security Documents, and the
Korean Law Guaranty and Security Documents;

(iv)the DNI IP Pledge Consents; and

(v)the Closing Date Flow of Funds Agreement duly executed and delivered by
Borrowing Agent; and

(b)Ex-Im Credit Documents.  Loan Parties, the Ex-Im Lenders, and the Ex-Im Agent
shall have entered into the Ex-Im Subfacility Credit Agreement and the Ex-Im
Subfacility Other Documents, and the Ex-Im Subfacility Credit Agreement and all
other Ex-Im Subfacility Other Documents shall be in full force and effect;

(c)Ex-Im Bank Approvals and Waivers and Conditions Precedent.  (i) Ex-Im Agent
shall have received all necessary approvals and waivers from the Ex-Im Bank for
the terms and conditions of the Ex-Im Subfacility as set forth in the Ex-Im
Subfacility Credit Agreement and the Ex-Im Subfacility Other Documents, (ii) the
Transactions shall be in full compliance with the ExIm Bank’s Working Capital
Guarantee Program, and (iii) all conditions precedent set forth in Sections 8.1
of the Ex-Im Subfacility Credit Agreement shall be satisfied (or waived by Ex-Im
Agent (and, to the extent applicable, the Ex-Im Bank);

(d)[RESERVED].  

(e)[RESERVED].

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

(g)Closing Certificate.  Agent shall have received a closing certificate signed
by the Chief Financial Officer of each Loan Party, dated as of the Closing Date,
stating that (i) all representations and warranties set forth in this Agreement,
the Other Documents, the Ex-Im Subfacility Credit Agreement, and the Ex-Im
Subfacility Other Documents are true and correct on and as of such date, (ii) on
such date no Default or Event of Default has occurred or is continuing, and (ii)
all of the conditions set forth in Sections 8.1(i), (l), (m), (o)(ii), (s), (y),
and (aa) and 8.2(c) have been satisfied (and attaching calculations supporting
Section 8.1(m)), the DNI Guarantee Fee Agreement, and the agreements evidencing
and/or governing the Permitted DNI Subordinated Loans, including the DNI Closing
Date Loan Amendment;

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(h)Borrowing Base.  (x) Agent shall have received a Borrowing Base Certificate
(as of a date acceptable to Agent and Lenders in their discretion) from
Borrowers evidencing that the aggregate amount of Eligible Receivables
(including Eligible Foreign Receivables) is sufficient in value and amount to
support Revolving Advances in the amount requested by Borrowers on the Closing
Date, and (y) Ex-Im Agent shall have received a “Borrowing Base Certificate” (as
of a date acceptable to Agent and Lenders in their discretion) under the Ex-Im
Subfacility Credit Agreement from Borrowers evidencing that the aggregate amount
of Eligible Export-Related Accounts Receivables is sufficient in value and
amount to support Ex-Im Revolving Advances in the amount requested by Ex-Im
Borrowers on the Closing Date;

(i)Undrawn Availability.  After giving effect to the initial Advances hereunder
and the initial loan advances under the Ex-Im Subfacility Credit Agreement and
payment of all disbursements, costs and expenses relating to the Transactions as
reflected in the Closing Date Flow of Funds Agreement and otherwise giving
effect to the Transactions, and as evidenced by the Borrowing Base Certificate
and “Borrowing Base Certificate” under the Ex-Im Subfacility Credit Agreement
referenced in Section 8.1(h) above, Borrowers shall have (x) Undrawn
Availability of at least $6,000,000 and (y) Qualified Cash of at least
$5,000,000, and Foreign Subsidiaries of DZSI shall have, in the aggregate,
Foreign Cash Liquidity of at least $3,000,000;

(j)Blocked Accounts and Disbursement Account.  Loan Parties shall have opened at
least one Depository Account and at least one disbursements/operating deposit
account with Agent;

(k)Permitted DNI Subordinated Loan Documents.  Agent shall have received, in
form and substance satisfactory to Agent, true, correct and complete copies of
the agreements evidencing and/or governing the Permitted DNI Subordinated Loans,
the form and substance, and terms and conditions, of which shall be satisfactory
to Agent in its discretion, including a true, correct and complete copy of the
executed DNI Closing Date Loan Amendment, the form and substance, and terms and
conditions, of which shall be satisfactory to Agent in its discretion;

(l)KeyMile Acquisition.  Agent shall have received a final executed copy of the
KeyMile Purchase Agreement (including all exhibits, schedules and disclosure
letters referred to therein or delivered pursuant thereto, if any) and all
material KeyMile Acquisition Documents executed in connection therewith,
specifically including the KeyMile Seller Working Capital Facility Agreement and
the KeyMile Seller Working Capital Facility Guarantee, each as in effect on the
Closing Date, including in each case all amendments thereto, waivers relating
thereto, and other side letters or agreements affecting the terms thereof;

(m)Pro Forma EBITDA Leverage.  After giving pro forma effect to the initial
Advances hereunder and the initial loan advances under the Ex-Im Subfacility
Credit Agreement and payment of all disbursements, costs and expenses relating
to the Transactions as reflected in the Closing Date Flow of Funds Agreement and
otherwise giving effect to the Transactions,

(i)Loan Parties on a Consolidated Basis (for the avoidance of doubt, including
KeyMile and its Subsidiaries) shall have EBITDA for the twelve month fiscal
measurement period ending as of December 31, 2018 of not less than $16,250,000,
and

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(ii)Loan Parties on a Consolidated Basis (for the avoidance of doubt, including
KeyMile and its Subsidiaries) shall have a Leverage Ratio measured as of
December 31, 2018 of not more than 3.75 to 1.00,

(n)Filings, Registrations and Recordings.  Each document (including any Uniform
Commercial Code financing statement and Uniform Commercial Code termination
statements) 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 in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, and Agent shall
have received an acknowledgment copy, or other evidence satisfactory to it, of
each such filing, registration or recordation and satisfactory evidence of the
payment of any necessary fee, tax or expense relating thereto;

(o)Payoffs.

(i)Wells Fargo Payoff Letter.  Agent shall have received a final executed copy
of a payoff letter, in form and substance and on terms and conditions
satisfactory to Agent, from Wells Fargo Bank, N.A (the “Wells Fargo Payoff
Letter”) regarding the payment in full of all Indebtedness and obligations owing
to Wells Fargo Bank, N.A. and any other applicable lender or secured party under
the existing senior secured credit facilities of DZSI and its Subsidiaries
agented by Wells Fargo Bank, N.A., other than with respect to the Existing WF
Letters of Credit (the “Existing Wells Fargo Debt”) and the release of all Liens
on any Collateral in favor of Wells Fargo Bank, N.A. securing such Existing
Wells Fargo Debt (other than the LC Cash Collateral as defined in the Wells
Fargo Payoff Letter) to secure the obligations relating to the Existing WF
Letters of Credit,

(ii)Korean Bank Payoffs.  Agent shall have received confirmation satisfactory to
Agent and Agent’s counsel (including Agent’s local Korean counsel) of the
respective amounts and applicable per diems necessary to be paid to the holders
of those certain bank loan facilities of DNS Korea listed on Schedule 2.21(a)
attached hereto such that, after giving effect to the disbursements and
subsequent currency conversion transactions and payment by DNS Korean
contemplated by the Closing Date Flow of Funds, all Indebtedness owing by DNS
Korea in connection with the such bank loan facilities shall be paid in full and
each such Korean bank shall be obligated to release any and all Liens on any
assets of DNS Korea granted by DNS Korea to secure such Korean bank loan
facilities, and  

(iii)Japan Bank Payoffs.  Agent shall have received confirmation satisfactory to
Agent and Agent’s counsel of the respective amounts and applicable per diems
necessary to be paid to the holders of those certain bank loan facilities of DNS
Japan listed on Schedule 2.21(a) attached hereto such that, after giving effect
to the disbursements contemplated by the Closing Date Flow of Funds, all
Indebtedness owing by DNS Japan in connection with the such bank loan facilities
shall be paid in full and each such Japanese bank shall be obligated to release
any and all Liens on any assets of DNS Japan granted by DNS Japan to secure such
Japanese bank loan facilities.

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(p)[RESERVED].  

(q)Secretary’s Certificates, Authorizing Resolutions and Good Standings of Loan
Parties.  Agent shall have received, in form and substance satisfactory to
Agent, a certificate of the Secretary or Assistant Secretary (or other
equivalent officer, partner or manager) of each Loan Party dated as of the
Closing Date which shall certify (i) copies of resolutions in form and substance
satisfactory to Agent, of the board of directors (or other equivalent governing
body, member or partner, and in relation to Loan Parties incorporated in
Germany, a resolution of its respective registered shareholder) of such Loan
Party authorizing (x) the execution, delivery and performance of this Agreement
and each Other Document 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 the Obligations
(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) continued legal existence and, where
relevant, the good standing (or equivalent status) of such Loan Party in its
jurisdiction of organization and each applicable jurisdiction where the conduct
of such Loan Party’s business activities or the ownership of its properties
necessitates qualification, as evidenced by good standing certificates (or the
equivalent thereof issued by any applicable jurisdiction (if any)) dated not
more than fifteen (15) days prior to the Closing Date, issued by the Secretary
of State or other appropriate official of each such jurisdiction;

(r)Legal Opinion.  Agent shall have received the executed legal opinions of
(i)  DLA Piper, US counsel to the Loan Parties, (ii) Lee & Ko, Korean counsel to
the Loan Parties, and (iii) DLA Piper, German counsel to Loan Parties in
relation to capacity and due execution and Squire Patton Boggs, German counsel
to Agent in relation to validity and enforceability, each in form and substance
satisfactory to Agent 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 opinions to Agent and
Lenders;

(s)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 Subordinated Loan
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;

(t)Collateral Examination.  Agent shall have completed its Initial Field
Examination, the results of which shall be satisfactory in form and substance to
Agent and Lenders in their discretion,

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(u)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;

(v)Initial Projections.  Agent shall have received a copy of the Initial
Projections which shall be satisfactory in all respects to Agent and Lenders;

(w)Insurance.  Agent shall have received in form and substance satisfactory to
Agent, (i) evidence that adequate insurance, including without limitation,
casualty and liability insurance, required to be maintained under this Agreement
is in full force and effect, (ii) insurance certificates issued by Loan Parties’
insurance broker containing such information regarding Loan Parties’ casualty
and liability insurance policies as Agent shall request and naming Agent as an
additional insured, lenders loss payee and/or mortgagee, as applicable, and
(iii) loss payable endorsements issued by Loan Parties’ insurer naming Agent as
lenders loss payee and mortgagee, as applicable;

(x)Consents.  Agent shall have received any and all Consents necessary to permit
the effectuation of the transactions contemplated by this Agreement and the
Other Documents; and, Agent shall have received such Consents and waivers of
such third parties as might assert claims with respect to the Collateral, as
Agent and their counsel shall deem necessary;

(y)No Adverse Material Change.  Since (i) September 30, 2018 with respect to
KeyMile and (ii) December 31, 2017, no event, condition or state of facts which
could reasonably be expected to have a Material Adverse Effect shall have
occurred 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 Companies including leases, union contracts, labor contracts,
vendor supply contracts, license agreements and distributorship agreements and
such contracts and agreements shall be satisfactory in all respects to Agent;

(aa)Compliance with Laws.  Agent shall be reasonably satisfied that each Company
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;

(bb)Flow of Funds Agreement.  Agent and Ex-Im Agent shall have received a flow
of funds agreement, including a schedule of sources and uses prepared by Loan
Parties and a schedule of payments and disbursements prepared by Loan Parties
(the “Closing Date Flow of Funds Agreement”), duly executed and delivered by
Borrowing Agent pursuant to which the Borrowing Agent directs Agent to disburse
the initial Advances hereunder and initial Ex-Im Revolving Advances under the
Ex-Im Subfacility Credit Agreement so as to consummate the Transactions.

(cc)Certificate of Beneficial Ownership; USA Patriot Act Diligence.  Agent and
each Lender shall have received, in form and substance acceptable to Agent and
each Lender an executed Certificate of Beneficial Ownership for each Loan Party
and such other documentation and other information requested in connection with
applicable “know your customer” and anti-money laundering rules and regulations,
including the USA Patriot Act; and

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(dd)Other.  All corporate and other proceedings, and all documents, instruments
and other legal matters in connection with the Transactions shall be
satisfactory in form and substance to Agent.

8.2Conditions to Each Advance.  The agreement of Lenders to make any Advance
requested to be made on any date (including the initial Advances), 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/or the Other
Documents and the Ex-Im Subfacility Credit Agreement and/or the Ex-Im
Subfacility Other Documents shall be true and correct in all material respects
(except in the case of any such representation or warranty that is qualified as
to materiality or as to the occurrence of (or the absence of the occurrence of)
a Material Adverse Effect (specifically including without limitation the
representations set forth in Section 5.5(d) hereof), which shall be true and
correct in all respects) 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 representation or
warranty shall have been true and correct in all material respects (except in
the case of any such representation or warranty that is qualified as to
materiality or as to the occurrence of (or the absence of the occurrence of) a
Material Adverse Effect, which shall have been true and correct in all respects)
on and as of such earlier and/or specified date);

(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 Advances,
after giving effect to the consummation of the Transactions; 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, and after giving effect to such requested Advance, there shall be no
violation of the terms and provisions of Section 2.7 .

Each request for an Advance by Borrowing Agent or Borrowers hereunder shall
constitute a representation and warranty by each Borrower and each other Loan
Party as of the date of such Advance that the conditions set forth in this
Section shall have been satisfied. Notwithstanding any provision to the contrary
set forth in this Section 8.2, in no event shall the conditions set forth in
this Section 8.2(b) be deemed to have been met during the continuance of any
Cure Period.

8.3Post-Closing Covenants/Conditions.  Loan Parties hereby acknowledge and agree
that Agent and Lenders have agreed to execute and deliver this Agreement and
make the initial Advances on the Closing Date notwithstanding the fact that
certain conditions precedent more fully described in this Section 8.3 have not
been satisfied as of the Closing Date, and Loan Parties hereby covenant and
agree to satisfy each of such conditions no later than the respective deadlines
for each such condition set forth below as follows (as any such deadline may be
extended from time to time by Agent in its sole discretion):

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(a)(x) immediately upon the effectiveness of this Agreement, Agent shall receive
the executed legal opinions of DLA Piper, German counsel to Loan Parties in
relation to capacity and due execution and Squire Patton Boggs, German counsel
to Agent in relation to validity and enforceability, each in form and substance
satisfactory to Agent 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 opinions to Agent and
Lenders, and (y) as soon as reasonably practical (taking into account all
applicable requirements of German Applicable Law, including any notarial
requirements) following the closing and consummation of the Transactions:
KeyMile and all parties thereto shall execute and deliver (or cause to be
executed and delivered by power of attorney) the Pledge Agreements described in
clauses (i) and (ii) of the definition of “Pledge Agreement with respect to the
Equity Interests of KeyMile and KeyMile GmbH.

(b)No later than (x) the date that is ninety (90) days after the Closing Date
(as such date may be extended by Agent in its sole discretion), with respect to
any deposit accounts (other than Excluded Accounts) of any Domestic Loan Party
which are maintained with a financial depository institution other than Agent
after compliance by Domestic Loan Parties with clause (y) of this paragraph (b),
execute and deliver, and shall cause the applicable financial depository
institution to execute and deliver, a deposit account Control Agreement
complying with the requirements of Section 4.8(j) with respect to such deposit
account, and (y) the date that is ninety (90) days after the Closing Date,
Domestic Loan Parties shall move, establish and continue thereafter to maintain
all of their primary cash management accounts and services with Agent, including
without limitation all of the Domestic Loan Parties’ primary lockboxes/lockbox
accounts and collection accounts and all of the Loan Parties’ primary operating
and disbursement accounts; provided that, for the avoidance of doubt, nothing in
this Section 8.3(b) shall be deemed to limit or contradict the provisions of, or
to defer or limit the obligations of Domestic Loan Parties to comply with the
requirements of, Section 4.8(d), and without limiting the generality of the
foregoing, during the period from the Closing Date until the date that Domestic
Loan Parties shall have fully complied with the requirements of clauses (x) and
(y) of this Section Error! Reference source not found., Domestic Loan Parties
shall make arrangements with respect to each of its deposit accounts into which
Customers remit payments and collections on Receivables or into which Domestic
Loan Parties deposit payments and collections on Receivables received from
Customers that is maintained with a bank other than Agent and is not subject to
a deposit account Control Agreement complying with the requirements of Section
4.8(h) for the funds in each such collections deposit account to be wired and
transferred to a Depositary Account maintained with Agent on a daily
basis.  Notwithstanding anything to the contrary provided for in the foregoing,
with respect to any bank account of any Domestic Loan Party maintained in
Canada, no later than date that is ninety (90) days after the Closing Date (as
such date may be extended by Agent in its sole discretion), Loan Parties shall
either have (i) moved and established (and thereafter continue to maintain) each
such deposit account with Agent or one of the other Lenders, or (ii) executed
and delivered, and shall have caused the applicable financial depository
institution to execute and deliver, a deposit account Control Agreement
complying with the requirements of Section 4.8(j) with respect to such deposit
account.

(c)No later than thirty (30) days after the Closing Date (as such date may be
extended by Agent in its sole discretion), Domestic Loan Parties shall deliver
to Agent loss payable endorsements issued by Domestic Loan Parties’ insurers
naming Agent as lenders loss payee and

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mortgagee, as applicable, with respect to each of Loan Parties’
casualty/property insurance policies (including business interruption insurance
policies).

(d)No later than one hundred eighty (180) days after the Closing Date (as such
date may be extended by Agent in its sole discretion), Loan Parties shall cause
that certain judgment (#J180000739870) filed by the State of Florida, Department
of Revenue, on November 7, 2018 and that certain judgment (#J180000753236))
filed by the State of Florida, Department of Revenue, on November 14, 2018
(collectively, the “Florida Judgement Lien”) to have been terminated and
released of record.

(e)No later than thirty (30) days after the Closing Date (as such date may be
extended by Agent in its sole discretion), Loan Parties shall either (x) cause a
reputable Korean patent law attorney to deliver to Agent and Ex-Im Agent a
memorandum, satisfactory in form and substance to each of Agent and Ex-Im Agent
in their Permitted Discretion, regarding the rights of DNS Korea (and of any
third-party to whom Agent and/or Ex-Im Agent may transfer DNS Korea’s ownership
rights in any registered Korean patents and patent application Intellectual
Property that is jointly owned by DNI and DNS Korea pursuant to any exercise by
Agent and/or Ex-Im Agent of its rights as a secured creditor) to freely use and
grant licenses with respect to such jointly owned Intellectual Property without
payment of royalties or license fees, or (y) cause DNI and DNS Korea to execute
and deliver, and deliver to Agent a true, correct, and complete copy of, a
license agreement regarding any Intellectual Property that is jointly owned by
DNI and DNS Korea granting DNS Korea a license with respect to such Intellectual
Property and consenting to a pledge and creation of a Lien in favor of Agent
with respect to DNS Korea’s rights as licensee under such license, to be in form
and substance acceptable to Agent in its Permitted Discretion (any such license
that may be entered into in accordance with the foregoing, if any, the “DNI IP
License”).]

(f)No later than forty-five (45) days after the Closing Date (as such date may
be extended by Agent in its sole discretion), Loan Parties shall cause the
Secured Loan Parties and any applicable other Companies to execute and deliver a
master intercompany note among such Companies on terms and conditions (including
terms subordinating payment of the Indebtedness evidenced by such note owing by
any Loan Party to the prior Payment in Full of all of the Obligations)
acceptable to Agent in its Permitted Discretion, and shall deliver the original
of such master intercompany 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 Companies that are the payees on such note.

(g)No later than (x) forty-five (45) days after the Closing Date (as such date
may be extended by Agent in its sole discretion), to the extent not delivered on
the Closing Date, the original stock certificates (if and to the extent any such
exist) representing the Equity Interest of each Subsidiary of any Domestic Loan
Party that is either a Dormant Subsidiary or a Foreign Subsidiary (other than
DNS Korea or KeyMile), together with appropriate stock powers or other
instruments of assignment or transfer undated and executed in blank, and (y)
three (3) Business Days after the Closing Date (as such date may be extended by
Agent in its sole discretion), to the extent not delivered on the Closing Date,
the original stock certificates (if and to the extent any such exist)
representing the Equity Interest of each other Pledged Issuer, together with
appropriate stock powers or other instruments of assignment or transfer undated
and executed in blank, if applicable.

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(h)No later than March 21, 2019 (as such date may be extended by Agent in its
sole discretion), a copy of Form 8-K filed by DZSI with the SEC with respect to
the pro forma financial information for the KeyMile Acquisition required to be
filed pursuant Article 11 of Regulation S-X (17 CFR 210).

(i)No later than ninety (90) days after the Closing Date (as such date may be
extended by Agent in its sole discretion), Loan Parties shall cause each
Subsidiary listed on Schedule 5.2(a) as not being, on the Closing Date,
continuing in existence and in good standing (where such concept is relevant) as
a legal entity under the laws of its jurisdiction of incorporation (each a
“Corporate Cure Subsidiary”) to either (x) return to good standing as a legal
entity under the laws of its jurisdiction of incorporation, or (y) elect to
dissolve such Corporate Cure Subsidiary and give written notice to Agent and
Ex-Im Agent of such election, in which event such Corporate Cure Subsidiary
shall be dissolved in accordance with Section 7.1(c) within one twenty (120)
days after such election (as such date may be extended by the Agent in its sole
discretion), and, in each such case, provide written notice of such action,
including delivery of a good standing certificate (or equivalent under
applicable local Laws), election of dissolution or delivery of evidence of such
dissolution.

(j)No later than twenty (20) Business Days after the date of the German
Assignment Agreement, provide to the Agent with respect to KeyMile and pursuant
to the terms of the German Assignment Agreement (1) a full list of the
Receivables of KeyMile outstanding as of such date, such list to be delivered
substantially in the form set out in Schedule 1 attached to the German
Assignment Agreement, (2) if applicable, the details of any profit and loss
pooling agreement as of such date, (3) a full list of KeyMile’s insurances which
have not expired as of such date, such list to be delivered substantially in the
form set out in Schedule 2 attached to the German Assignment Agreement and (4) a
full list of KeyMile’s IP Rights (as defined in the German Assignment Agreement)
existing as of such date;

(k)No later than fifteen (15) Business Days after the Closing Date (as such date
may be extended by Agent in its sole discretion), Loan Parties shall have caused
the Korean IP Pledges to have been duly submitted for registration with the
Korean Patent Office;

(l)No later than forty-five (45) Business Days after the Closing Date (as such
date may be extended by Agent in its sole discretion), Loan Parties shall have
made commercially reasonable efforts to cause the applicable Persons to execute
and deliver to Agent Lien Waiver Agreements with respect to (i) each leased
corporate headquarters location of each Loan Party, (ii) each leased location or
third-party warehouse/bailee/processor at which tangible Collateral with a fair
market value, as to each such location, in excess of $500,000 is located, and
(iii) each leased location at which any unique books and records (not duplicated
at the applicable corporate headquarters of such Loan Party) of any Loan Party
are kept, subject to any exceptions to the foregoing as may have been agreed
between Loan Parties and Agent prior to the Closing Date.

ARTICLE IXINFORMATION AS TO LOAN PARTIES.

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, the termination of the Commitments and the termination of this
Agreement:

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9.1Disclosure of Material Matters.  Immediately upon learning thereof, report to
Agent (a) all matters materially affecting the value, enforceability or
collectability of any portion of the Collateral, including any Loan Party’s
reclamation or repossession of, or the return to any Loan Party of, a material
amount of goods or claims or disputes asserted by any Customer or other obligor,
and (b) any investigation, hearing, proceeding or other inquest into any Loan
Party or any Affiliate of any Loan Party by any Governmental Body with respect
to Anti-Terrorism Laws.  

9.2Schedules.  

(a)Deliver to Agent, in form and substance satisfactory to Agent, with respect
to any Customers billed by any Borrower: (a) on or before the twentieth (20th)
day of each month as and for the prior month (i) accounts receivable agings
inclusive of reconciliations to the general ledger of each Borrower, (ii)
accounts payable schedules inclusive of reconciliations to the general ledger of
each Borrower, (iii) Inventory reports, (iv) a report detailing all Receivables
collected by Loan Parties and separating such collections into collections
received on account of Export-Related Accounts Receivable  and collections
received on account of all other Receivables, (v) all reports delivered and all
claims filed with respect to all Approved Credit Insurance Policies during the
prior month, (vi) 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), and (vii) a certification
of the amounts of the Companies’ Qualified Cash and Foreign Cash Liquidity as of
the last day of the prior month, with screen shots or other evidence reasonably
acceptable to Agent in its Permitted Discretion from time to time
supporting/corroborating such certification, and (b) at such intervals as Agent
may require, but, so long as no Event of Default shall have occurred and be
continuing, no more frequently than monthly: (i) confirmatory assignment
schedules; (ii) copies of Customer’s invoices; (iii) evidence of shipment or
delivery; and (iv) such further schedules, documents and/or information
regarding the Collateral as Agent may require including trial balances and test
verifications; provided further that all such Borrowing Base Certificates shall
include a calculation of the Dollar Equivalent value of the Eligible Foreign
Receivables, Eligible Export-Related Accounts Receivable, Letters of Credit, and
Ex-Im Letters of Credit denominated in currencies other than Dollars (with
separate calculations as to the Eligible Foreign Receivables, Eligible
Export-Related Accounts Receivable, Letters of Credit, and Ex-Im Letters of
Credit denominated in each such non-Dollar Currency) based on the Exchange Rate
as in effect on the “as of” date of such Borrowing Base Certificate.  

(b)Deliver to Agent (i) with respect to DNS Korea, at the request of Agent, but
not more frequently than quarterly, the updated information regarding DNS
Korea’s Receivables and machinery and equipment and other “moveables” (as such
term is used in Korean secured lending practice) as described and provided for
in Section 4.15(a), (ii) on or before the twentieth (20th) day of each calendar
quarter, a list of KeyMile’s Receivables which were outstanding at the end of
such calendar quarter (and shall provide such list at shorter intervals if so
requested by Agent if reasonably necessary to safeguard the interests of the
Secured Parties) and (iii) on or before the twentieth (20th) day of each
calendar quarter, a list of KeyMile’s IP Rights (as defined in the German
Assignment Agreement) and those Insurances (as defined in the German Assignment
Agreement) which have not expired at the end of such calendar quarter.

(c)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
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protect its interests hereunder, provided, however, that unless an Event of
Default has occurred and is continuing or Agent shall be conducting a Field
Examination, Agent shall first notify Borrowing Agent before contacting any
Customer.  

(d)The items to be provided under this Section are to be in form satisfactory to
Agent and executed by each Loan Party and delivered to Agent from time to time
solely for Agent’s convenience in 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.

9.3Environmental Reports. Provide Agent, concurrently with the delivery of the
financial statements referred to in Sections 9.7 and 9.8 hereof, with a
certificate signed by the President of Borrowing Agent stating, to the best of
his knowledge, that each Company is in compliance with all applicable
Environmental Laws, except to the extent that any such non-compliance would not
reasonably be expected to result in any Materially Adverse Effect.  To the
extent of any such non-compliance that would reasonably be expected to result in
any Materially Adverse Effect, the certificate shall set forth with specificity
all areas of non-compliance and the proposed action Companies will implement in
order to achieve full compliance.

9.4Litigation.  Promptly notify Agent in writing of any claim, litigation, suit
or administrative proceeding affecting any Company, whether or not the claim is
covered by insurance, and of any litigation, suit or administrative proceeding,
which in any such case affects a material portion of the Collateral or which
could reasonably be expected to have a Material Adverse Effect.

9.5Material Occurrences.  Immediately notify Agent in writing upon the
occurrence of: (a) any Event of Default or Default hereunder or any Ex-Im Event
of Default or Ex-Im Default under the Ex-Im Subfacility Credit Agreement; (b)
any event of default under the agreements evidencing and/or governing the
Permitted DNI Subordinated Loans; (c) any event which with the giving of notice
or lapse of time, or both, would constitute an event of default under the
agreements evidencing and/or governing the Permitted DNI Subordinated Loans; (d)
any event, development or circumstance whereby any financial statements or other
reports delivered to Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied, the financial condition or operating
results of any Company as of the date of such statements; (e) any accumulated
retirement plan funding deficiency which, if such deficiency continued for two
plan years and was not corrected as provided in Section 4971 of the Code, could
subject any Company or any member of the Controlled Group to a tax imposed by
Section 4971 of the Code; (f) each and every default by any Company which might
result in the acceleration of the maturity of any Indebtedness, 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; and (g) any other
development in the business or affairs of any Loan Party, which could reasonably
be expected to have a Material Adverse Effect; in each case describing the
nature thereof and the action Companies propose to take with respect thereto.

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9.6Government Receivables.  Notify Agent immediately if any of its Receivables
arise out of contracts between any Loan Party and the United States, any state,
or any department, agency or instrumentality of any of them.

9.7Annual Financial Statements.  Deliver to Agent within ninety (90) days after
the end of each fiscal year of DZSI and its Subsidiaries, financial statements
of DZSI and its Subsidiaries on a consolidating and Consolidated Basis
including, but not limited to, consolidated and consolidating statements of
income and stockholders’ equity and cash flow from the beginning of the current
fiscal year to the end of such fiscal year and the consolidated and
consolidating balances sheet as at the end of such fiscal year, which such
financial statements and balance sheets shall be true, complete and correct in
all material respects and fairly present, in all material respects, the
financial position of DZSI and its Subsidiaries on a consolidating and
Consolidated Basis as of the date thereof and the results of operations for DZSI
and its Subsidiaries on a consolidating and Consolidated Basis for such fiscal
year and prepared in accordance with GAAP applied on a basis consistent with
prior practices, and in reasonable detail, which such consolidated balance
sheet, income statement, statement of cash flow, and statement of shareholder’s
equity shall be audited by and be reported and opined upon without  any
qualifications (including any (A) “going concern” or like qualification or
exception, (B) qualification or exception as to the scope of such audit, or (C)
qualification which relates to the treatment or classification of any item and
which, as a condition to the removal of such qualification, would require an
adjustment to such item) by an independent certified public accounting firm
selected by Loan Parties and satisfactory to Agent (the “Accountants”); provided
that, it is agreed by the parties hereto that PricewaterhouseCoopers shall be
acceptable as the Accountants.  The report of the Accountants shall be
accompanied by any Accountants’ letter to management (if prepared).  In
addition, the reports shall be accompanied by a Compliance Certificate.

9.8Quarterly Financial Statements.  Deliver to Agent within forty-five (45) days
after the end of each fiscal quarter of DZSI and its Subsidiaries, unaudited
financial statements of DZSI and its Subsidiaries on a consolidating and
Consolidated Basis including, but not limited to, consolidated and consolidating
statements of income and stockholders’ equity and cash flow and consolidating
and consolidated balance sheets reflecting results of operations from the
beginning of the fiscal year to the end of such fiscal quarter and for such
fiscal quarter and setting forth in comparative form the respective
consolidating and consolidated financial statements and balance sheets for the
corresponding date and period in the previous fiscal year and the budget
delivered pursuant to Section 9.12, which such financial statements and balance
sheets shall be true, complete and correct in all material respects and fairly
present, in all material respects, the financial position of DZSI and its
Subsidiaries on a consolidating and Consolidated Basis as of the date thereof
and the results of operations for DZSI and its Subsidiaries on a consolidating
and Consolidated Basis for such fiscal quarter and year-to-date period and
prepared in accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail, subject to normal and recurring year-end
adjustments that individually and in the aggregate are not material to Loan
Parties’ business and the customary absence of footnotes.  The reports shall be
accompanied by a Compliance Certificate and (if prepared by DZSI) a
corresponding discussion and analysis of results from management.

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9.9Monthly Bank Statements.  Deliver to Agent within thirty (30) days after the
end of each month, copies of the bank statement(s) received during such month
for each deposit account/bank account of any Secured Loan Party that are not
maintained with Agent.  

9.10Other Reports.  Deliver to Agent as soon as available, but in any event
within five (5) days after the issuance and/or filings with the Securities and
Exchange Commission (as applicable) thereof, copies of such financial
statements, reports and returns as DZSI shall send to the holders of its Equity
Interests and/or file with the Securities and Exchange Commission (including all
Form 10-Q quarterly reports, and Form 10-K annual reports).

9.11Additional Information.  Provide 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 Companies including, without the necessity
of any request by Agent, (a) copies of all environmental audits and reviews, (b)
at least thirty (30) days prior thereto, notice of any Loan Party’s opening of
any new office or place of business or any Loan Party’s closing of any existing
office or place of business, and (c) promptly upon any Company’s learning
thereof, notice of any labor dispute to which any Company may become a party,
any strikes or walkouts relating to any of its plants or other facilities, and
the expiration of any labor contract to which any Company is a party or by which
any Company is bound.  

9.12Projected Operating Budget.  Deliver to Agent, no later than then last day
of DZSI’s fiscal years commencing with fiscal year 2019, Projections for the
coming/following fiscal year, such Projections to be accompanied by a
certificate signed by the President or Chief Financial Officer of DZSI to the
effect that such Projections have been prepared on the basis of sound financial
planning practice consistent with past budgets and financial statements and that
such officer has no reason to question the reasonableness of any material
assumptions on which such Projections were prepared.

9.13Variances from Operating Budget.  Deliver to Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.9 hereof,
a written report summarizing all material variances from budgets submitted by
Loan Parties pursuant to Section 9.12 hereof and a discussion and analysis by
management with respect to such variances.

9.14Notice of Suits, Adverse Events.  Provide Agent with prompt written notice
of (a) any lapse or other termination of any Consent issued to any Company by
any Governmental Body or any other Person that is material to the operation of
any Company’s business, (b) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (c) copies of any periodic or
special reports filed by any Loan Party with any Governmental Body or Person, if
such reports indicate any material change in the business, operations, affairs
or condition of any Loan Party, or if copies thereof are requested by Lender,
and (d) copies of any material notices and other communications from any
Governmental Body or Person which specifically relate to any Loan Party.

9.15ERISA Notices and Requests.  Provide Agent with immediate written notice in
the event that (a) any Company 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 Company or any member of the Controlled

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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, (b) any Company 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 Section 4975 of the Code) has
occurred together with a written statement describing such transaction and the
action which such Company or any member of the Controlled Group has taken, is
taking or proposes to take with respect thereto to the extent such could
reasonably be expected to result in any material liability to DZSI and its
Subsidiaries, (c) a funding waiver request has been filed with respect to any
Plan together with all communications received by any Company or any member of
the Controlled Group with respect to such request, (d) any increase in the
benefits of any existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which any Company or any member of
the Controlled Group was not previously contributing shall occur which could
reasonably be expected to result in any material liability to DZSI and its
Subsidiaries, (e) any Company 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, (f) any Company or any member of the Controlled Group shall receive
any  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; (g) any Company or any member of the Controlled
Group shall receive a notice regarding the imposition of withdrawal liability,
together with copies of each such notice; or (h) any Company 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.

9.16Additional 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 purposes, terms or conditions of this Agreement.

9.17Updates to Certain Schedules.  Deliver to Agent promptly as shall be
required to maintain the related representations and warranties as true and
correct, updates to Schedules 4.4 (Locations of equipment and Inventory),
Schedule 4.14 (Pledged Equity Interest Collateral), 5.9 (Intellectual Property),
5.22 (Equity Interests), 5.23 (Commercial Tort Claims), and 5.24
(Letter-of-Credit Rights) hereto; provided, that absent the occurrence and
continuance of any Event of Default, Loan Parties shall only be required to
provide such updates on a quarterly basis in connection with delivery of a
Compliance Certificate with respect to the applicable quarter (or, in the case
of Schedule 5.9 (Intellectual Property), semi-annually with the Compliance
Certificate for the second and fourth fiscal quarter of each fiscal year).  Any
such updated Schedules delivered by 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.

9.18Financial Disclosure.  Each Loan Party hereby irrevocably authorizes and
directs all accountants and auditors employed by such Company at any time during
the Term to exhibit and deliver to Agent and each Lender copies of any of such
Company’s financial statements, trial balances or other accounting records of
any sort in the accountant’s or auditor’s possession, and

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to disclose to Agent and each Lender any information such accountants may have
concerning such Company’s financial status and business operations.  Each
Company hereby authorizes all Governmental Bodies to deliver to Agent and each
Lender copies of reports or examinations relating to such Company, whether made
by such Company or otherwise; provided however, Agent and each Lender will
attempt to obtain such information or materials directly from such Company prior
to obtaining such information or materials from such accountants or Governmental
Bodies.

ARTICLE XEVENTS OF DEFAULT.

The occurrence of any one or more of the following events shall constitute an
“Event of Default”:

10.1Nonpayment.  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;

10.2Breach of Representation.  Except as provided in Section 10.18 hereof, any
representation or warranty made or deemed made by any Loan Party in this
Agreement, any of the Other Documents or any related agreement, document,
certificate or financial or other statement provided 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;

10.3Financial Information.  Failure by any Loan Party to (a) deliver financial
information when due hereunder or, if no due date is specified herein, within
three (3) Business Days following a request therefor, or (b) permit the
inspection of its books or records or access to its premises for audits and
appraisals in accordance with the terms hereof;

10.4Judicial Actions.  Issuance of a notice of Lien, levy, assessment,
injunction or attachment (a) against any Loan Party’s Inventory or Receivables
or (b) against a material portion of any Company’s other property, which, in
either case, is not stayed or lifted within thirty (30) days;

10.5Noncompliance.  Except as otherwise provided for in Sections 10.1, 10.3,
10.5(b) and 10.18 hereof, any (a) failure or neglect of any Loan Party or any
Person to perform, keep or observe any term, provision, condition, covenant
(subject to any Cure Right) herein contained, or contained in any Other Document
or any other agreement or arrangement, now or hereafter entered into between any
Loan Party or such Person, and Agent or any Lender which is not cured within
thirty (30) days from the occurrence of such failure or neglect, or (b) failure
or neglect of any Loan Party to perform, keep or observe any term, provision,
condition or covenant, contained in Sections 4.8, 6.1, 6.5, 6.6, 6.15, 6.17,
8.3, 9.2, 9.9, or Article VII hereof (provided that, no such failure or neglect
with respect to any provision of any Lender-Provided Foreign Currency Hedge,
Lender-Provided Interest Rate Hedge, or Cash Management Product or Service will
constitute any default under this Section 10.5 unless the amount of the
Obligations that would be owing to the applicable Secured Party or Secured
Parties upon and termination and/or acceleration with respect to such
Lender-Provided Foreign Currency Hedge, Lender-Provided Interest Rate Hedge, or
Cash

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Management Product or Service at such time as a result of such failure or
neglect would exceed $500,000), or (c) failure or neglect of any Loan Party to
perform, keep or observe any term, provision, condition or covenant contained in
Section 5 of the Closing Date Flow of Funds Agreement;

10.6Judgments.  Any (a) judgment(s), writ(s), order(s) or decree(s) for the
payment of money are rendered against any one or more of the Companies in an
aggregate amount in excess of $500,000, and (b) (i) action shall be legally
taken by any judgment creditor to levy upon assets or properties of any Company
to enforce any such judgment, (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, or (iii) any Liens arising by virtue of the rendition, entry or issuance
of such judgment upon assets or properties of any Loan Party shall be senior to
any Liens in favor of Agent on such assets or properties;

10.7Bankruptcy.  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 Insolvency Proceeding commenced against it), including with
respect to a Person having its center of main interest (in accordance with EU
Regulation 2015/848) in Germany, a reason for the opening of insolvency
proceedings pursuant to §§ 17-19 German Insolvency Code applies, (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 action for the purpose of effecting any of the foregoing;

10.8[RESERVED].  

10.9Lien Priority.  Any Lien created hereunder or provided for hereby or under
any of the Other Documents for any reason ceases to be or is not a valid and
perfected Lien having a first priority interest (subject only to Permitted
Encumbrances that have priority as a matter of Applicable Law to the extent such
Liens only attach to Collateral other than Receivables or Inventory);

10.10Subordinated Loan Default.  An event of default has occurred under the
Subordinated Loan Documents, which default shall not have been cured or waived
within any applicable grace period, or if any Person party to any Subordination
Agreement breaches or violates, or attempts to terminate or challenge the
validity of, such Subordination Agreement;

10.11Cross Default.  Either (a) an Ex-Im Event of Default (for the avoidance of
doubt, after taking into account any applicable grace, notice, or cure period),
or (b) any specified “event of default” (for the avoidance of doubt, after
taking into account any applicable grace, notice, or cure period) under any
Indebtedness (other than the Obligations) of any Company with a then-outstanding
principal balance (or, in the case of any Indebtedness not so denominated, with
a then-outstanding total obligation amount) of $500,000 or more, or any other
event or circumstance

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which would permit the holder of any such Indebtedness of any Company to
accelerate such Indebtedness (and/or the obligations of Companies 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);

10.12Breach of Guaranty, Guarantor Security Agreement or Pledge
Agreement.  Termination or breach of any Guaranty, Guarantor Security Agreement,
Pledge Agreement or similar agreement executed and delivered to Agent in
connection with the Obligations, or if any Guarantor or pledgor attempts to
terminate, challenges the validity of, or its liability under, any such
Guaranty, Guarantor Security Agreement, Pledge Agreement or similar agreement;

10.13Change of Control.  Any Change of Control shall occur;

10.14Invalidity.  Any material provision of 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;

10.15Seizures.  Any (a) portion of the Collateral shall be seized, subject to
garnishment or taken by a Governmental Body, or any Loan Party, or (b) the title
and rights of any Loan Party or any Original Owner which is the owner of any
material portion of the Collateral shall have become the subject matter of
claim, litigation, suit, garnishment or other proceeding which might, in the
opinion of Agent, upon final determination, result in impairment or loss of the
security provided by this Agreement or the Other Documents;

10.16[RESERVED].  

10.17Pension Plans.  An event or condition specified in Sections 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
Company 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

10.18Anti-Terrorism Laws.  Either (x) if (a) any representation or warranty set
forth in (i) Section 16.18(a) hereof or (ii) any corresponding section of any
Guaranty is or becomes false or misleading at any time, (b) any Borrower shall
fail to comply with its obligations under Section 16.18(b) hereof, or (c) any
Guarantor shall fail to comply with its obligations under any section of any
Guaranty containing provisions comparable to those set forth in Section 16.18(b)
 hereof, or (y) with respect to any Loan Party that is party to this Agreement
and that is domiciled in Germany (Inländer), the occurrence of any event or
circumstances which would have resulted in any representation or warranty set
forth in Section 16.18(a) hereof being or becoming false or misleading or which
would have constituted a failure by any such Loan Party to comply with the
provisions of Section 16.18(b) hereof but for the effects of Section 16.18(c)
hereof.

ARTICLE XILENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

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11.1Rights 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 (including, without limitation, any applicable fee(s) or other
amounts payable under the Fee Letter in connection with or with respect to such
acceleration) and this Agreement and the Commitments 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 (including, without limitation, any applicable
fee(s) or other amounts payable under the Fee Letter in connection with or with
respect to such acceleration) and Agent or Required Lenders shall have the right
to terminate this Agreement and to terminate the Commitments; and (iii) without
limiting Section 8.2 hereof, any Default under Sections 10.7(g) hereof, the
obligation of Lenders to make Advances hereunder shall be 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 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 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 non-revocable,
royalty free, nonexclusive license and Agent is granted permission to use all of
each Loan Party’s (a) Intellectual Property which is used or useful 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.  Non-cash proceeds
will only be applied to the Obligations as they are converted into cash.  If any
deficiency shall arise, 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
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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 one or more professional
auctioneers 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 set forth
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).

11.2Agent’s Discretion.  Agent shall have the right 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 Loan Parties or
each other.

11.3Setoff.  If an Event of Default shall have occurred and be continuing,
Agent, each Lender, each Issuer, and each of their respective Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held, and other obligations (in whatever currency) at any time owing, by
Agent, such Lender, such Issuer or any such Affiliate, to or for the credit or
the account of the Borrowers or any other Loan Party against any and all of the
obligations of the Borrowers or any other Loan Party now or hereafter existing
under this Agreement or any Other Document to Agent, such Lender or such Issuer
or their respective Affiliates, irrespective of whether or not such Lender,
Issuer or Affiliate shall have made any demand under this Agreement or any Other
Document and although such

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obligations of the Borrowers or any other Loan Party may be contingent or
unmatured or are owed to a branch, office or Affiliate of Agent, such Lender or
such Issuer different from the branch, office or Affiliate holding such deposit
or obligated on such indebtedness; provided that in the event that any
Defaulting Lender shall exercise any such right of setoff, (x) all amounts so
set off shall be paid over immediately to the Agent for further application in
accordance with the provisions of Section 2.22 and, pending such payment, shall
be segregated by such Defaulting Lender from its other funds and deemed held in
trust for the benefit of the Agent, the Issuer, and the Lenders, and (y) the
Defaulting Lender shall provide promptly to the Agent a statement describing in
reasonable detail the Obligations owing to such Defaulting Lender as to which it
exercised such right of setoff.  The rights of Agent, each Lender, the Issuer
and their respective Affiliates under this Section are in addition to other
rights and remedies (including other rights of setoff) that Agent, such Lender,
the Issuer or their respective Affiliates may have.  Agent, each Lender and
Issuer agrees to notify the Borrowing Agent and the Agent promptly after any
such setoff and application; provided that the failure to give such notice shall
not affect the validity of such setoff and application

11.4Rights 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.

11.5Allocation of Payments and Proceeds of Collateral after Event of
Default.  Notwithstanding any provisions of this Agreement to the contrary:

(a)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, adequate protection payments and distributions under a
plan of reorganization), or in respect of the Collateral may be paid, at Agent’s
discretion, over or delivered as follows:

FIRST, to the payment until paid in full of (x) all out-of-pocket costs and
expenses (including without limitation all legal expenses and reasonable
attorneys’ fees) of Agent and Ex-Im Agent to the extent payable and/or
reimbursable by Loan Parties under the provisions of Section 16.9 hereof and/or
any other applicable provisions hereof or of any Other Document, and/or under
the provisions of Section 16.9 of the Ex-Im Subfacility Credit Agreement  and/or
any other applicable provisions thereof or of any Ex-Im Subfacility Other
Document, including all such costs and expenses incurred by Agent or Ex-Im Agent
in connection with enforcing the rights and remedies of Agent and/or any other
Secured Parties under this Agreement and the Other Documents and/or of Ex-Im
Agent and/or any Ex-Im Secured Party under the Ex-Im Subfacility Credit
Agreement and the Ex-Im Subfacility Other Documents, and (y) all indemnification
obligations owing to Agent and Ex-Im Agent to the extent payable by Loan Parties
under the provisions of Section 16.5 hereof and/or any other applicable
provisions hereof or of any Other Document and/or under the provisions of
Section 16.5 of the Ex-Im Subfacility Credit Agreement  and/or any other
applicable provisions thereof or of any Ex-Im Subfacility Other Document;

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SECOND, to payment until paid in full of any fees owing and payable to Agent
hereunder and/or under any Other Document and to Ex-Im Agent under the Ex-Im
Subfacility Credit Agreement and/or any Ex-Im Subfacility Other Document;

THIRD, to the payment until paid in full of all Obligations (including Ex-Im
Obligations) arising under this Agreement and the Other Documents and/or the
Ex-Im Subfacility Credit Agreement and the Ex-Im Subfacility Credit Agreement
consisting of accrued and unpaid interest on any Out-of-Formula Loans and
Protective Advances funded by Agent under Sections 16.2(e) and 16.2(f) hereof
and not funded by the other Revolving Lenders hereunder and on any
“Out-of-Formula Loans” and “Protective Advances” (each as defined in the Ex-Im
Subfacility Credit Agreement) funded by Ex-Im Agent under Sections 16.2(e) and
16.2(f) of the Ex-Im Subfacility Credit Agreement and not funded by the other
Ex-Im Lenders under the Ex-Im Subfacility Credit Agreement,

FOURTH, to the payment until paid in full of all Obligations (including Ex-Im
Obligations) arising under this Agreement and the Other Documents and/or the
Ex-Im Subfacility Credit Agreement and the Ex-Im Subfacility Credit Agreement
consisting of the principal outstanding on any Out-of-Formula Loans and
Protective Advances funded by Agent under Sections 16.2(e) and 16.2(f) hereof
and not funded by the other Revolving Lenders hereunder and on any
“Out-of-Formula Loans” and “Protective Advances” (each as defined in the Ex-Im
Subfacility Credit Agreement) funded by Ex-Im Agent under Sections 16.2(e) and
16.2(f) of the Ex-Im Subfacility Credit Agreement and not funded by the other
Ex-Im Lenders under the Ex-Im Subfacility Credit Agreement;

FIFTH, ratably, to the payment until paid in full of (x) all out-of-pocket costs
and expenses (including without limitation all legal expenses and reasonable
attorneys’ fees) of each of the Lenders and the Ex-Im Lenders to the extent
payable and/or reimbursable by Loan Parties under the provisions of Section 16.9
hereof and/or any other applicable provisions hereof or of any Other Document
and/or under the provisions of Section 16.9 of the Ex-Im Subfacility Credit
Agreement and/or any other applicable provisions thereof or of any Ex-Im
Subfacility Other Document, and (y) all indemnification obligations owing to
each of the Lenders and the Ex-Im Lenders to the extent payable by Loan Parties
under the provisions of Section 16.5 hereof and/or any other applicable
provisions hereof or of any Other Document and/or under the provisions of
Section 16.5 of the Ex-Im Subfacility Credit Agreement  and/or any other
applicable provisions thereof or of any Ex-Im Subfacility Other Document;

SIXTH, to the payment until paid in full of all Obligations (including Ex-Im
Obligations) arising under this Agreement and the Other Documents and/or the
Ex-Im Subfacility Credit Agreement and the Ex-Im Subfacility Credit Agreement
consisting of accrued and unpaid interest on any Swing Loans or Ex-Im Swing
Loans;

SEVENTH, to the payment until paid in full of all Obligations (including Ex-Im
Obligations) arising under this Agreement and the Other Documents and/or the
Ex-Im Subfacility Credit Agreement and the Ex-Im Subfacility Credit Agreement
consisting of the principal outstanding on any Swing Loans or Ex-Im Swing Loans,

EIGHTH, to the payment until paid in full of all Obligations (including Ex-Im
Obligations) arising under this Agreement and the Other Documents and/or the
Ex-Im Subfacility

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Credit Agreement and the Ex-Im Subfacility Other Documents consisting of accrued
and unpaid interest and accrued and unpaid fees to the extent not repaid
pursuant to clauses THIRD or SIXTH (including but not limited to all Letter of
Credit Fees and all Facility Fees and all interest on any Letter of Credit
Borrowings);

NINTH, to the payment until paid in full of all Obligations (including Ex-Im
Obligations) arising under this Agreement and the Other Documents and/or the
Ex-Im Subfacility Credit Agreement and the Ex-Im Subfacility Credit Agreement
consisting of (i) the principal outstanding on any Revolving Advances, the Term
Loan, or the Ex-Im Revolving Advances, (ii) the principal outstanding on any
Letter of Credit Borrowings and cash collateralization of any outstanding
Letters of Credit in accordance with Section 3.2(b) hereof and of the payment or
cash collateralization of any outstanding Ex-Im Letters of Credit in accordance
with Section 3.2(b) of the Ex-Im Subfacility Credit Agreement, and (ii) any Cash
Management Liabilities and Hedge Liabilities;

TENTH, to the payment, pro rata, until paid in full of all other Obligations
(including Ex-Im Obligations) arising under this Agreement or any Other Document
and/or the Ex-Im Subfacility Credit Agreement or any Ex-Im Subfacility Other
Document which have become due and payable and not repaid pursuant to clauses
“FIRST” through “NINTH” above; and

ELEVENTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.

In carrying out the foregoing, and subject in all cases to the other provisions
of this Section 11.5, (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 applicable Secured Parties and each of the applicable
Ex-Im Secured Parties shall receive an amount equal to its pro rata share (based
on the proportion that the then-outstanding Obligations (including Ex-Im
Obligations) of the applicable category held by each of the applicable Secured
Parties and applicable Ex-Im Secured Parties bears to the aggregate
then-outstanding Obligations (including Ex-Im Obligations) of the applicable
category) of amounts available to be applied pursuant to each of the clauses
above, and (iii) to the extent that any amounts available for distribution
pursuant to clause “NINTH” above are attributable to the issued but undrawn
amount of outstanding Letters of Credit and/or Ex-Im Letters of Credit, such
amounts shall be held by Agent and/or Ex-Im Agent (as applicable) as cash
collateral for such Letters of Credit and Ex-Im Letters of Credit pursuant to
Section 3.2(b) hereof and/or Section 3.2(b) of the Ex-Im Subfacility Credit
Agreement (as applicable) and applied (A) first, to reimburse Issuer and/or
Ex-Im Issuer (as applicable) 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 in the manner provided in this Section 11.5
(beginning with clause FIRST hereof).

 

(b)In the event that, notwithstanding the foregoing provisions of this
Section 11.5, any amounts (including any proceeds of any Collateral) shall be
received by any Secured Party in violation of the terms of this Section 11.5,
such amounts shall be held in trust for the benefit of the rightful and owing
Secured Party or Secured Parties and shall be promptly upon receipt paid over

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to or delivered to Agent (along with any necessary endorsement) (who shall then
distribute such amounts of such Collateral in accordance with this Section
11.5).

(c)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 Loan Parties 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.

(d)For the avoidance of doubt, for all purposes under this Section 11.5, as
applied to any category of Obligations, “paid in full” means payment in cash of
all amounts owing hereunder and under the Other Documents in respect of such
Obligations according to the terms thereof, including loan fees, service fees,
professional fees and interest and specifically including interest accrued after
the commencement of any Insolvency Proceeding (whether or not such interest is
allowed or allowable in such Insolvency Proceeding), default interest calculated
at default rates, interest on interest and expense reimbursements, whether or
not the same would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.

(e)Notwithstanding anything to the contrary contained in (i) this Section 11.5
or in Sections 2.20 or 4.8 hereof, (ii) any other provision hereof or of any
Other Documents, (iii) Sections 2.20, 4.8, 7.20, or 11.5 of the Ex-Im
Subfacility Credit Agreement or (iv) any other provision of the Ex-Im
Subfacility Credit Agreement or any Ex-Im Subfacility Other Document, every
application of the proceeds of Collateral of any Ex-Im Borrower or Ex-Im Credit
Agreement Guarantor to the Obligations shall be made in such a way as to comply
fully with all of the requirements of the Ex-Im Agreements while giving effect,
so far as possible, to such provisions of this Agreement, the Other Documents,
the Ex-Im Subfacility Credit Agreement and the Ex-Im Subfacility Other Documents
(other than the Ex-Im Agreements); provided further that, without limiting the
generality of the foregoing, all payments and collections on and other proceeds
of any Export-Related Accounts Receivable and Export Related General Intangibles
(and any other Export-Related Collateral) shall under all circumstances be
applied first to the payment and repayment of the Ex-Im Obligations, and, only
then, after satisfaction in full of all such Ex-Im Obligations under this
Agreement, second, to the remaining Domestic Obligations.

ARTICLE XIIWAIVERS AND JUDICIAL PROCEEDINGS.

12.1Waiver 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.

12.2Delay.  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.

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12.3Jury 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.

ARTICLE XIIIEFFECTIVE DATE AND TERMINATION.

13.1Term.  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 third anniversary of the Closing
Date (the “Term”), unless sooner terminated as herein provided.  Borrowers may
terminate this Agreement at any time upon ninety (90) days prior written notice
to Agent upon Payment in Full of the Obligations.  

13.2Termination.  The termination of this 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 all transactions entered into, rights or
interests created and all of the Obligations have been Paid in Full.  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 (a) all of the Obligations have Paid in Full, the Commitments
and this Agreement and the Other Documents have been terminated and each Loan
Party has provided Agent and Lenders with an indemnification satisfactory to
Agent with respect thereto, and (b) all of the Loan Parties have released Agent
and the other Secured Parties from and against any and all claims of any nature
whatsoever that any Loan Party may have against Secured Parties pursuant to a
release in form and substance acceptable to Agent.  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 this Agreement shall have
been terminated in accordance with its terms, all Obligations have been Paid in
Full, and all of the Loan Parties have released Agent and the other Secured
Parties from and against any and all claims of any nature whatsoever that any
Loan Party may have against Agent

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and such other Secured Parties pursuant to a release in form and substance
acceptable to Agent (the “Release Conditions”).  Upon satisfaction of the
Release Conditions all security interests and liens granted to Agent under this
Agreement and the Other Documents shall be automatically released and
terminated.  All representations, warranties, covenants, waivers and agreements
set forth herein shall survive the termination of this Agreement and the Payment
in Full of the Obligations.

Agent hereby agrees with the Borrowers that Agent shall (and the Lenders hereby
direct the Agent to), upon the request of the Borrowing Agent:  (a) release any
Lien on any Collateral granted to or held by Agent under any Loan Document
(i) upon satisfaction of the Release Conditions, (ii) that is transferred or to
be transferred as part of or in connection with any Disposition permitted
hereunder or under any other Loan Document, or (iii) as approved in accordance
with Section 16.2(b) of this Agreement; and (b) release any Guarantor from its
obligations under this Agreement and the Other Documents if such Person ceases
to be a Subsidiary of DZSI as a result of a transaction permitted hereunder.

ARTICLE XIVREGARDING AGENT.

14.1Appointment.  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, 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 provided with an indemnification reasonably
satisfactory to Agent with respect thereto.

14.2Nature 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
Agreement, or any of the Other Documents or for any failure of any Loan Party to
perform its obligations hereunder.  Agent shall not be under any obligation

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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 Borrowers 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.

14.3Lack 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.

14.4Resignation of Agent; Successor Agent; Resignation of Non-Agent Issuing
Bank.  Agent may resign on sixty (60) days written notice to each of Lenders and
Borrowing Agent and upon such resignation, Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrowing Agent (provided
that no such approval by Borrowing Agent shall be required (i) in any case where
the successor Agent is one of Lenders or (ii) after the occurrence and during
the continuance of any Event of Default) ; provided that in no event shall any
such successor Agent be a Defaulting Lender.  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 take any further actions after such date as such
agent for perfection to continue the perfection of any such

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Liens (other than to forego from taking any affirmative action to release any
such Liens).  After 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).

Any Issuer (other than PNC) may resign its capacity as an Issuer hereunder on
ten (10) days written notice to each of Lenders and Borrowing Agent, and upon
the effectiveness of such resignation, such resigning Issuer shall have no
further commitment, obligation, or duty to issue any new Letters of Credit
hereunder and/or to consent to any modifications or amendments or increases to
any Letter of Credit issued by such resigning Issuer prior to the effectiveness
of such resignation and/or to extend the maturity or term of any Letter of
Credit issued by such resigning Issuer prior to the effectiveness of such
resignation (and/or to permit any “evergreen” Letter of Credit issued by such
resigning Issuer prior to the effectiveness of such resignation to renew);
provided that, such resigning Issuer shall remain an Issuer for all purposes
hereunder and under the Other Documents with respect to the Letters of Credit
issued by such resigning Issuer prior to the effectiveness of such resignation
until each such prior-issued Letter of Credit (x) has been fully drawn, (y)
expires and/or terminates in accordance with the terms thereof, or (y) is
cancelled/terminated and returned to such resigning Issuer with the consent of
the beneficiary thereof.  After any Issuer’s resignation as Issuer under the
provisions of this paragraph, 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 an Issuer under this
Agreement as to any Letter of Credit.

14.5Certain 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.

14.6Reliance.  Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
email, facsimile or telecopier message, 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.

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14.7Notice 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 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.

14.8Indemnification.  To the extent Agent is not reimbursed and indemnified by
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
hereunder, or in any way relating to or arising out 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).

14.9Agent 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.

14.10Delivery of Documents.  To the extent Agent receives financial statements
required under Sections 9.7, 9.8, 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
deliver such documents and information to Lenders.

14.11Loan 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.

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14.12No 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
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.

14.13Other Agreements.  Each of 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 Lenders 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.

ARTICLE XVBORROWING AGENCY.

15.1Borrowing Agency Provisions.

(a)Each Loan Party hereby irrevocably designates Borrowing Agent to be its
attorney and agent and in such capacity whether verbally, in writing or through
electronic methods (including, without limitation, an Approved Electronic
Communication) 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, writings and further
assurances now or hereafter required hereunder, (vi) make elections regarding
interest rates, (vii) give instructions regarding Letters of Credit and agree
with 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 of such Loan Party or 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 Loan Parties and at their request.  Neither Agent nor any
Lender shall incur liability to 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
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Agent or any Lender by any Person arising from or incurred by reason of the
handling of the financing arrangements of 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 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 Borrower shall make
payment upon the maturity of the Obligations by acceleration or otherwise, and
such obligation and liability on the part of each Borrower 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 Borrower 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 Borrower’s Obligations or the lack
thereof.  Each Borrower waives all suretyship defenses.  

15.2Waiver 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 Party’s 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.

ARTICLE XVIMISCELLANEOUS.

16.1Governing 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 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 Loan
Party 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 Loan Party hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
hand delivery or delivery (prepaid) by internationally recognized overnight
courier to Borrowing Agent at its address 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

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bring proceedings against any Loan Party in the courts of any other
jurisdiction.  Each Loan Party 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.

16.2Entire Understanding.

(a)This Agreement and the Other Documents 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 not herein
contained and hereinafter made 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, 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 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 Loan Parties 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)Subject to the provisions of this Section 16.2(b), the conditions, provisions
or terms hereof or of any Other Document may be amended, modified, supplemented,
changed, varied, made the subject of any consent, or waived in any manner upon
consent of Required Lenders, Agent, and Loan Parties and the execution by them
of a written amendments or other agreements, documents or instruments providing
for the terms of such amendment, modification, supplement, change, variation,
consent, or waiver; provided, however, that no such amendment, or other
agreement, document or instrument shall:

(i)increase the Revolving Commitment or any Term Loan Commitment, as applicable,
or the maximum dollar amount of the Revolving Commitment Amount or any Term Loan
Commitment Amount, as applicable 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

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Section 3.1 hereof or Letter of Credit Default Rate 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
Revolving 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 all Lenders;

(vi)release any Collateral during any calendar year (other than in accordance
with the provisions of this Agreement) having an aggregate value in excess of
$3,000,000 without the consent of all Lenders, except in connection with a
Permitted Disposition;

(vii)change the rights and duties of Agent without the consent of all Lenders
and Agent;

(viii)subject to clause (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 Formula Amount
without the consent of all Revolving Lenders;

(ix)increase the Advance Rates above the Advance Rates in effect on the Closing
Date without the consent of all Revolving Lenders; or

(x)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 Loan Parties, Lenders and Agent and all future holders of the
Obligations.  In the case of any waiver, 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 (x) such consent is denied and (y) Required Lenders have
approved such consent, then Agent may 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 Borrowers.  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

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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, without the consent of any Lender, voluntarily permit the
outstanding Revolving Advances at any time to exceed an amount equal to the
Formula Amount by up to ten percent (10%) of the Formula Amount for up to sixty
(60) consecutive Business Days (the “Out-of-Formula Loans”); provided that no
such Out-of-Formula Loan may be made to the extent, after giving effect to such
Out-of-Formula Loan, the aggregate principal amount of the Revolving Loans
(including any Out-of-Formula Loans and any Protective Advances) and Swing Loans
then-outstanding plus the Maximum Undrawn Amount of all Letters of Credit
then-outstanding plus the Ex-Im Subfacility Outstandings Amount would exceed the
Maximum Revolving Advance Amount.  If Agent is willing in its sole and absolute
discretion to permit such Out-of-Formula Loans, the Revolving Lenders 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; 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) and further provided that,
no Revolving Lender shall be required to fund any portion of any Out-of-Formula
Loan to the extent that, after giving effect to such funding, the aggregate
amount of the outstanding Revolving Advances funded by such Revolving Lender
(including any Out-of-Formula Loans and/or Protective Advances funded by such
Revolving Lender) plus such Revolving Lender’s Revolving Commitment Percentage
of all outstanding Swing Loans plus such Revolving Lender’s Revolving Commitment
Percentage of the aggregate Maximum Undrawn Amount of all outstanding Letters of
Credit plus such Lender’s Ex-Im Revolving Commitment Percentage of the Ex-Im
Subfacility Outstandings Amount would exceed the Revolving Commitment Amount of
such Lender.  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 fact that the Formula Amount was unintentionally exceeded for
any reason, including, but not limited to, Collateral previously deemed to be
Eligible Receivables (or Eligible Foreign Receivables) 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 Formula Amount by more than ten
percent (10%), Agent shall use its efforts to have Borrowers 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 Revolving Lender under this Agreement and
the Other Documents with respect to such Revolving Advances.

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(f)In addition to (and not in substitution of) the discretionary Revolving
Advances permitted above in this Section 16.2, (A) Agent is hereby authorized by
Borrowers 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 Borrowers pursuant to the terms of this
Agreement (any such Revolving Advances, the “Protective Advances”), provided
that, no such Protective Advance may be made to the extent, after giving effect
to such Protective Advance, the aggregate principal amount of the Revolving
Loans (including any Out-of-Formula Loans and any Protective Advances) and Swing
Loans then-outstanding plus the Maximum Undrawn Amount of all Letters of Credit
then-outstanding plus the Ex-Im Subfacility Outstandings Amount would exceed the
Maximum Revolving Advance Amount.  The Revolving Lenders shall be obligated to
fund such Protective Advances and effect a settlement with Agent therefore upon
demand of Agent in accordance with their respective Revolving Commitment
Percentages; provided that, no Revolving Lender shall be required to fund any
portion of any Protective Advance to the extent that, after giving effect to
such funding, the aggregate amount of the outstanding Revolving Advances funded
by such Revolving Lender (including any Out-of-Formula Loans and/or Protective
Advances funded by such Revolving Lender) plus such Revolving Lender’s Revolving
Commitment Percentage of all outstanding Swing Loans plus such Revolving
Lender’s Revolving Commitment Percentage of the aggregate Maximum Undrawn Amount
of all outstanding Letters of Credit plus such Lender’s Ex-Im Revolving
Commitment Percentage of the Ex-Im Subfacility Outstandings Amount would exceed
the Revolving Commitment Amount of such Lender.  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 Revolving Lender
under this Agreement and the Other Documents with respect to such Revolving
Advances.  

16.3Successors and Assigns; Participations; New Lenders.

(a)This Agreement shall be binding upon and inure to the benefit of 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
or purchaser of a participating 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) Borrowers shall not be required to pay to any Participant more than the
amount which it would have been required to pay to Lender which granted an
interest in its Advances or other Obligations payable hereunder to such

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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 Borrower’s prior written consent, and (ii) in no event
shall Borrowers 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.

(c)Any Lender may sell, assign or transfer all or any part of its rights and
obligations under or relating to any of the Advances or Commitments of such
Lender under this Agreement and the Other Documents to one or more entities
(each a “Purchasing Lender”), in minimum amounts of not less than $2,500,000,
pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender,
the transferor Lender, and Agent (Agent’s consent not to be unreasonably
withheld or delayed) and delivered to Agent for recording, provided, however,
each such sale, assignment or transfer by any Lender must consist of an
assignment by such Lender of an equal percentage of such Lender’s Revolving
Commitment and/or Revolving Advances and interests hereunder as a Revolving
Lender and of such Lender’s  portion of the Term Loan and interest hereunder as
a Term Lender. 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 hereunder with respect to the Advances and,
if applicable, Commitments transferred to such Purchasing Lender under such
Commitment Transfer Supplement, and (ii) the transferor Lender thereunder shall,
to the extent provided in such Commitment Transfer Supplement, be released from
its obligations under this Agreement.  Such 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 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.  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.  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 Borrowers (such consent not to be unreasonably withheld 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 Borrowers shall be deemed to have consented to any such assignment
unless Borrowing Agent shall object thereto by written notice to Agent within
five (5) 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 any of the
Advances or Commitments of such Lender under this Agreement and the Other
Documents to an entity, whether a corporation, partnership, trust, limited
liability company or other entity that (i) is a Fund 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”),

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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, provided,
however, each such sale, assignment or transfer by any Revolving Lender prior to
the termination of such Revolving Lender’s Revolving Commitment must consist of
an assignment by such Revolving Lender of both the designated portion of such
Revolving Lender’s Revolving Commitment and Revolving Advances and of that
portion of the Term Loan held by such Lender as is proportionate to that portion
of such Revolving Lender’s Revolving Commitment and Revolving Advances so sold,
assigned or transferred.  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 with respect to the Advances and, if
applicable, Commitments transferred to such Purchasing CLO under such Commitment
Transfer Supplement, 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.  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.  Loan Parties
shall execute and deliver such further documents and do such further acts and
things in order to effectuate the foregoing.

(e)Agent 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 or to a Permitted Assignee) to such Purchasing Lender and/or
Purchasing CLO and the resulting adjustment of the Revolving Commitment
Percentages.

(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.

(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.

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(h)Notwithstanding anything to the contrary contained in this Section 16.3
(specifically including subsections (b), (c) or (d) hereof) or otherwise
provided for in this Agreement or any Other Document including any Note, no
Lender may sell any participating interest in its Revolving Commitment and/or
its interest in the Revolving Advances (and in its Participation Commitment with
respect to Swing Loans and Letters of Credit) to any Participant, and no Lender
may sell, assign or transfer all or any part of its rights and obligations under
or relating to its Revolving Commitment and/or its interest in the Revolving
Advances (and in its Participation Commitment with respect to Swing Loans and
Letters of Credit) to any Purchasing Lender or any  Purchasing CLO, unless
Lender shall also simultaneously sell, assign or transfer (as applicable) to the
applicable Participant, Purchasing Lender or Purchasing CLO a corresponding
participation interest or transferred interest (as applicable) in such
participating/transferring Lender’s Ex-Im Revolving Commitment as an Ex-Im
Lender under the Ex-Im Subfacility Credit Agreement and such
participating/transferring Lender’s interest as an Ex-Im Lender under the Ex-Im
Subfacility Credit Agreement in the Ex-Im Revolving Advances (and in its
“Participation Commitment” (as defined in the Ex-Im Subfacility Credit
Agreement) with respect to Ex-Im Swing Loans and Ex-Im Letters of Credit) such
that, after giving effect to all such participations, sales, assignments or
transfers (as applicable), such Participant, Purchasing Lender or Purchasing CLO
(as applicable) shall hold an equal percentage interest (as a participant or a
lender, as applicable) in both such selling Lender’s Revolving Commitment and
interests in the Revolving Advances (and Participation Commitment with respect
to Swing Loans and Letters of Credit) and such selling Lender’s Ex-Im Revolving
Commitment as an Ex-Im Lender under the Ex-Im Subfacility Credit Agreement and
interests as an Ex-Im Lender under the Ex-Im Subfacility Credit Agreement in the
Ex-Im Revolving Advances (and “Participation Commitment” (as defined in the
Ex-Im Subfacility Credit Agreement) with respect to Ex-Im Swing Loans and Ex-Im
Letters of Credit).

16.4Application 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.

16.5Indemnity.  Each Loan Party shall defend, protect, indemnify, pay and save
harmless Agent, 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 fees and disbursements of outside 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

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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, Issuer or any Lender under the Agreement and the Other Documents, (v) any
threatened or actual imposition of fines or penalties, or disgorgement of
benefits, for violation of any Anti-Terrorism Law by any Loan Party or any
Affiliate or Subsidiary of any Loan Party, and (vi) any claim, litigation,
proceeding or investigation instituted or conducted by any Governmental Body or
instrumentality, any Loan Party, any Affiliate or Subsidiary of any Loan Party
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 Company, any Hazardous
Discharge, the presence of any Hazardous Materials affecting such Real Property
(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 of such Real Property 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.  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 Company, 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.  Additionally, if any taxes (excluding taxes
imposed upon or measured solely by the net income of Agent and Lenders, but
including any intangibles taxes, stamp tax, recording tax or franchise tax)
shall be payable by Agent, Lenders or Loan Parties on account of the execution
or delivery of this Agreement, or the execution, delivery, issuance or recording
of any of the Other Documents, or the creation or repayment of any of the
Obligations hereunder, by reason of any Applicable Law now or hereafter in
effect, Loan Parties will pay (or will promptly reimburse Agent and Lenders for
payment of) all such taxes, including interest and penalties thereon, and will
indemnify and hold the Indemnified Parties harmless from and against all
liability in connection therewith.

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16.6Notice.  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
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 12:00 p.m. 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

350 S. Grand Ave., (2 Cal Plaza) Suite 3850

Los Angeles, CA 90071

Attention:Relationship Manager – Dasan Zhone/DZSI / Steve Roberts

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Telephone: 626-432-6128

 

with a copy to:

 

PNC Bank, National Association

PNC Agency Services

PNC Firstside Center

500 First Avenue (Mailstop: P7-PFSC-04-1)

Pittsburgh, Pennsylvania 15219 

Attention: Lori Killmeyer

Facsimile: (412) 762-8672

 

with an additional copy to:

 

Blank Rome LLP

The Chrysler Building – 405 Lexington Avenue

New York, New York 10174-0208

Attention: Lawrence F. Flick, Esq.

Facsimile: (212) 885-5001

 

(B)If to a Lender other than Agent, as specified on its signature page hereto or
in the Commitment Transfer Supplement or joinder agreement under which such
Lender became a party hereto.

 

(C)If to Borrowing Agent or any Loan Party:

 

DASAN Zhone Solutions, Inc.

7195 Oakport Street

Oakland, California 94621

Attention:  

Michael Golomb

Jerry Borja

Pei Hung

Alexander Yastremski

 

Facsimile: (510)  777-7001

 

with a copy to:

 

DLA Piper LLP (US)

2000 University Avenue

East Palo Alto, California

Attention: Louis Lehot

Facsimile: (650) 833-2001

 

16.7Survival.  The obligations of Loan Parties under Sections 2.2(f), 2.2(g),
2.2(h), 2.16, 2.17, 2.19, 3.7, 3.8, 3.9, 3.10, 16.5, 16.9, 16.20 and 16.21
hereof and the obligations of Lenders

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under Sections 2.2, 2.4(c), 2.14(d), 2.15(b), 2.16, 2.18, 2.19, 14.8 and 16.5
hereof shall survive the termination of this Agreement and the Other Documents
and the Payment in Full of the Obligations.

16.8Severability.  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.

16.9Expenses.  The Loan Parties shall pay (a) all out-of-pocket expenses
incurred by Agent and its Affiliates (including the reasonable fees, charges and
disbursements of counsel for each of Agent), and shall pay all 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 out-of-pocket expenses incurred
by Issuer in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, (c) all out-of-pocket
expenses incurred by Agent, any Lender or Issuer (including the fees, charges
and disbursements of any counsel for Agent, any Lender or Issuer), and shall pay
all fees and time charges for attorneys who may be employees of Agent, any
Lender or 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 out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Advances or Letters of Credit, and (d) all reasonable out-of-pocket expenses of
Agent’s regular employees and agents engaged periodically to perform audits of
the Loan Parties’ books, records and business properties.

16.10Injunctive 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; therefore, 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.

16.11Consequential 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 Loan Party) 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.

16.12Captions.  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.

16.13Counterparts; 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.  

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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.

16.14Construction.  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.

16.15Confidentiality; Sharing Information.  Each of the Agent, the Lenders and
the Issuer agree to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to
its Related Parties (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential); (b) to the
extent required or requested by any regulatory authority purporting to have
jurisdiction over such Person or its Related Parties (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners); (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process; (d) to any other party hereto; (e) in
connection with the exercise of any remedies hereunder or under any Other
Document or any action or proceeding relating to this Agreement or any Other
Document or the enforcement of rights hereunder or thereunder; (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights and obligations under this Agreement, or (ii)
any actual or prospective party (or its Related Parties) to any swap, derivative
or other transaction under which payments are to be made by reference to the
Borrowers and their obligations, this Agreement or payments hereunder; (g) on a
confidential basis to (i)  any rating agency in connection with rating the
Borrowers or their Subsidiaries or the credit facilities hereunder or (ii) the
CUSIP Service Bureau or any similar agency in connection with the issuance and
monitoring of CUSIP numbers with respect to the credit facilities hereunder;
(h) with the consent of the Borrowers; or (i) to the extent such Information
(x) becomes publicly available other than as a result of a breach of this
Section, or (y) becomes available to the Agent, any Lender, the Issuer or any of
their respective Affiliates on a nonconfidential basis from a source other than
the Borrowers. In addition, the Agent and the Lenders may disclose the existence
of this Agreement and information about this Agreement to market data
collectors, similar service providers to the lending industry and service
providers to the Agent and the Lenders in connection with the administration of
this Agreement, the Other Documents, and the Commitments.

16.16Publicity.  Each Loan Party and each Lender hereby authorizes Agent to make
appropriate announcements of the financial arrangement (exclusive of any pricing
terms) entered into among 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.

16.17Certifications 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 contained in Section 313 of the USA
PATRIOT Act and the applicable

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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.

(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, Agent and
each Lender may from time to time request, and each Loan Party shall provide to
Agent or such Lender, such Loan Party’s name, address, tax identification number
and/or such other identifying information as shall be necessary for Agent or
such Lender to comply with the USA PATRIOT Act and any other Anti-Terrorism Law.

16.18Anti-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 (A) 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; (B) 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; (C) engage in any dealings or
transactions prohibited by any Anti-Terrorism Law or (D) 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 any Loan Party obtaining knowledge of the occurrence of a
Reportable Compliance Event.

(c)This Section 16.18 shall not be applied (or construed to apply) to, or for
the benefit of, any party domiciled in Germany (Inländer) to the extent that the
provisions under this section 16.18 would violate or expose such entity or any
officer or employee thereof to any liability under any anti-boycott or blocking
law, regulation or statute in force from time to time in the Federal Republic of
Germany or the European Union and applicable to such entity (including without
limitation EU Regulation (EC) 2271/96 and section 7 of the German Foreign Trade
Ordinance (Verordnung zur Durchführung des Außenwirtschaftsgesetzes
(Außenwirtschafts-verordnung - AWV)).

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16.19Acknowledgement and Consent to Bail-In of EEA Financial
Institutions.  Notwithstanding anything to the contrary in this Agreement or in
any Other Document or in any other agreement, arrangement or understanding among
any such parties, each party hereto 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:

 

(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 Authority.

16.20Currency Indemnity.  If, for the purposes of obtaining judgment in any
court in any jurisdiction with respect to this Agreement or any Other Document
it becomes necessary to convert into the currency of such jurisdiction (the
"Judgment Currency") any amount due under this Agreement or under any of the
Other Documents in any currency other than the Judgment Currency (the "Currency
Due"), then conversion shall be made at the Exchange Rate at which Agent is
able, on the relevant date, to purchase the Currency Due with the Judgment
Currency prevailing on the Business Day before the day on which judgment is
given.  In the event that there is a change in the rate of Exchange Rate
prevailing between the Business Day before the day on which the judgment is
given and the date of receipt by Agent of the amount due, the Borrowers will, on
the date of receipt by Agent, pay such additional amounts, if any, or be
entitled to receive reimbursement of such amount, if any, as may be necessary to
ensure that the amount received by Agent on such date is the amount in the
Judgment Currency which when converted at the rate of exchange prevailing on the
date of receipt by Agent is the amount then due under this Agreement or such
Other Document in the Currency Due.  If the amount of the Currency Due which
Agent is able to purchase is less than the amount of the Currency Due originally
due to it, the Borrowers shall indemnify and save Agent harmless from and
against loss or damage arising as a result of such deficiency.  The indemnity
contained herein shall constitute an obligation separate and independent from
the other obligations contained in this Agreement and the Other Documents, shall
give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by Agent from time to time and shall
continue in full force and effect

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notwithstanding any judgment or order for a liquidated sum in respect of an
amount due under this Agreement or any of the Other Documents or under any
judgment or order.

16.21Sovereign Immunity.  To the extent any Loan Party has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether from service or notice, attachment prior to judgment, attachment in aid
of execution of a judgment, execution or otherwise), each Loan Party hereby
irrevocably waives such immunity in respect of its obligations hereunder and
under the Other Documents.

16.22Ex-Im Subfacility.  The parties hereto acknowledge and agree that the
credit facility under the Ex-Im Subfacility Credit Agreement is a subfacility
under this Agreement and is the “Ex-Im Subfacility” under this
Agreement.  Notwithstanding anything to the contrary in this Agreement or the
Ex-Im Subfacility Credit Agreement, in no event shall any Loan Party have any
obligations to make duplicate payments, such as mandatory prepayments or the
payment of fees, costs and expenses under the Ex-Im Subfacility Credit Agreement
and this Agreement.  The parties hereto acknowledge and agree, notwithstanding
anything to the contrary herein, that (a) (i) any Lien granted by any of the
Loan Parties to the Ex-Im Agent, for the benefit of the Ex-Im Secured Parties,
in any Export-Related Collateral pursuant to the Ex-Im Subfacility Credit
Agreement or any Ex-Im Subfacility Other Documents shall be senior to any Lien
granted by any of the Loan Parties to Agent in such Export-Related Collateral,
for the benefit of the Secured Parties, pursuant to this Agreement or any Other
Documents and (ii) any Lien granted by any of the Loan Parties to Agent in the
Export-Related Collateral, for the benefit of the Secured Parties, pursuant to
this Agreement or any Other Documents shall be subordinate to any Lien granted
by any of the Loan Parties to the Ex-Im Agent, for the benefit of the Ex-Im
Secured Parties, in such Export-Related Collateral pursuant to the Ex-Im
Subfacility Credit Agreement or any Ex-Im Subfacility Other Documents and (b)
(i) any Lien granted by any of the Loan Parties to Agent, for the benefit of the
Secured Parties, in any Secondary Collateral pursuant to this Agreement or any
Other Documents shall be senior to any Lien granted by any of the Loan Parties
to the Ex-Im Agent, for the benefit of the Ex-Im Secured Parties, in such
Secondary Collateral pursuant to the Ex-Im Subfacility Credit Agreement or any
Ex-Im Subfacility Other Documents and (ii) any Lien granted by any of the Loan
Parties to Agent, for the benefit of the Secured Parties, in any Secondary
Collateral pursuant to the Ex-Im Subfacility Credit Agreement or any Ex-Im
Subfacility Other Documents shall be subordinate to any Lien granted by any of
the Loan Parties to Agent, for the benefit of the Secured Parties, in such
Second Collateral pursuant to this Agreement or any Other Documents.  In
addition, the parties hereto acknowledge and agree, notwithstanding anything to
the contrary herein, that (x) the Liens granted by any of the Loan Parties to
the Ex-Im Agent, for the benefit of the Ex-Im Secured Parties, in any Inventory
Collateral pursuant to the Ex-Im Subfacility Credit Agreement or any Ex-Im
Subfacility Other Documents and (y) the Liens granted by any of the Loan Parties
to Agent, for the benefit of the Secured Parties, in any Inventory Collateral
pursuant to this Agreement or any Other Documents shall rank pari passu.  Any
representation, warranty or covenant in this Agreement or any Other Document
made by any Loan Party with respect to the priority of any Lien in the
Collateral shall be made subject to the foregoing sentences.  The parties
acknowledge that any proxy or power or attorney granted to Agent hereunder has
also been granted to the Ex-Im Agent, and Agent and Lenders consent
thereto.  Solely with respect to the Export-Related Collateral, Agent’s rights
and remedies (including any proxies and powers of attorney) under this Agreement
and the Other Documents shall be subject to the rights and remedies of the Ex-Im
Agent and, solely with respect to the Secondary Collateral, the Ex-Im Agent’s
rights and

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remedies under the Ex-Im Subfacility Credit Agreement (including any proxies and
powers of attorney thereunder) shall be subject to the rights and remedies of
Agent.  Except in the case where an assignment with respect to the Ex-Im
Subfacility Credit Agreement and the Ex-Im Subfacility Other Documents has
already taken place under Section 16.3(i) of the Ex-Im Subfacility Credit
Agreement, in no event may Agent resign as agent under this Agreement, unless
Agent has simultaneously resigned under the Ex-Im Subfacility Credit Agreement,
the intent being that Agent under this Agreement shall also be the Ex-Im Agent
unless an assignment with respect to the Ex-Im Subfacility Credit Agreement and
the Ex-Im Subfacility Other Documents has already taken place under Section
16.3(i) of the Ex-Im Subfacility Credit Agreement.

ARTICLE XVIIGUARANTY AND SURETYSHIP AGREEMENT

17.1Guaranty and Suretyship Agreement.  Each Guarantor hereby guarantees, and
becomes surety for, the prompt payment and performance when due (whether at
stated maturity, by required prepayment, declaration, demand, by acceleration or
otherwise) of (a) all of the Obligations owing by the Loan Parties to the
Secured Parties, including all of the costs and expenses and all of the
indemnities owing to any Secured Party or other Indemnitee under the provisions
of Sections 16.5 and 16.9 hereof, and (b) the costs and expenses of Agent in
enforcing the provisions of this Article XVII (all collectively under the
foregoing clauses (a) and (b), the “Guaranteed Obligations”).  The obligations
and liabilities of the Guarantors under this Article XVII are joint and several,
and each Guarantor hereby acknowledges and accepts such joint and several
liability and further acknowledges and agrees that the joint and several
liabilities of Guarantors under the provisions of this Article XVII shall be
primary and direct liabilities and not secondary liabilities.

17.2Guaranty of Payment and Not Merely Collection.  The provisions of this
Article XVII constitute a guaranty of payment and not of collection and no
Secured Party shall be required, as a condition of any Guarantor’s liability
hereunder, to make any demand upon or to pursue any of their rights against any
Loan Parties and/or any of the Collateral (or any other collateral pledged
and/or made subject to any Lien by any Person to secure any part of the
Guaranteed Obligations), or to pursue any rights which may be available to any
Secured Party with respect to any other person who may be liable for the payment
of the Guaranteed Obligations and/or any other collateral or security available
to any Secured Party therefor.

17.3Guarantor and Suretyship Waivers.

(a)The provisions of this Article XVII constitute an absolute, unconditional,
irrevocable and continuing guaranty and will remain in full force and effect
until all of the Guaranteed Obligations have been Paid in Full.  The provisions
of this Article XVII will remain in full force and effect even if there are no
Guaranteed Obligations outstanding at a particular time or from time to
time.  The provisions of this Article XVII will not be affected (i) by any
surrender, exchange, acceptance, compromise or release by any Secured Party of
any other party, or any other guaranty or any Collateral or other collateral or
security held by it for any of the Guaranteed Obligations, (ii) by any failure
of any Secured Party to take any steps to perfect or maintain their Liens or
security interest in or to preserve their rights in or to any Collateral or any
other security or other collateral for the Guaranteed Obligations or any
guaranty, (iii) the illegality of the guaranteed obligations, (iv) any change in
the corporate existence or structure of any borrower, (v)

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any law, regulation, decree or order of any jurisdiction or any event affecting
any term of a guaranteed obligation, or (vi) by any irregularity,
unenforceability or invalidity of the Guaranteed Obligations or any part thereof
or any security therefor or other guaranty thereof, and the provisions of this
Article XVII will not be affected by any other facts, events, occurrences or
circumstances (except Payment in Full of the Guaranteed Obligations) that might
otherwise give rise to any “guarantor” or “suretyship” defenses to which any
Guarantor might otherwise be entitled, all of which such “guarantor” or
“suretyship” defenses are hereby waived by each Guarantor.  The obligations of
each Guarantor hereunder shall not be affected, modified or impaired by any
counterclaim, set-off, deduction or defense of any kind, including any such
counterclaim, set-off, deduction or defense based upon any claim such Guarantor
may have against any Borrower or any Secured Party (or any of their respective
Affiliates), or based upon any claim any Borrower or any other guarantor or
surety may have against any Secured Party (or any of their respective
Affiliates), except the Payment in Full of the Guaranteed Obligations.

(b)Notice of acceptance of the agreement to guaranty provided for under the
provisions of this Article XVII, notice of extensions of credit to Loan Parties
from time to time, notice of default, diligence, presentment, notice of
dishonor, protest, demand for payment, and any defense based upon any Secured
Party’s failure to comply with the notice requirements of §§ 9-611, 9-612 and
9-613 of the Uniform Commercial Code are hereby waived to the fullest extent
permitted by law.  Each Guarantor hereby waives all defenses based on suretyship
or impairment of collateral to the fullest extent permitted by law.

(c)Secured Parties may at any time and from time to time, without impairing or
releasing, discharging or modifying any Guarantor’s liabilities hereunder and
(for purposes of this Article XVII only) without notice to or the consent of any
Guarantor: (i) change the manner, place, time or terms of payment or performance
of or interest rates or other fees on, or other terms relating to (including the
maturity thereof), any of the Guaranteed Obligations; (ii) renew, extend,
substitute, modify, amend or alter or refinance, or grant consents or waivers
relating to any of the terms and provisions of this Agreement or any of the
Other Documents or of the Guaranteed Obligations, or of any other guaranties, or
any security for the Obligations or guaranties, (iii) increase (without limit of
any kind) or decrease the Guaranteed Obligations (including all loans and
extensions of credit thereunder) or modify the terms on which loans and
extensions of credit may be made to Loan Parties (including without limitation
by making available to Loan Parties under this Agreement and/or any Other
Document and as part of the Guaranteed Obligations any new loans, advances or
other extensions of credit of any kind, including any such new loans, advances
or extension of credit of a new or different type or nature (including any new
Cash Management Products and Services of any kind, Foreign Currency Hedges of
any kind and/or Interest Rate Hedge of any kind) as compared to the loans,
advances and extensions of credit available to Loan Parties hereunder as of the
Closing Date); (iv) apply any and all payments by whomever paid or however
realized including any proceeds of the Collateral or any other collateral or
security, to any Guaranteed Obligations in such order, manner and amount as
Agent may determine in its sole discretion in accordance with the terms of this
Agreement; (v) settle, compromise or deal with any other Person, including any
Borrower or any other guarantor, with respect to the Guaranteed Obligations in
such manner as Agent deems appropriate in its sole discretion; (vi) substitute,
exchange, subordinate, sell, compromise or release any security or guaranty for
the Guaranteed Obligations; or (vii) take such actions and exercise such
remedies hereunder as provided herein.

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17.4Repayments or Recovery from Secured Parties.  If any demand or claim is made
at any time upon any Secured Party for the repayment or recovery of any amount
received by it in payment or on account of the Guaranteed Obligations (including
any such demand or claim made in respect of or arising out of any laws relating
to fraudulent transfers, fraudulent conveyances or preferences) and if any
Secured Party repays all or any part of such amount by reason of any judgment,
decree or order of any court or administrative body in respect of such demand or
claim, or by reason of any settlement or compromise of any such demand or claim,
the joint and several liability of Guarantors with respect to such portion of
the Guaranteed Obligations previously satisfied by the payment of the amount so
repaid or recovered shall be reinstated and revived and Guarantors will be and
remain jointly and severally liable hereunder for the amount so repaid or
recovered to the same extent as if such amount had never been received
originally by Agent and/or such Secured Party, as the case may be.  The
provisions of this Section 17.4 shall survive any release and/or termination of
this Agreement (and/or of any Guarantor’s liability under this Article XVII) and
will be and remain effective notwithstanding any contrary action which may have
been taken by any Guarantor in reliance upon such payment, and any such contrary
action so taken will be without prejudice to Secured Parties’ rights hereunder
and any such release and/or termination will be deemed to have been conditioned
upon such payment having become final and irrevocable.

17.5Enforceability of Obligations.  No modification, limitation or discharge of
the Guaranteed Obligations arising out of or by virtue of any bankruptcy,
reorganization or similar proceeding for relief of debtors under federal or
state law with respect to any Borrower or any other guarantor or surety for the
Guaranteed Obligations will affect, modify, limit or discharge Guarantors’
liability in any manner whatsoever and the provisions of this Article XVII will
remain and continue in full force and effect and will be enforceable against
each Guarantor to the same extent and with the same force and effect as if any
such proceeding had not been instituted.  Each Guarantor hereby waives all
rights and benefits which might accrue to it by reason of any such proceeding
and will be liable to the full extent hereunder, irrespective of any
modification, limitation or discharge of the Guaranteed Obligations that may
result from any such proceeding.

17.6Guaranty Payable upon Event of Default; Remedies.

(a) Upon the occurrence of any Event of Default under this Agreement:
(i) Guarantors shall pay to Agent, immediately upon Agent’s demand therefore
(except in the case of any Event of Default under Section 10.7, in which case
Guarantors shall pay to Agent immediately, without any demand or notice
whatsoever), the full amount of the Guaranteed Obligations; (ii) Agent in its
discretion may exercise with respect to any Collateral of any Guarantor or any
other collateral or security for the Guaranteed Obligations any one or more of
the rights and remedies provided a secured party under the Uniform Commercial
Code or any other applicable law or at equity (all of which such rights and
remedies are hereby deemed incorporated herein and confirmed and ratified by
Guarantors as if expressly set forth and granted and agreed to by Guarantors
herein); and/or (iii) Agent in its discretion may exercise from time to time any
other rights and remedies available to it or any other Secured Party at law, in
equity or otherwise.

(b)The Guarantors jointly and severally agree that, as between the Guarantors
and the Secured Parties, the Obligations of Loan Parties under this Agreement
and the Other Documents may be declared to be forthwith due and payable as
provided in Section 11.1 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in

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Section 11.1) for purposes of this Article XVII (specifically including Section
17.1 hereof), notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically due
and payable) as against Loan Parties and that, in the event of such declaration
(or such obligations being deemed to have become automatically due and payable),
such Obligations (whether or not due and payable by Loan Parties) shall
forthwith become due and payable by the Guarantors for purposes of this Article
XVII (specifically including Section 17.1 hereof).

(c)Each Guarantor hereby acknowledges that the guarantee provided for under the
provisions of this Article XVII constitutes an instrument for the payment of
money, and consents and agrees that any Secured Party, at its sole option, in
the event of a dispute by such Guarantor in the payment of any moneys due
hereunder, shall have the right to bring a motion-action under New York CPLR
Section 3213.

17.7Waiver of Subrogation.  Until the Guaranteed Obligations are Paid in Full
and this Agreement and the Commitments have been terminated, each Guarantor
waives in favor of Secured Parties any and all rights which such Guarantor may
have to (a) assert any claim against any Borrower or any other Guarantor based
on subrogation, restitution, reimbursement or contribution rights with respect
to payments made under the provisions of this Article XVII, and (b) any
realization on any property of any Borrower or any other Guarantor, including
participation in any marshalling of any Borrower’s or any other Guarantor’s
assets.

17.8Continuing Guaranty and Suretyship Agreement.  The provisions of this
Article XVII shall constitute a continuing guaranty and suretyship obligation of
each Guarantor with respect to all Guaranteed Obligations from time to time
outstanding, arising or incurred, and shall continue in effect, and Secured
Parties may continue to act in reliance hereon, until all of the Guaranteed
Obligations have been Paid in Full and this Agreement and the Commitments have
been terminated (provided that, even after such time, each provision hereof that
expressly states it shall survive any such Payment and Full and/or termination
shall remain in full force and effect in accordance with the terms of such
provision), and until such time, no Guarantor shall have any right to terminate
or revoke the provisions of this Article XVII nor any of the guarantee and
surety agreements and other covenants and undertakings provided for herein.

17.9General Limitation on Guarantee Obligations.  If, in the course of any legal
action or proceeding under any applicable law, including any Insolvency
Proceedings with respect to any Guarantor, the obligations of any Guarantor
under the provisions of this Article XVII would otherwise be held or determined
to be void, voidable, invalid or unenforceable, or subordinated to the claims of
any other creditors, on account of the amount of its liability under the
provisions of this Article XVII, then, notwithstanding any other provision to
the contrary, the amount of such liabilities of such Guarantor under the
provisions of this Article XVII shall, without any further action by such
Guarantor, any Secured Party or any other Person, be automatically limited and
reduced to the highest amount (after giving effect to the right of contribution
established in Section 17.10 hereof) that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.  Absent any such determination in any such legal action or
proceeding, the provisions of this Section 17.9 shall in no respect limit the
obligations and liabilities of any Guarantor to Secured Parties, and each
Guarantor shall remain liable to Secured Parties for the full amount guaranteed
by such Guarantor hereunder.

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17.10Limitation with respect to German Guarantors.

(a)Agent shall be entitled to enforce the Guaranty provided for under this
Article XVII (“this Guarantee”) against any German Guarantor without limitation
in respect of:

(i)all and any amounts which are owed under the Guaranteed Obligations (other
than only under this clause) by such German Guarantor itself or by any of its
Subsidiaries that later become Loan Parties; and

(ii)all and any amounts which are owed under the Guaranteed Obligations by (aa)
a shareholder of such German Guarantor or (bb) an affiliated company
(verbundenes Unternehmen) within the meaning of section 15 of the German Stock
Corporation Act (Aktiengesetz) of a shareholder of such German Guarantor (other
than such German Guarantor and its Subsidiaries) provided that

(A)such German Guarantor has entered into a domination and/or profit and loss
transfer agreement (Beherrschungs- und/oder  Gewinnabführungsvertrag) with such
shareholder or affiliated company, and

(B)section 30 of the German Act on Companies with Limited Liability (Gesetz
betreffend die Gesellschaften mit beschränkter Haftung) as amended from time to
time exempts specific distributions (Leistungen) among parties to a domination
and/or profit and loss transfer agreement from the prohibition to pay out assets
required for the preservation of the registered share capital (Stammkapital).

(b)Agent and Secured Parties shall not be entitled to enforce this Guarantee
against a German Guarantor, if and to the extent that:

(i)this Guarantee secures the obligations of an obligor which is (i) a
shareholder of such German Guarantor or (ii) an affiliated company within the
meaning of section 15 of the German Stock Corporation Act of a shareholder of
such German Guarantor (other than a German Guarantor and its Subsidiaries); and

(ii)such German Guarantor has not entered into a domination and/or profit and
loss transfer agreement with such shareholder or affiliate and section 30 of the
German Act on Companies with Limited Liability as amended from time to time
exempts distributions among parties of a domination and/or profit and loss
transfer agreement from the prohibition to pay out assets required for the
preservation of the registered share capital; and

(iii)the enforcement of this Guarantee would have the effect of (aa) reducing
such German Guarantor's net assets (Reinvermögen) (as determined in accordance
with subsection 17.10(c), (the "Net Assets") to an amount of less than its
registered share capital or, if the Net Assets are already an amount of less
than its registered share capital, of causing such amount to be further reduced
and (bb) would thereby affect the assets required for the obligatory
preservation of such German Guarantor's registered share capital according to
section 30 and section 31 of the German Act on Companies with Limited Liability
(as amended from time to time), provided that the amount of the registered share

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capital to be taken into consideration shall be the amount registered in the
commercial register as at the date hereof, and any increase of the registered
share capital registered after the date of this Agreement shall only be taken
into account if such increase has been effected with the prior written consent
of Agent.

(c)The Net Assets shall be calculated as an amount equal to the sum of the
values of such German Guarantor's assets (consisting of all assets which
correspond to the items set forth in section 266 sub-section (2) A, B and C of
the German Commercial Code (Handelsgesetzbuch)) less the aggregate amount of
such German Guarantor's liabilities (consisting of all liabilities and liability
reserves which correspond to the items set forth in section 266 sub-section (3)
B, C and D of the German Commercial Code).  The Net Assets shall be determined
in accordance with the generally accepted accounting principles applicable from
time to time in Germany (Grundsätze ordnungsgemäßer Buchführung) and be based on
the same principles which were applied by such German Guarantor in the
preparation of its (at the time in question) most recent annual balance sheet
(Jahresbilanz).

(d)The German Guarantor shall, to the extent that such German Guarantor is
legally permitted to do so, take measures (including, without limitation,
setting-off claims or dissolution of hidden reserves) to increase the amount of
Net Assets and, in particular, the German Guarantor shall realise, to the extent
legally permitted, any and all of its assets that are not required for the
German Guarantor's business (nicht betriebsnotwendig) and where the book value
(Buchwert) of such asset or assets shown in the most recent annual balance sheet
is significantly lower than the market value of the asset or assets, within a
time period reasonably required in order to realise any such asset or assets.

(e)The limitations of this Guarantee set out above shall only apply if such
German Guarantor delivers to Agent, without undue delay,

(i)but no later than within 10 Business Days after receipt of a request for
payment under this Guarantee by Agent, a notice in writing specifying

(A)to what extent this Guarantee should not be enforced;

(B)the amounts which would, if this Guarantee was enforced, have the effect of
(aa) reducing such German Guarantor's Net Assets to an amount of less than its
registered share capital or, if the Net Assets are already an amount of less
than its registered share capital, of causing such amount to be further reduced
and (bb) would thereby affect the assets required for the obligatory
preservation of such German Guarantor's registered share capital according to
section 30 of the German Act on Companies with Limited Liability (as amended
from time to time),

(ii)providing with such notice sufficient supporting evidence, including,
without limitation, an up-to-date pro forma balance sheet and a reasonably
detailed calculation of the Net Assets (the "Management Determination");

(iii)but not later than within 30 Business Days after receipt of a request for
payment under this Guarantee by Agent, an up-to-date balance sheet prepared by a
firm of auditors of international standard and reputation which shows the value
of such German

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Guarantor's Net Assets (the "Balance Sheet"). The Balance Sheet shall be
prepared in accordance with the principles set out above and shall contain
additional information (in reasonable detail) relating to items to be adjusted
pursuant to the above.

(f)If such German Guarantor fails to deliver a Management Determination and/or
the Balance Sheet within the aforementioned time periods, Agent shall be
entitled to enforce this Guarantee irrespective of the limitations set out
herein. For the avoidance of doubt, Agent is entitled to enforce the Guarantee
without limitation to the extent enforcement is not restricted based on the
Management Determination and the Balance Sheet in any event.

(g)If Agent disagrees with the Management Determination and/or the Balance
Sheet, it shall notify such German Guarantor accordingly. Agent shall be
entitled to enforce this Guarantee and to apply the proceeds to settle the
Guaranteed Obligations without limitation up to the amount which is undisputed
between it and such German Guarantor. In relation to the amount which is
disputed, Agent shall be entitled to further pursue their claims under this
Guarantee if and to the extent that an up-to-date balance sheet prepared by a
firm of auditors of international standard and reputation opposing the Balance
Sheet (the "Opposing Balance Sheet") shows that the limitations set out herein
shall not apply, provided that such other firm of auditors preparing the
Opposing Balance Sheet enter into a reliance letter with such German Guarantor.
The Opposing Balance Sheet shall be prepared in accordance with the principles
set out above.

(h)In relation to any amounts exceeding the amount which according to the
Management Determination, the Balance Sheet and, as the case may be, the
Opposing Balance Sheet can be enforced in compliance with the limitations set
out herein for which such German Guarantor is liable under this Guarantee, Agent
shall be entitled to further pursue their claims (if any) after expiry of six
(6) months from the date the Balance Sheet was delivered to Agent. However, such
German Guarantor is entitled to object that this amount is still necessary for
maintaining its registered share capital (calculated as of the date the demand
under this Guarantee was made) in accordance with the above.

(i)The limitations set out herein shall not apply:

(i)if and to the extent, despite being in a position to take measures as
described above, such German Guarantor fails to take such measures; or

(ii)if a court order providing for the commencement of preliminary insolvency
proceedings in respect of the assets of such German Guarantor has been issued.

(j)No reduction of the amount enforceable pursuant to this Guarantee shall
prejudice the right of Agent to continue enforcing this Guarantee (subject
always to the operation of the limitations set out above at the time of such
enforcement) until full satisfaction of the Guaranteed Obligations.

(k)For the avoidance of doubt, nothing shall prevent Agent from enforcing its
rights under this Guarantee against such German Guarantor if and to the extent
that such enforcement does not contravene the provisions or such limitations are
not required in order to protect the managing directors of such German Guarantor
from incurring personal liability exposure with

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respect to breaches of section 30 of the German Act on Companies with Limited
Liability (as amended from time to time and as each interpreted by the German
Federal Court).

17.11Right of Contribution.  Each Guarantor hereby agrees that to the extent
that any Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment.  Each Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 17.7 hereof.  The
provisions of this Section 17.10 shall in no respect limit the obligations and
liabilities of any Guarantor to Secured Parties, and each Guarantor shall remain
liable to Secured Parties for the full amount guaranteed by such Guarantor
hereunder.

17.12Keepwell.  Without limiting any other provision of this Article XVII or
otherwise limiting the provisions of Section 6.15 hereof as to the Loan Parties
generally, each Guarantor hereby agrees that, for the purposes of this Article
XVII as an absolute, unconditional, irrevocable and continuing guaranty
agreement, the provisions of Section 6.15 hereof are hereby incorporated and
restated in this Article XVII as an obligation of each Guarantor that is and/or
may hereafter be a Qualified ECP Loan Party from time to time.

[Remainder of Page Intentionally Left Blank]

 

203

 

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Each of the parties has signed this Agreement as of the day and year first above
written.

 

BORROWERS

 

DASAN ZHONE SOLUTIONS, INC., a Delaware Corporation

 

 

By:

 

/s/ IL YUNG KIM

 

 

Name:

 

Il Yung Kim

 

 

Title:

 

CEO

 

 

 

 

 

 

 

ZTE MERGER SUBSIDIARY III, INC., a Delaware corporation

 

 

 

 

 

 

 

By:

 

/s/ IL YUNG KIM

 

 

Name:

 

Il Yung Kim

 

 

Title:

 

CEO

 

 

 

 

 

GUARANTORS:

 

PREMISYS TECHNOLOGIES INTERNATIONAL, INC., a Delaware Corporation

 

 

 

 

 

By:

 

/s/ IL YUNG KIM

 

 

Name:

 

Il Yung Kim

 

 

Title:

 

CEO

 

 

 

 

 

 

 

ZHONE TECHNOLOGIES INTERNATIONAL, INC., a Delaware corporation

 

 

 

 

 

 

 

By:

 

/s/ IL YUNG KIM

 

 

Name:

 

Il Yung Kim

 

 

Title:

 

CEO

 

 

 

 

 

 

 

PARADYNE NETWORKS, INC., a Delaware corporation

 

 

 

 

 

 

 

By:

 

/s/ IL YUNG KIM

 

 

Name:

 

Il Yung Kim

 

 

Title:

 

CEO

 

 

 

 

 

 

 

PARADYNE CORPORATION, a Delaware corporation

 

 

 

 

 

 

 

By:

 

/s/ IL YUNG KIM

 

 

Name:

 

Il Yung Kim

 

 

Title:

 

CEO

 

 

 

 

 

 

 

 

 

 

1

 

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

 

 

 

DASAN NETWORK SOLUTIONS, INC., a California corporation

 

 

 

 

 

 

 

By:

 

/s/ IL YUNG KIM

 

 

Name:

 

Il Yung Kim

 

 

Title:

 

CEO

 

 

 

 

 

 

 

DASAN NETWORK SOLUTIONS, INC., a corporation organized under the laws of the
Republic of Korea

 

 

 

 

 

 

 

By:

 

/s/ DANIEL WON

 

 

Name:

 

Daniel Won

 

 

Title:

 

President

 

 

 

 

 

 

 

KEYMILE GMBH, a limited liability company organized under the laws of Germany

 

 

 

 

 

 

 

By:

 

/s/ LOTHAR SCHWEMM

 

 

Name:

 

Lothar Schwemm

 

 

Title:

 

CEO

 

 

 

 

 

 

 

PNC BANK, NATIONAL ASSOCIATION,

as Agent and a Lender

 

 

 

 

 

 

 

By:

 

/s/ STEVE ROBERTS

 

 

Name:

 

Steve Roberts

 

 

Title:

 

Senior Vice President

 

 

 

 

 

 

 

STEEL CITY CAPITAL FUNDING, A DIVISION OF PNC BANK, NATIONAL ASSOCIATION, as
Lender

 

 

 

 

 

 

 

By:

 

/s/ DEEDRA DARBY-JONES

 

 

Name:

 

Deedra Darby-Jones

 

 

Title:

 

Vice President

 

 

 

 

 

 

 

CITIBANK, N.A., as a Lender

 

 

 

 

 

 

 

By:

 

/s/ CHRISTOPHER SNIDER

 

 

Name:

 

Christopher Snider

 

 

Title:

 

SVP Relationship Manager

 

 

 

2

 

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

 

Schedule 1.1

 

Closing Date Commitments

 

Lender

Revolving Commitment Amount

Revolving Commitment Percentage

Term Loan Commitment Amount

Term Loan Commitment Percentage

 

 

 

 

 

PNC BANK, NATIONAL ASSOCIATION

$10,312,500.00

68.75%

$17,187,500.00

68.75%

CITIBANK, N.A.

$4,687,500.00

31.25%

$7,812,500.00

31.25%

 

 

 

 

 

TOTALS:

$15,000,000.00

100%

$25,000,000.00

100%