CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
EXHIBIT, WHICH PORTIONS HAVE BEEN OMITTED AND REPLACED WITH [****] AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
Exhibit 10.1
 
 
CREDIT AGREEMENT
by and among

FINISAR CORPORATION
and
OPTIUM CORPORATION
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
WELLS FARGO FOOTHILL, LLC
as the Agent
Dated as of October 2, 2009
 
 

 

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

 

CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS

                              Page  
 
                1.   DEFINITIONS AND CONSTRUCTION     1  
 
  1.l   Definitions     1  
 
  1.2   Accounting Terms     1  
 
  1 3   Code     1  
 
  1 4   Construction     1  
 
  1.5   Schedules and Exhibits     2   2.   LOAN AND TERMS OF PAYMENT     2  
 
  2.1   Revolver Advances     2  
 
  2.2   [RESERVED]        
 
  2.3   Borrowing Procedures and Settlements     3  
 
  2.4   Payments; Reductions of Revolver Commitments; Prepayments     7  
 
  2.5   Overadvances     11  
 
  2.6   Interest Rates and Letter of Credit Fee: Rates, Payments and
Calculations     11  
 
  2.7   Crediting Payments     12  
 
  2.8   Designated Account     13  
 
  2.9   Maintenance of Loan Account; Statements of Obligations     13  
 
  2.10   Fees     13  
 
  2.11   Letters of Credit     13  
 
  2.12   LIBOR Option     16  
 
  2.13   Capital Requirements     18   3.   CONDITIONS; TERM OF AGREEMENT     19
 
 
  3.1   Conditions Precedent to the Initial Extension of Credit     19  
 
  3.2   Conditions Precedent to all Extensions of Credit     19  
 
  3.3   Term     19  
 
  3.4   Effect of Termination     19  
 
  3.5   Early Termination by Borrowers     19   4.   REPRESENTATIONS AND
WARRANTIES     19  
 
  4.1   Due Organization and Qualification; Subsidiaries     20  
 
  4.2   Due Authorization; No Conflict     20  
 
  4.3   Governmental Consents     21  
 
  4.4   Binding Obligations; Perfected Liens     21  
 
  4.5   Title to Assets; No Encumbrances     21  
 
  4.6   Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims     21  

 

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

 

CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS
(continued)

                              Page  
 
               
 
  4.7   Litigation     21  
 
  4.8   Compliance with Laws     22  
 
  4.9   No Material Adverse Change     22  
 
  4.10   Fraudulent Transfer     22  
 
  4.11   Employee Benefits     22  
 
  4.12   Environmental Condition     22  
 
  4.13   Intellectual Property     23  
 
  4.14   Leases     23  
 
  4.15   Deposit Accounts and Securities Accounts     23  
 
  4.16   Complete Disclosure     23  
 
  4.17   Material Contracts     23  
 
  4.18   Patriot Act     23  
 
  4.19   Indebtedness     24  
 
  4.20   Payment of Taxes     24  
 
  4.21   Margin Stock     24  
 
  4.22   Governmental Regulation     24  
 
  4.23   OFAC     24  
 
  4.24   Employee and Labor Matters     24  
 
  4.25   Eligible Accounts, Eligible Investment Grade Accounts, Eligible Credit
Insured Accounts     25  
 
  4.26   Eligible Inventory     26  
 
  4.27   Eligible Inventory     26  
 
  4.28   Locations of Inventory and Equipment     26  
 
  4.29   Inventory Records     26  
 
  4.30   The Indentures     27   5.   AFFIRMATIVE COVENANTS     26  
 
  5.1   Financial Statements, Reports, Certificates     26  
 
  5.2   Collateral Reporting     26  
 
  5.3   Existence     26  
 
  5.4   Maintenance of Properties     26  
 
  5.5   Taxes     27  
 
  5.6   Insurance     27  
 
  5.7   Inspection     27  
 
  5.8   Compliance with Laws     27  

-2-

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

 

CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS
(continued)

                              Page  
 
               
 
  5.9   Environmental     27  
 
  5.10   Disclosure Updates     28  
 
  5.11   Formation of Subsidiaries     28  
 
  5.12   Further Assurances     29  
 
  5.13   Lender Meetings     29  
 
  5.14   Material Contracts     29  
 
  5.15   Location of Inventory and Equipment     29  
 
  5.16   Assignable Material Contracts     29   6.   NEGATIVE COVENANTS     30  
 
  6.1   Indebtedness     30  
 
  6.2   Liens     30  
 
  6.3   Restrictions on Fundamental Changes     30  
 
  6.4   Disposal of Assets     30  
 
  6.5   Change Name     30  
 
  6.6   Nature of Business     31  
 
  6.7   Prepayments and Amendments     31  
 
  6.8   Change of Control     31  
 
  6.9   Distributions     32  
 
  6.10   Accounting Methods     32  
 
  6.11   Investments     32  
 
  6.12   Transactions with Affiliates     32  
 
  6.13   Use of Proceeds     33  
 
  6.14   Consignments     33  
 
  6.15   Inventory and Equipment with Bailees     33   7.   FINANCIAL COVENANTS
    33   8.   EVENTS OF DEFAULT     35   9.   RIGHTS AND REMEDIES     36  
 
  9.1   Rights and Remedies     36  
 
  9.2   Remedies Cumulative     37   10.   WAIVERS; INDEMNIFICATION     37  
 
  10.1   Demand; Protest; etc     37  
 
  10.2   The Lender Group’s Liability for Collateral     37  
 
  10.3   Indemnification     37  

-3-

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

 

CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS
(continued)

                              Page  
 
                11.   NOTICES     38   12.   CHOICE OF LAW AND VENUE; JURY TRIAL
WAIVER     38   13.   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS     39  
 
  13.1   Assignments and Participations     39  
 
  13.2   Successors     42   14.   AMENDMENTS; WAIVERS     42  
 
  14.1   Amendments and Waivers     42  
 
  14.2   Replacement of Holdout Lender     43  
 
  14.3   No Waivers; Cumulative Remedies     44   15.   AGENT; THE LENDER GROUP
    44  
 
  15.1   Appointment and Authorization of Agent     44  
 
  15.2   Delegation of Duties     45  
 
  15.3   Liability of Agent     45  
 
  15.4   Reliance by Agent     45  
 
  15.5   Notice of Default or Event of Default     45  
 
  15.6   Credit Decision     46  
 
  15.7   Costs and Expenses; Indemnification     46  
 
  15.8   Agent in Individual Capacity     46  
 
  15.9   Successor Agent     47  
 
  15.10   Lender in Individual Capacity     47  
 
  15.11   Collateral Matters     47  
 
  15.12   Restrictions on Actions by Lenders; Sharing of Payments     48  
 
  15.13   Agency for Perfection     48  
 
  15.14   Payments by Agent to the Lenders     49  
 
  15.15   Concerning the Collateral and Related Loan Documents     49  
 
  15.16   Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information     49  
 
  15.17   Several Obligations; No Liability     50   16.   WITHHOLDING TAXES    
50   17.   GENERAL PROVISIONS     52  
 
  17 1   Effectiveness     52  
 
  17.2   Section Headings     52  
 
  17.3   Interpretation     52  
 
  17.4   Severability of Provisions     52  

-4-

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

 

CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS
(continued)

                              Page  
 
               
 
  17.5   Bank Product Providers     53  
 
  17.6   Debtor-Creditor Relationship     53  
 
  17.7   Counterparts; Electronic Execution     53  
 
  17.8   Revival and Reinstatement of Obligations     53  
 
  17.9   Confidentiality     53  
 
  17.10   Lender Group Expenses     54  
 
  17.11   USA PATRIOT Act     54  
 
  17.12   Integration     54  
 
  17.13   Parent as Agent for Borrowers     54  
 
  17.14   Designated Senior Indebtedness     54  

-5-

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

 

CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS

                  Page
 
        EXHIBITS AND SCHEDULES

 
       
Exhibit A-1
  Form of Assignment and Acceptance    
Exhibit B-l
  Form of Borrowing Base Certificate    
Exhibit C-L
  Form of Compliance Certificate    
Exhibit L-l
  Form of LIBOR Notice    
Exhibit P-l
  Permitted Convertible Note Debt Terms and Conditions    
 
       
Schedule A-l
  Agent’s Account    
Schedule A-2
  Authorized Persons    
Schedule C-l
  Revolver Commitments    
Schedule D-l
  Designated Account    
Schedule E-l
  Eligible Inventory and Eligible Equipment Locations    
Schedule E-2
  Eligible Investment Grade Account Debtors    
Schedule E-3
  Eligible Specified Account Debtors    
Schedule P-l
  Permitted Investments    
Schedule P-2
  Permitted Liens    
Schedule R-l
  Real Property Collateral    
Schedule 1.1
  Definitions    
Schedule 3.1
  Conditions Precedent    
Schedule 4.1 (a)
  Due Organization and Qualification; Subsidiaries    
Schedule 4.1(b)
  Capitalization of Parent    
Schedule 4.1(c)
  Capitalization of Parent’s Subsidiaries    
Schedule 4.6(a)
  States of Organization    
Schedule 4.6(b)
  Chief Executive Offices    
Schedule 4.6(c)
  Organizational Identification Numbers    
Schedule 4.6(d)
  Commercial Tort Claims    
Schedule 4.7
  Litigation    
Schedule 4.8
  Compliance with Laws    
Schedule 4.11
  Employee Benefits    
Schedule 4.13
  Intellectual Property    
Schedule 4.15
  Deposit Accounts and Securities Accounts    
Schedule 4.17
  Material Contracts    
Schedule 4.19
  Permitted Indebtedness    
Schedule 4.24
  Employee and Labor Matters    
Schedule 4.28
  Locations of Inventory and Equipment    
Schedule 5.1
  Financial Statements, Reports, Certificates    
Schedule 5.2
  Collateral Reporting    
Schedule 6.6
  Nature of Business    

 

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

 

CONFIDENTIAL TREATMENT REQUESTED
CREDIT AGREEMENT
          THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of
October 2, 2009, by and among the lenders identified on the signature pages
hereof (such lenders, together with their respective successors and permitted
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), WELLS FARGO FOOTHILL, LLC, a Delaware limited
liability company, as agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, “Agent”). FINISAR CORPORATION, a
Delaware corporation (“Parent”), and OPTIUM CORPORATION, a Delaware corporation,
(“Optium” and Parent are referred to hereinafter each individually as a
“Borrower”, and individually and collectively, jointly and severally, as the
“Borrowers”).
          The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
     1.1 Definitions. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.
     1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP; provided, however, that if Parent
notifies Agent that Parent requests an amendment to any provision hereof to
eliminate the effect of any Accounting Change occurring after the Closing Date
or in the application thereof on the operation of such provision (or if Agent
notifies Administrative Borrower that the Required Lenders request an amendment
to any provision hereof for such purpose), regardless of whether any such notice
is given before or after such Accounting Change or in the application thereof,
then Agent and Borrowers agree that they will negotiate in good faith amendments
to the provisions of this Agreement that are directly affected by such
Accounting Change with the intent of having the respective positions of the
Lenders and Borrowers after such Accounting Change conform as nearly as possible
to their respective positions as of the date of this Agreement and, until any
such amendments have been agreed upon, the provisions in this Agreement shall be
calculated as if no such Accounting Change had occurred. When used herein, the
term “financial statements” shall include the notes and schedules thereto.
Whenever the term “Parent” is used in respect of a financial covenant or a
related definition, it shall be understood to mean Parent and its Subsidiaries
on a consolidated basis, unless the context clearly requires otherwise.
     1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 of the Code shall
govern.
     1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). The words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all

 

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

 

CONFIDENTIAL TREATMENT REQUESTED
tangible and intangible assets and properties, including cash, securities,
accounts, and contract rights. Any reference herein or in any other Loan
Document to the satisfaction, repayment, or payment in full of the Obligations
shall mean the repayment in full in cash (or, in the case of Letters of Credit
or Bank Products, providing Letter of Credit Collateralization or Bank Product
Collateralization, as applicable) of all Obligations other than unasserted
contingent indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and that are not required by the provisions of
this Agreement to be repaid or cash collateralized. Any reference herein to any
Person shall be construed to include such Person’s successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record.
     1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
     2.1 Revolver Advances.
          (a) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances (“Advances”)
to Borrowers in an amount at any one time outstanding not to exceed such
Lender’s Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the Letter of Credit Usage at such time, and (ii) the
Borrowing Base at such time less the Letter of Credit Usage at such time.
          (b) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement. The outstanding principal amount of the
Advances, together with interest accrued thereon, shall be due and payable on
the Maturity Date or, if earlier, on the date on which they are declared due and
payable pursuant to the terms of this Agreement.
          (c) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to establish reserves against the Borrowing Base in
such amounts, and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, including reserves with respect
to (i) sums that Parent or its Subsidiaries are required to pay under any
Section of this Agreement or any other Loan Document (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay, and (ii) amounts
owing by Parent or its Non-CFC Subsidiaries to any Person to the extent secured
by a Lien on, or trust over, any of the Collateral (other than a Permitted
Lien), which Lien or trust, in the Permitted Discretion of Agent likely would
have a priority superior to Agent’s Liens (such as Liens or trusts in favor of
landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral.
     2.2 [Reservedl
     2.3 Borrowing Procedures and Settlements.
          (a) Procedure for Borrowing. Each Borrowing shall be made by a written
request by an Authorized Person delivered to Agent. Unless Swing Lender is not
obligated to make a Swing Loan pursuant to Section 2.3(b) below, such notice
must be received by Agent no later than 10:00 a.m. (California time) on the
Business Day that is the requested Funding Date specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day; provided, however, that if Swing Lender is not obligated to make a Swing
Loan as to a requested Borrowing, such notice must be received by Agent no later
than 10:00 a.m. (California time) on the Business Day prior to the date that is
the requested Funding Date. At

-2-

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

 

CONFIDENTIAL TREATMENT REQUESTED
Agent’s election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time. In such circumstances, Borrowers agree that any such telephonic
notice will be confirmed in writing within 24 hours of the giving of such
telephonic notice, but the failure to provide such written confirmation shall
not affect the validity of the request.
          (b) Making of Swing Loans. In the case of a request for an Advance and
so long as either (i) the aggregate amount of Swing Loans made since the last
Settlement Date, minus the amount of Collections or payments applied to Swing
Loans since the last Settlement Date, plus the amount of the requested Advance
does not exceed $10,000,000, or (ii) Swing Lender, in its sole discretion, shall
agree to make a Swing Loan notwithstanding the foregoing limitation, Swing
Lender shall make an Advance in the amount of such Borrowing (any such Advance
made solely by Swing Lender pursuant to this Section 2.3(b) being referred to as
a “Swing Loan” and such Advances being referred to collectively as “Swing
Loans”) available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to the Designated Account. Each Swing
Loan shall be deemed to be an Advance hereunder and shall be subject to all the
terms and conditions (including Section 3) applicable to other Advances, except
that all payments on any Swing Loan shall be payable to Swing Lender solely for
its own account. Subject to the provisions of Section 2.3(d)(ii), Swing Lender
shall not make and shall not be obligated to make any Swing Loan if Swing Lender
has actual knowledge that (i) one or more of the applicable conditions precedent
set forth in Section 3 will not be satisfied on the requested Funding Date for
the applicable Borrowing, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Swing Lender shall not otherwise be required
to determine whether the applicable conditions precedent set forth in Section 3
have been satisfied on the Funding Date applicable thereto prior to making any
Swing Loan. The Swing Loans shall be secured by Agent’s Liens, constitute
Obligations hereunder, and bear interest at the rate applicable from time to
time to Advances that are Base Rate Loans.
          (c) Making of Loans.
               (i) In the event that Swing Lender is not obligated to make a
Swing Loan, then promptly after receipt of a request for a Borrowing pursuant to
Section 2.3(a). Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding Date
applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender’s Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent’s Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent’s receipt
of the proceeds of such Advances, Agent shall make the proceeds thereof
available to Administrative Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds received by
Agent to the Designated Account; provided, however, that, subject to the
provisions of Section 2.3(d)(ii), Agent shall not request any Lender to make,
and no Lender shall have the obligation to make, any Advance if (1) one or more
of the applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
               (ii) Unless Agent receives notice from a Lender prior to 9:00
a.m. (California time) on the date of a Borrowing, that such Lender will not
make available as and when required hereunder to Agent for the account of
Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may
assume that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrowers on
such date a corresponding amount. If any Lender shall not have made its full
amount available to Agent in immediately available funds and if Agent in such
circumstances has made available to Borrowers such amount, that Lender shall on
the Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each day during
such period. A notice submitted by Agent to any Lender with respect to amounts
owing under this Section 2.3(c)(ii) shall be conclusive, absent manifest error.
If such amount is so made available, such payment to Agent shall

-3-

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

 

CONFIDENTIAL TREATMENT REQUESTED
constitute such Lender’s Advance on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to Agent on the Business
Day following the Funding Date, Agent will notify Administrative Borrower of
such failure to fund and, upon demand by Agent, Borrowers shall pay such amount
to Agent for Agent’s account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Advances composing such Borrowing.
If such Advance repaid is a LIBOR Rate Loan, Borrowers shall not be obligated to
pay any Funding Losses with respect to such repaid Advance. The failure of any
Lender to make any Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance on such Funding Date, but
no Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on any Funding Date.
               (iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the Defaulting Lender’s
benefit (or any Collections or proceeds of Collateral that would otherwise be
remitted hereunder to the Defaulting Lender), and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer any such payments (A)
first, to Swing Lender to the extent of any Swing Loans that were made by Swing
Lender and that were required to be, but were not, repaid by the Defaulting
Lender, (B) second, to the Issuing Lender, to the extent of the portion of a
Letter of Credit Disbursement that was required to be, but was not, repaid by
the Defaulting Lender, (C) third, to each non-Defaulting Lender ratably in
accordance with its Revolver Commitment (but, in each case, only to the extent
that such Defaulting Lender’s portion of an Advance (or other funding
obligation) was funded by such other non-Defaulting Lender), and (D) to a
suspense account maintained by Agent, the proceeds of which shall be retained
and may be made available to be re-advanced to Borrowers as if such Defaulting
Lender had made its portion of Advances (or other funding obligations) to
Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such Defaulting Lender the
amount of all such payments received and retained by Agent for the account of
such Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender shall be
deemed not to be a “Lender” and such Lender’s Revolver Commitment shall be
deemed to be zero. This Section shall remain effective with respect to such
Lender until (x) the Obligations under this Agreement shall have been declared
or shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such Defaulting
Lender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata
Share of the applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this Section shall not be
construed to increase or otherwise affect the Revolver Commitment of any Lender,
to relieve or excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder, or to relieve or excuse the
performance by Borrowers of their duties and obligations hereunder to Agent or
to the Lenders other than such Defaulting Lender. Any such failure to fund by
any Defaulting Lender shall constitute a material breach by such Defaulting
Lender of this Agreement and shall entitle Administrative Borrower at its
option, upon written notice to Agent, to arrange for a substitute Lender to
assume the Revolver Commitment of such Defaulting Lender, such substitute Lender
to be reasonably acceptable to Agent. In connection with the arrangement of such
a substitute Lender, the Defaulting Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance in favor of the substitute Lender (and agrees that it
shall be deemed to have executed and delivered such document if it fails to do
so) subject only to being repaid its share of the outstanding Obligations (other
than Bank Product Obligations, but including an assumption of its Pro Rata Share
of the Letters of Credit) without any premium or penalty of any kind whatsoever;
provided, however, that any such assumption of the Revolver Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups’ or Borrowers’ rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.
          (d) Protective Advances and Optional Overadvances.
               (i) Any contrary provision of this Agreement notwithstanding,
Agent hereby is authorized by Borrowers and the Lenders, from time to time in
Agent’s sole discretion, (A) after the occurrence and during the continuance of
a Default or an Event of Default, or (B) at any time that any of the

-4-

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

 

CONFIDENTIAL TREATMENT REQUESTED
other applicable conditions precedent set forth in Section 3 are not satisfied,
to make Advances to, or for the benefit of, Borrowers on behalf of the Lenders
that Agent, in its Permitted Discretion, deems necessary or desirable (1) to
preserve or protect the Collateral, or any portion thereof, or (2) to enhance
the likelihood of repayment of the Obligations (other than the Bank Product
Obligations) (any of the Advances described in this Section 2.3(d)(i) shall be
referred to as “Protective Advances”).
               (ii) Any contrary provision of this Agreement notwithstanding,
the Lenders hereby authorize Agent or Swing Lender, as applicable, and either
Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly
and intentionally, continue to make Advances (including Swing Loans) to
Borrowers notwithstanding that an Overadvance exists or thereby would be
created, so long as (A) after giving effect to such Advances, the outstanding
Revolver Usage does not exceed the Borrowing Base by more than $10,000,000, and
(B) after giving effect to such Advances, the outstanding Revolver Usage (except
for and excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) does not exceed the Maximum Revolver Amount. In the event
Agent obtains actual knowledge that the Revolver Usage exceeds the amounts
permitted by the immediately foregoing provisions, regardless of the amount of,
or reason for, such excess, Agent shall notify the Lenders as soon as
practicable (and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented with Borrowers
intended to reduce, within a reasonable time, the outstanding principal amount
of the Advances to Borrowers to an amount permitted by the preceding sentence.
In such circumstances, if any Lender with a Revolver Commitment objects to the
proposed terms of reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according to the
determination of the Required Lenders. In any event: (x) if any unintentional
Overadvance remains outstanding for more than 30 days, unless otherwise agreed
to by the Required Lenders, Borrowers shall immediately repay the Advances in an
amount sufficient to eliminate all such unintentional Overadvances, and
(y) after the date all such Overadvances have been eliminated, there must be at
least five consecutive days before intentional Overadvances are made. The
foregoing provisions are meant for the benefit of the Lenders and Agent and are
not meant for the benefit of Borrowers, which shall continue to be bound by the
provisions of Section 2.5. Each Lender with a Revolver Commitment shall be
obligated to settle with Agent as provided in Section 2.3(e) for the amount of
such Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted under this
Section 2.3(d)(ii), and any Overadvances resulting from the charging to the Loan
Account of interest, fees, or Lender Group Expenses.
               (iii) Each Protective Advance and each Overadvance shall be
deemed to be an Advance hereunder, except that no Protective Advance or
Overadvance shall be eligible to be a LIBOR Rate Loan and, prior to Settlement
therefor, all payments on the Protective Advances shall be payable to Agent
solely for its own account. The Protective Advances and Overadvances shall be
repayable on demand, secured by Agent’s Liens, constitute Obligations hereunder,
and bear interest at the rate applicable from time to time to Advances that are
Base Rate Loans. The ability of Agent to make Protective Advances is separate
and distinct from its ability to make Overadvances and its ability to make
Overadvances is separate and distinct from its ability to make Protective
Advances. For the avoidance of doubt, the limitations on Agent’s ability to make
Protective Advances do not apply to Overadvances and the limitations on Agent’s
ability to make Overadvances do not apply to Protective Advances. The provisions
of this Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and
the Lenders and are not intended to benefit Borrowers in any way.
          (e) Settlement. It is agreed that each Lender’s funded portion of the
Advances is intended by the Lenders to equal, at all times, such Lender’s Pro
Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent,
Swing Lender, and the other Lenders agree (which agreement shall not be for the
benefit of any Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among the Lenders as to the
Advances, the Swing Loans, and the Protective Advances shall take place on a
periodic basis in accordance with the following provisions:

-5-

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

 

CONFIDENTIAL TREATMENT REQUESTED
               (i) Agent shall request settlement (“Settlement”) with the
Lenders on a weekly basis, or on a more frequent basis if so determined by Agent
(1) on behalf of Swing Lender, with respect to the outstanding Swing Loans,
(2) for itself, with respect to the outstanding Protective Advances, and
(3) with respect to Borrowers’ or their Subsidiaries’ Collections or payments
received, as to each by notifying the Lenders by telecopy, telephone, or other
similar form of transmission, of such requested Settlement, no later than 2:00
p.m. (California time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being the
“Settlement Date”). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Swing Loans, and Protective
Advances for the period since the prior Settlement Date. Subject to the terms
and conditions contained herein (including Section 2.3(c)(iii)): (y) if a
Lender’s balance of the Advances (including Swing Loans and Protective Advances)
exceeds such Lender’s Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, then Agent shall, by no later than
12:00 p.m. (California time) on the Settlement Date, transfer in immediately
available funds to a Deposit Account of such Lender (as such Lender may
designate), an amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective Advances), and (z) if a Lender’s balance
of the Advances (including Swing Loans and Protective Advances) is less than
such Lender’s Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, such Lender shall no later than
12:00 p.m. (California time) on the Settlement Date transfer in immediately
available funds to Agent’s Account, an amount such that each such Lender shall,
upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share
of the Advances (including Swing Loans and Protective Advances). Such amounts
made available to Agent under clause (z) of the immediately preceding sentence
shall be applied against the amounts of the applicable Swing Loans or Protective
Advances and, together with the portion of such Swing Loans or Protective
Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute
Advances of such Lenders. If any such amount is not made available to Agent by
any Lender on the Settlement Date applicable thereto to the extent required by
the terms hereof, Agent shall be entitled to recover for its account such amount
on demand from such Lender together with interest thereon at the Defaulting
Lender Rate.
               (ii) In determining whether a Lender’s balance of the Advances,
Swing Loans, and Protective Advances is less than, equal to, or greater than
such Lender’s Pro Rata Share of the Advances, Swing Loans, and Protective
Advances as of a Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments actually received in
good funds by Agent with respect to principal, interest and fees payable by
Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.
               (iii) Between Settlement Dates, Agent, to the extent Protective
Advances or Swing Loans are outstanding, may pay over to Agent or Swing Lender,
as applicable, any Collections or payments received by Agent, that in accordance
with the terms of this Agreement would be applied to the reduction of the
Advances, for application to the Protective Advances or Swing Loans. Between
Settlement Dates, Agent, to the extent no Protective Advances or Swing Loans are
outstanding, may pay over to Swing Lender any Collections or payments received
by Agent, that in accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing Lender’s Pro Rata
Share of the Advances. If, as of any Settlement Date, Collections or payments of
Parent or its Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender’s Pro Rata Share of the
Advances other than to Swing Loans, as provided for in the previous sentence,
Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall
pay to the Lenders, to be applied to the outstanding Advances of such Lenders,
an amount such that each Lender shall, upon receipt of such amount, have, as of
such Settlement Date, its Pro Rata Share of the Advances. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Protective Advances, and each Lender (subject to the effect of
agreements between Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Protective Advances, shall be entitled to interest at
the applicable rate or rates payable under this Agreement on the daily amount of
funds employed by Swing Lender, Agent, or the Lenders, as applicable.

-6-

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (f) Notation. Agent, as a non-fiduciary agent for Borrowers, shall
maintain a register showing the principal amount of the Advances, owing to each
Lender, including the Swing Loans owing to Swing Lender, and Protective Advances
owing to Agent, and the interests therein of each Lender, from time to time and
such register shall, absent manifest error, conclusively be presumed to be
correct and accurate.
          (g) Lenders’ Failure to Perform. All Advances (other than Swing Loans
and Protective Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Revolver Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
     2.4 Payments; Reductions of Revolver Commitments; Prepayments.
          (a) Payments by Borrowers.
               (i) Except as otherwise expressly provided herein, all payments
by Borrowers shall be made to Agent’s Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment received by Agent
later than 11:00 a.m. (California time) shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.
               (ii) Unless Agent receives notice from Administrative Borrower
prior to the date on which any payment is due to the Lenders that Borrowers will
not make such payment in full as and when required, Agent may assume that
Borrowers have made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent Borrowers
do not make such payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed to such Lender,
together with interest thereon at the Defaulting Lender Rate for each day from
the date such amount is distributed to such Lender until the date repaid.
          (b) Apportionment and Application.
               (i) So long as no Application Event has occurred and is
continuing and except as otherwise provided with respect to Defaulting Lenders,
all principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to which
such payments relate held by each Lender) and all payments of fees and expenses
(other than fees or expenses that are for Agent’s separate account) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the Revolver
Commitment or Obligation to which a particular fee or expense relates. All
payments to be made hereunder by Borrowers shall be remitted to Agent and all
(subject to Section 2.4 (b)(iv), Section 2.4(d)(ii), and Section 2.4(e)) such
payments, and all proceeds of Collateral received by Agent, shall be applied, so
long as no Application Event has occurred and is continuing, to reduce the
balance of the Advances outstanding and, thereafter, to Borrowers (to be wired
to the Designated Account) or such other Person entitled thereto under
applicable law.
               (ii) At any time that an Application Event has occurred and is
continuing and except as otherwise provided with respect to Defaulting Lenders,
all payments remitted to Agent and all proceeds of Collateral received by Agent
shall be applied as follows:
                    (A) first, to pay any Lender Group Expenses (including cost
or expense reimbursements) or indemnities then due to Agent under the Loan
Documents, until paid in full,

-7-

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

 

CONFIDENTIAL TREATMENT REQUESTED
                    (B) second, to pay any fees or premiums then due to Agent
under the Loan Documents until paid in full,
                    (C) third, to pay interest due in respect of all Protective
Advances until paid in full,
                    (D) fourth, to pay the principal of all Protective Advances
until paid in full,
                    (E) fifth, ratably to pay any Lender Group Expenses
(including cost or expense reimbursements) or indemnities then due to any of the
Lenders under the Loan Documents, until paid in full,
                    (F) sixth, ratably to pay any fees or premiums then due to
any of the Lenders under the Loan Documents until paid in full,
                    (G) seventh, ratably to pay interest due in respect of the
Advances (other than Protective Advances) and the Swing Loans until paid in
full,
                    (H) eighth, ratably (i) to pay the principal of all Swing
Loans until paid in full, (ii) to pay the principal of all Advances until paid
in full, (iii) to Agent, to be held by Agent, for the benefit of Issuing Lender
(and for the ratable benefit of each of the Lenders that have an obligation to
pay to Agent, for the account of the Issuing Lender, a share of each Letter of
Credit Disbursement), as cash collateral in an amount up to 105% of the Letter
of Credit Usage (which cash collateral shall be applied to the reimbursement of
any Letter of Credit Disbursement as and when such disbursement occurs and, if a
Letter of Credit expires undrawn, the cash collateral held by Agent in respect
of such Letter of Credit shall be reapplied pursuant to this Section 2.4(b)(ii),
beginning with tier (A) hereof), and (iv) ratably, to the Bank Product Providers
on account of all amounts then due and payable in respect of Bank Product
Obligations, with any balance to be paid to Agent, to be held by Agent, for the
ratable benefit of the Bank Product Providers, as cash collateral in an amount
up to the amount the Bank Product Providers reasonably determine to be the
credit exposure of Parent and its Subsidiaries in respect of Bank Product
Obligations (which cash collateral shall be applied, ratably, to the payment or
reimbursement of any amounts due and payable with respect to such Bank Product
Obligations as and when such amounts first become due and payable and, if any
such Bank Product Obligation is paid or otherwise satisfied in full, the cash
collateral held by Agent in respect of such Bank Product Obligation shall be
reapplied pursuant to this Section 2.4(b)(ii), beginning with tier (A) hereof),
                    (I) ninth, to pay any other Obligations, and
                    (J) tenth, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
               (iii) Agent promptly shall distribute to each Lender, pursuant to
the applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in Section 2.3(e).
               (iv) In each instance, so long as no Application Event has
occurred and is continuing, Section 2.4(b)(i) shall not apply to any payment
made by Borrowers to Agent and specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement or any other Loan Document.
               (v) For purposes of Section 2.4(b)(ii), “paid in full” means
payment in cash of all amounts owing under the Loan Documents, including loan
fees, service fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency Proceeding), default
interest,

-8-

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

 

CONFIDENTIAL TREATMENT REQUESTED
interest on interest, and expense reimbursements, whether or not any of the
foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.
               (vi) In the event of a direct conflict between the priority
provisions of this Section 2.4 and any other provision contained in any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this Section 2.4 shall
control and govern.
          (c) Reduction of Revolver Commitments. The Revolver Commitments shall
terminate on the Maturity Date. Borrowers may reduce the Revolver Commitments to
an amount not less than the greater of (i) $50,000,000 and (ii) the sum of
(A) the Revolver Usage as of such date, plus (B) the principal amount of all
Advances not yet made as to which a request has been given by Administrative
Borrower under Section 2.3(a), plus (C) the amount of all Letters of Credit not
yet issued as to which a request has been given by Administrative Borrower
pursuant to Section 2.11(a). Each such reduction shall be in an amount which is
not less than $5,000,000, shall be made by providing not less than 10 Business
Days prior written notice to Agent and shall be irrevocable. Once reduced, the
Revolver Commitments may not be increased. Each such reduction of the Revolver
Commitments shall reduce the Revolver Commitments of each Lender proportionately
in accordance with its Pro Rata Share thereof.
          (d) Optional Prepayments. Borrowers may prepay the principal of any
Advance at any time in whole or in part.
          (e) Mandatory Prepayments. If, at any time, (A) the Revolver Usage on
such date exceeds (B) the Borrowing Base (such excess being referred to as the
“Borrowing Base Excess”), then Borrowers shall promptly, but in any event,
within 1 Business Day prepay the Obligations in accordance with
Section 2.4(f)(i) in an aggregate amount equal to the Borrowing Base Excess.
          (f) Application of Payments. Each prepayment pursuant to
Section 2.4(e) shall, (A) so long as no Application Event shall have occurred
and be continuing, be applied, first, to the outstanding principal amount of the
Advances until paid in full, and second, to cash collateralize the Letters of
Credit in an amount equal to 105% of the then extant Letter of Credit Usage, and
(B) if an Application Event shall have occurred and be continuing, be applied in
the manner set forth in Section 2.4(b)(ii).
          (g) Application of Payments Between LIBOR and Base Rate Loans. If one
or more LIBOR Rate Loans are outstanding, along with Base Rate Loans, all
payments from Borrowers applied to the Advances pursuant to Section 2.4(a) or
Section 2.4(f), shall be applied first to the principal amount of the Base Rate
Loans outstanding, and then to the principal amount of the LIBOR Rate Loans, and
if there is more than one (1) LIBOR Rate Loan outstanding, the payments shall be
applied to the LIBOR Rate Loans in the order of the occurrence of the last day
of the Interest Periods for such Advances.
     2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Lender Group pursuant to Section 2.1 or
Section 2.11 is greater than any of the limitations set forth in Section 2.1 or
Section 2.11, as applicable (an “Overadvance”), Borrowers shall promptly, but in
any event, within 1 Business Day of the initial occurrence of an Overadvance pay
to Agent, in cash, the amount of such excess, which amount shall be used by
Agent to reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b). Borrowers promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full on the Maturity Date or,
if earlier, on the date on which the Obligations are declared due and payable
pursuant to the terms of this Agreement.
     2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.

-9-

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (a) Interest Rates. Except as provided in Section 2.6(c), all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows:
               (i) if the relevant Obligation is a LIBOR Rate Loan, at a per
annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and
               (ii) otherwise, at a per annum rate equal to the Base Rate plus
the Base Rate Margin.
          (b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable
benefit of the Lenders with a Revolver Commitment, subject to any agreements
between Agent and individual Lenders), a Letter of Credit fee (in addition to
the charges, commissions, fees, and costs set forth in Section 2.11(e)) which
shall accrue at a per annum rate equal to the LIBOR Rate Margin times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
          (c) Default Rate. Upon the occurrence and during the continuation of
an Event of Default and at the election of the Required Lenders,
               (i) all Obligations (except for undrawn Letters of Credit and
except for Bank Product Obligations) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof at
a per annum rate equal to 2 percentage points above the per annum rate otherwise
applicable hereunder, and
               (ii) the Letter of Credit fee provided for in Section 2.6(b)
shall be increased to 2 percentage points above the per annum rate otherwise
applicable hereunder.
          (d) Payment. Except to the extent provided to the contrary in
Section 2.10 or Section 2.12(a), interest, Letter of Credit fees, all other fees
payable hereunder or under any of the other Loan Documents, and all costs,
expenses, and Lender Group Expenses payable hereunder or under any of the other
Loan Documents shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or Revolver Commitments are outstanding.
Borrowers hereby authorize Agent, from time to time without prior notice to
Borrowers, to charge all interest, Letter of Credit fees, and all other fees
payable hereunder or under any of the other Loan Documents (in each case, as and
when due and payable), all costs, expenses, and Lender Group Expenses payable
hereunder or under any of the other Loan Documents (in each case, as and when
incurred), all charges, commissions, fees, and costs provided for in
Section 2.11(e) (as and when accrued or incurred), all fees and costs provided
for in Section 2.10 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including any amounts due and
payable to the Bank Product Providers in respect of Bank Products) to the Loan
Account, which amounts thereafter shall constitute Advances hereunder and shall
accrue interest at the rate then applicable to Advances that are Base Rate
Loans. Any interest, fees, costs, expenses, Lender Group Expenses, or other
amounts payable hereunder or under any other Loan Document not paid when due
shall be compounded by being charged to the Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans (unless and until converted into
LIBOR Rate Loans in accordance with the terms of this Agreement).
          (e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year, in each case, for
the actual number of days elapsed in the period during which the interest or
fees accrue. In the event the Base Rate is changed from time to time hereafter,
the rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.

-10-

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.
     2.7 Crediting Payments. The receipt of any payment item by Agent shall not
be considered a payment on account unless such payment item is a wire transfer
of immediately available federal funds made to Agent’s Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrowers shall be
deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into
Agent’s Account on a Business Day on or before 11:00 a.m. (California time). If
any payment item is received into Agent’s Account on a non-Business Day or after
11:00 a.m. (California time) on a Business Day, it shall be deemed to have been
received by Agent as of the opening of business on the immediately following
Business Day.
     2.8 Designated Account. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person or, without instructions, if pursuant to
Section 2.6(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrowers and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Borrowers, any Advance
or Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder
shall be made to the Designated Account.
     2.9 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the “Loan Account”)
on which Borrowers will be charged with all Advances (including Protective
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers’ account, the Letters of Credit issued or made by
Issuing Lender for Borrowers’ account, and with all other payment Obligations
hereunder or under the other Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with Section 2.7, the Loan Account will be credited with
all payments received by Agent from Borrowers or for Borrowers’ account. Agent
shall render monthly statements regarding the Loan Account to Administrative
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements, absent manifest error, shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and the Lender
Group unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
     2.10 Fees. Borrowers shall pay to Agent,
          (a) for the account of Agent, as and when due and payable under the
terms of the Fee Letter, the fees set forth in the Fee Letter; and
          (b) for the ratable account of those Lenders with Revolver
Commitments, on the first day of each month from and after the Closing Date up
to the first day of the month prior to the Payoff Date and on

-11-

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

 

CONFIDENTIAL TREATMENT REQUESTED
the Payoff Date, an unused line fee in an amount equal to the Unused Line Margin
times the result of (i) the Maximum Revolver Amount, less (ii) the average Daily
Balance of the Revolver Usage during the immediately preceding month (or portion
thereof).
     2.11 Letters of Credit.
          (a) Subject to the terms and conditions of this Agreement, upon the
request of Administrative Borrower made in accordance herewith, the Issuing
Lender agrees to issue, or to cause an Underlying Issuer, as Issuing Lender’s
agent, to issue, a requested Letter of Credit. If Issuing Lender, at its option,
elects to cause an Underlying Issuer to issue a requested Letter of Credit, then
Issuing Lender agrees that it will obligate itself to reimburse such Underlying
Issuer (which may include, among, other means, by becoming an applicant with
respect to such Letter of Credit or entering into undertakings which provide for
reimbursements of such Underlying Issuer with respect to such Letter of Credit;
each such obligation or undertaking, irrespective of whether in writing, a
“Reimbursement Undertaking”) with respect to Letters of Credit issued by such
Underlying Issuer. By submitting a request to Issuing Lender for the issuance of
a Letter of Credit, Administrative Borrower shall be deemed to have requested
that Issuing Lender issue or that an Underlying Issuer issue the requested
Letter of Credit and to have requested Issuing Lender to issue a Reimbursement
Undertaking with respect to such requested Letter of Credit if it is to be
issued by an Underlying Issuer (it being expressly acknowledged and agreed by
Borrowers that Administrative Borrower is and shall be deemed to be an applicant
(within the meaning of Section 5-102(a)(2) of the Code) with respect to each
Underlying Letter of Credit). Each request for the issuance of a Letter of
Credit, or the amendment, renewal, or extension of any outstanding Letter of
Credit, shall be made in writing by an Authorized Person and delivered to the
Issuing Lender via hand delivery, telefacsimile, or other electronic method of
transmission reasonably in advance of the requested date of issuance, amendment,
renewal, or extension. Each such request shall be in form and substance
reasonably satisfactory to the Issuing Lender and shall specify (i) the amount
of such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the expiration date of such Letter of
Credit, (iv) the name and address of the beneficiary of the Letter of Credit,
and (v) such other information (including, in the case of an amendment, renewal,
or extension, identification of the Letter of Credit to be so amended, renewed,
or extended) as shall be necessary to prepare, amend, renew, or extend such
Letter of Credit. Anything contained herein to the contrary notwithstanding, the
Issuing Lender may, but shall not be obligated to, issue or cause the issuance
of a Letter of Credit or to issue a Reimbursement Undertaking in respect of an
Underlying Letter of Credit, in either case, that supports the obligations of
Parent or its Subsidiaries in respect of (1) a lease of real property, or (2) an
employment contract. Borrowers agree that this Agreement (along with the terms
of the applicable application) will govern each Letter of Credit and its
issuance. The Issuing Lender shall have no obligation to issue a Letter of
Credit or a Reimbursement Undertaking in respect of an Underlying Letter of
Credit, in either case, if any of the following would result after giving effect
to the requested issuance:
               (i) the Letter of Credit Usage would exceed the Borrowing Base
less the outstanding amount of Advances, or
               (ii) the Letter of Credit Usage would exceed $10,000,000, or
               (iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the outstanding amount of Advances.
          Each Letter of Credit shall be in form and substance reasonably
acceptable to the Issuing Lender, including the requirement that the amounts
payable thereunder must be payable in Dollars. If Issuing Lender makes a payment
under a Letter of Credit or an Underlying Issuer makes a payment under an
Underlying Letter of Credit, Borrowers shall pay to Agent an amount equal to the
applicable Letter of Credit Disbursement on the date such Letter of Credit
Disbursement is made and, in the absence of such payment, the amount of the
Letter of Credit Disbursement immediately and automatically shall be deemed to
be an Advance hereunder and, initially, shall bear interest at the rate then
applicable to Advances that are Base Rate Loans. If

-12-

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

 

CONFIDENTIAL TREATMENT REQUESTED
a Letter of Credit Disbursement is deemed to be an Advance hereunder, Borrowers’
obligation to pay the amount of such Letter of Credit Disbursement to Issuing
Lender shall be discharged and replaced by the resulting Advance. Promptly
following receipt by Agent of any payment from Borrowers pursuant to this
paragraph, Agent shall distribute such payment to the Issuing Lender or, to the
extent that Lenders have made payments pursuant to Section 2.11(b) to reimburse
the Issuing Lender, then to such Lenders and the Issuing Lender as their
interests may appear.
          (b) Promptly following receipt of a notice of a Letter of Credit
Disbursement pursuant to Section 2.11(a), each Lender with a Revolver Commitment
agrees to fund its Pro Rata Share of any Advance deemed made pursuant to
Section 2.11(a) on the same terms and conditions as if Borrowers had requested
the amount thereof as an Advance and Agent shall promptly pay to Issuing Lender
the amounts so received by it from the Lenders. By the issuance of a Letter of
Credit or a Reimbursement Undertaking (or an amendment to a Letter of Credit or
a Reimbursement Undertaking increasing the amount thereof) and without any
further action on the part of the Issuing Lender or the Lenders with Revolver
Commitments, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit issued by
Issuing Lender and each Reimbursement Undertaking, in an amount equal to its Pro
Rata Share of such Letter of Credit or Reimbursement Undertaking, and each such
Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender’s Pro Rata Share of any Letter of Credit Disbursement made by Issuing
Lender or an Underlying Issuer under the applicable Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender with a Revolver
Commitment hereby absolutely and unconditionally agrees to pay to Agent, for the
account of the Issuing Lender, such Lender’s Pro Rata Share of each Letter of
Credit Disbursement made by Issuing Lender or an Underlying Issuer and not
reimbursed by Borrowers on the date due as provided in Section 2.11(a), or of
any reimbursement payment required to be refunded to Borrowers for any reason.
Each Lender with a Revolver Commitment acknowledges and agrees that its
obligation to deliver to Agent, for the account of the Issuing Lender, an amount
equal to its respective Pro Rata Share of each Letter of Credit Disbursement
pursuant to this Section 2.11(b) shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any condition set forth in
Section 3. If any such Lender fails to make available to Agent the amount of
such Lender’s Pro Rata Share of a Letter of Credit Disbursement as provided in
this Section, such Lender shall be deemed to be a Defaulting Lender and Agent
(for the account of the Issuing Lender) shall be entitled to recover such amount
on demand from such Lender together with interest thereon at the Defaulting
Lender Rate until paid in full.
          (c) Each Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group and each Underlying Issuer harmless from any loss, cost,
expense, or liability, and reasonable attorneys fees incurred by Issuing Lender,
any other member of the Lender Group, or any Underlying Issuer arising out of or
in connection with any Reimbursement Undertaking or any Letter of Credit;
provided, however, that Borrowers shall not be obligated hereunder to indemnify
for any loss, cost, expense, or liability to the extent that a court of
competent jurisdiction finally determines that such loss, cost, expense, or
liability resulted from the gross negligence or willful misconduct of the
Issuing Lender, any other member of the Lender Group, or any Underlying Issuer.
Each Borrower agrees to be bound by the Underlying Issuer’s regulations and
interpretations of any Letter of Credit or by Issuing Lender’s interpretations
of any Reimbursement Undertaking even though this interpretation may be
different from such Borrower’s own, and each Borrower understands and agrees
that none of the Issuing Lender, the Lender Group, or any Underlying Issuer
shall be liable for any error, negligence, or mistake, whether of omission or
commission, in following Borrowers’ instructions or those contained in the
Letter of Credit or any modifications, amendments, or supplements thereto. Each
Borrower understands that the Reimbursement Undertakings may require Issuing
Lender to indemnify the Underlying Issuer for certain costs or liabilities
arising out of claims by Borrowers against such Underlying Issuer. Each Borrower
hereby agrees to indemnify, save, defend, and hold Issuing Lender and the other
members of the Lender Group harmless with respect to any loss, cost, expense
(including reasonable attorneys fees), or liability incurred by them as a result
of the Issuing Lender’s indemnification of an Underlying Issuer; provided,
however, that no Borrower shall be obligated hereunder to indemnify for any

-13-

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

 

CONFIDENTIAL TREATMENT REQUESTED
such loss, cost, expense, or liability to the extent that it is caused by the
gross negligence or willful misconduct of the Issuing Lender or any other member
of the Lender Group. Each Borrower hereby acknowledges and agrees that none of
the Issuing Lender, any other member of the Lender Group, or any Underlying
Issuer shall be responsible for delays, errors, or omissions resulting from the
malfunction of equipment in connection with any Letter of Credit.
          (d) Each Borrower hereby authorizes and directs any Underlying Issuer
to deliver to the Issuing Lender all instruments, documents, and other writings
and property received by such Underlying Issuer pursuant to such Underlying
Letter of Credit and to accept and rely upon the Issuing Lender’s instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
          (e) Any and all issuance charges, usage charges, commissions, fees,
and costs incurred by the Issuing Lender relating to Underlying Letters of
Credit shall be Lender Group Expenses for purposes of this Agreement and shall
be reimbursable promptly, but in any event, within 1 Business Day by Borrowers
to Agent for the account of the Issuing Lender; it being acknowledged and agreed
by Borrowers that, as of the Closing Date, the usage charge imposed by the
Underlying Issuer is .825% per annum times the undrawn amount of each Underlying
Letter of Credit, that such usage charge may be changed from time to time, and
that the Underlying Issuer also imposes a schedule of charges for amendments,
extensions, drawings, and renewals.
          (f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Issuing Lender, any other member of the Lender Group, or Underlying Issuer with
any direction, request, or requirement (irrespective of whether having the force
of law) of any Governmental Authority or monetary authority including,
Regulation D of the Federal Reserve Board as from time to time in effect (and
any successor thereto):
               (i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued or caused to be
issued hereunder or hereby, or
               (ii) there shall be imposed on the Issuing Lender, any other
member of the Lender Group, or Underlying Issuer any other condition regarding
any Letter of Credit or Reimbursement Undertaking,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Issuing Lender, any other member of the Lender Group, or an Underlying
Issuer of issuing, making, guaranteeing, or maintaining any Reimbursement
Undertaking or Letter of Credit or to reduce the amount receivable in respect
thereof, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay within 30 days after
demand therefor, such amounts as Agent may specify to be necessary to compensate
the Issuing Lender, any other member of the Lender Group, or an Underlying
Issuer for such additional cost or reduced receipt, together with interest on
such amount from the date of such demand until payment in full thereof at the
rate then applicable to Base Rate Loans hereunder; provided, however, that
Borrowers shall not be required to provide any compensation pursuant to this
Section 2.11(f) for any such amounts incurred more than 180 days prior to the
date on which the demand for payment of such amounts is first made to Borrowers;
provided further, however, that if an event or circumstance giving rise to such
amounts is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof. The determination
by Agent of any amount due pursuant to this Section 2.11(f), as set forth in a
certificate setting forth the calculation thereof in reasonable detail, shall,
in the absence of manifest or demonstrable error, be final and conclusive and
binding on all of the parties hereto.
     2.12 LIBOR Option.

-14-

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (a) Interest and Interest Payment Dates. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option,
subject to Section 2.12(b) below (the “LIBOR Option”) to have interest on all or
a portion of the Advances be charged (whether at the time when made (unless
otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR
Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a
rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall
be payable on the earliest of (i) the last day of the Interest Period applicable
thereto; (ii) the date on which all or any portion of the Obligations are
accelerated pursuant to the terms hereof, or (iii) the date on which this
Agreement is terminated pursuant to the terms hereof. On the last day of each
applicable Interest Period, unless Administrative Borrower properly has
exercised the LIBOR Option with respect thereto, the interest rate applicable to
such LIBOR Rate Loan automatically shall convert to the rate of interest then
applicable to Base Rate Loans of the same type hereunder. At any time that an
Event of Default has occurred and is continuing Borrowers no longer shall have
the option to request that Advances bear interest at a rate based upon the LIBOR
Rate.
          (b) LIBOR Election.
               (i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. (California
time) at least 3 Business Days prior to the commencement of the proposed
Interest Period (the “LIBOR Deadline”). Notice of Administrative Borrower’s
election of the LIBOR Option for a permitted portion of the Advances and an
Interest Period pursuant to this Section shall be made by delivery to Agent of a
LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic
notice received by Agent before the LIBOR Deadline (to be confirmed by delivery
to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m. (California
time) on the same day). Promptly upon its receipt of each such LIBOR Notice,
Agent shall provide a copy thereof to each of the affected Lenders.
               (ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any loss,
cost, or expense actually incurred by Agent or any Lender as a result of (A) the
payment of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (B) the conversion of any LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses,
“Funding Losses”). A certificate of Agent or a Lender delivered to
Administrative Borrower setting forth in reasonable detail any amount or amounts
that Agent or such Lender is entitled to receive pursuant to this Section 2.12
shall be conclusive absent manifest error. Borrowers shall pay such amount to
Agent or the Lender, as applicable, within 30 days of the date of its receipt of
such certificate. If a payment of a LIBOR Rate Loan on a day other than the last
day of the applicable Interest Period would result in a Funding Loss, Agent may,
in its sole discretion at the request of Administrative Borrower, hold the
amount of such payment as cash collateral in support of the Obligations until
the last day of such Interest Period and apply such amounts to the payment of
the applicable LIBOR Rate Loan on such last day, it being agreed that Agent has
no obligation to so defer the application of payments to any LIBOR Rate Loan and
that, in the event that Agent does not defer such application, Borrowers shall
be obligated to pay any resulting Funding Losses.
               (iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR Option for
proposed LIBOR Rate Loans of at least $1,000,000.
          (c) Conversion. Borrowers may convert LIBOR Rate Loans to Base Rate
Loans at any time; provided, however, that in the event that LIBOR Rate Loans
are converted or prepaid on any date that is not the last day of the Interest
Period applicable thereto, including as a result of any automatic prepayment
through the required application by Agent of proceeds of Parent’s and its
Non-CFC Subsidiaries’ Collections

-15-

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

 

CONFIDENTIAL TREATMENT REQUESTED
in accordance with Section 2.4(b) or for any other reason, including early
termination of the term of this Agreement or acceleration of all or any portion
of the Obligations pursuant to the terms hereof, each Borrower shall indemnify,
defend, and hold Agent and the Lenders and their Participants harmless against
any and all Funding Losses in accordance with Section 2.12(b)(ii).
          (d) Special Provisions Applicable to LIBOR Rate.
               (i) The LIBOR Rate may be adjusted by Agent with respect to any
Lender on a prospective basis to take into account any additional or increased
costs to such Lender of maintaining or obtaining any eurodollar deposits or
increased costs, in each case, due to changes in applicable law occurring
subsequent to the commencement of the then applicable Interest Period, including
changes in tax laws (except changes of general applicability in corporate income
tax laws) and changes in the reserve requirements imposed by the Board of
Governors of the Federal Reserve System (or any successor), excluding the
Reserve Percentage, which additional or increased costs would increase the cost
of funding or maintaining loans bearing interest at the LIBOR Rate. In any such
event, the affected Lender shall give Administrative Borrower and Agent notice
of such a determination and adjustment and Agent promptly shall transmit the
notice to each other Lender and, upon its receipt of the notice from the
affected Lender, Administrative Borrower may, by notice to such affected Lender
(y) require such Lender to furnish to Administrative Borrower a statement
setting forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans
with respect to which such adjustment is made (together with any amounts due
under Section 2.12(b)(ii)).
               (ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation or application thereof, shall at any time after the date hereof,
in the reasonable opinion of any Lender, make it unlawful or impractical for
such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and
Administrative Borrower and Agent promptly shall transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender’s notice shall be deemed to be
the last day of the Interest Period of such LIBOR Rate Loans, and interest upon
the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to
elect the LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.
          (e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate.
     2.13 Capital Requirements.
          (a) If, after the date hereof, any Lender determines that (i) the
adoption of or change in any law, rule, regulation or guideline regarding
capital requirements for banks or bank holding companies, or any change in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof, or (ii) compliance by such Lender or its parent bank
holding company with any guideline, request or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on such Lender’s or such holding company’s capital
as a consequence of such Lender’s Revolver Commitments hereunder to a level
below that which such Lender or such holding company could have achieved but for
such adoption, change, or compliance (taking into consideration such Lender’s or
such holding company’s then existing policies with respect to capital adequacy
and assuming the full utilization of such entity’s capital) by any amount deemed
by such Lender to be material, then such Lender may notify Administrative
Borrower and Agent thereof. Following receipt of such notice, Borrowers agree to
pay such Lender on demand the amount of such reduction of return of capital as
and when

-16-

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

 

CONFIDENTIAL TREATMENT REQUESTED
such reduction is determined, payable within 30 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail such
Lender’s calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error).
In determining such amount, such Lender may use any reasonable averaging and
attribution methods. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s right to demand such compensation; provided that Borrowers shall not be
required to compensate a Lender pursuant to this Section for any reductions in
return incurred more than 180 days prior to the date that such Lender notifies
Administrative Borrower of such law, rule, regulation or guideline giving rise
to such reductions and of such Lender’s intention to claim compensation
therefor; provided further that if such claim arises by reason of the adoption
of or change in any law, rule, regulation or guideline that is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
          (b) If any Lender requests reimbursement for additional or increased
costs referred to in Section 2.12(d)(i) or amounts under Section 2.13 (a) (any
such Lender, an “Affected Lender”), then such Affected Lender shall use
reasonable efforts to promptly designate a different one of its lending offices
or to assign its rights and obligations hereunder to another of its offices or
branches, if (i) in the reasonable judgment of such Affected Lender, such
designation or assignment would eliminate or reduce amounts payable pursuant to
Section 2.12(d)(i) or Section 2.13(a), as applicable, and (ii) in the reasonable
judgment of such Affected Lender, such designation or assignment would not
subject it to any material unreimbursed cost or expense and would not otherwise
be materially disadvantageous to it. Borrowers agree to pay all reasonable
out-of-pocket costs and expenses incurred by such Affected Lender in connection
with any such designation or assignment. If, after such reasonable efforts, such
Affected Lender does not so designate a different one of its lending offices or
assign its rights to another of its offices or branches so as to eliminate
Borrowers’ obligation to pay any future amounts to such Affected Lender pursuant
to Section 2.12(d)(i) or Section 2.13(a), as applicable, then Borrowers (without
prejudice to any amounts then due to such Affected Lender under
Section 2.12(d)(i) or Section 2.13(a), as applicable) may, unless prior to the
effective date of any such assignment the Affected Lender withdraws its request
for such additional amounts under Section 2.12(d)(i) or Section 2.13(a), as
applicable, may seek a substitute Lender reasonably acceptable to Agent to
purchase the Obligations owed to such Affected Lender and such Affected Lender’s
Revolver Commitments hereunder (a “Replacement Lender”), and if such Replacement
Lender agrees to such purchase, such Affected Lender shall assign to the
Replacement Lender its Obligations and Revolver Commitments, pursuant to an
Assignment and Acceptance Agreement, and upon such purchase by the Replacement
Lender, such Replacement Lender shall be deemed to be a “Lender” for purposes of
this Agreement and such Affected Lender shall cease to be a “Lender” for
purposes of this Agreement.
     2.14 Joint and Several Liability of Borrowers.
          (a) Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender Group under this Agreement, for the
mutual benefit, directly and indirectly, of each Borrower and in consideration
of the undertakings of the other Borrowers to accept joint and several liability
for the Obligations.
          (b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including any Obligations arising under
this Section 2.14). it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of each Borrower without
preferences or distinction among them.
          (c) If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Borrowers will make such payment with respect to, or perform, such
Obligation.

-17-

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (d) The Obligations of each Borrower under the provisions of this
Section 2.14 constitute the absolute and unconditional, full recourse
Obligations of each Borrower enforceable against each Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
          (e) Except as otherwise expressly provided in this Agreement, each
Borrower hereby waives notice of acceptance of its joint and several liability,
notice of any Advances or Letters of Credit issued under or pursuant to this
Agreement, notice of the occurrence of any Default, Event of Default, or of any
demand for any payment under this Agreement, notice of any action at any time
taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without limiting
the generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 2.14 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this
Section 2.14, it being the intention of each Borrower that, so long as any of
the Obligations hereunder remain unsatisfied, the Obligations of each Borrower
under this Section 2.14 shall not be discharged except by performance and then
only to the extent of such performance. The Obligations of each Borrower under
this Section 2.14 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or any Agent or Lender.
          (f) Each Borrower represents and warrants to Agent and Lenders that
such Borrower is currently informed of the financial condition of Borrowers and
of all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Agent and Lenders that such Borrower has read and understands
the terms and conditions of the Loan Documents. Each Borrower hereby covenants
that such Borrower will continue to keep informed of Borrowers’ financial
condition, the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
          (g) Each Borrower waives all rights and defenses arising out of an
election of remedies by Agent or any Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Agent’s or such Lender’s rights of
subrogation and reimbursement against such Borrower by the operation of Section
580(d) of the California Code of Civil Procedure or otherwise:
          (h) Each Borrower waives all rights and defenses that such Borrower
may have because the Obligations are secured by Real Property. This means, among
other things:
               (i) Agent and Lenders may collect from such Borrower without
first foreclosing on any real or personal property Collateral pledged by
Borrowers.
               (ii) If Agent or any Lender forecloses on any Real Property
Collateral pledged by Borrowers:

-18-

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

 

CONFIDENTIAL TREATMENT REQUESTED
                    (A) The amount of the Obligations may be reduced only by the
price for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.
                    (B) Agent and Lenders may collect from such Borrower even if
Agent or Lenders, by foreclosing on the Real Property Collateral, has destroyed
any right such Borrower may have to collect from the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
          (i) The provisions of this Section 2.14 are made for the benefit of
Agent, Lenders and their respective successors and assigns, and may be enforced
by it or them from time to time against any or all Borrowers as often as
occasion therefor may arise and without requirement on the part of Agent,
Lender, successor or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this Section 2.14 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this
Section 2.14 will forthwith be reinstated in effect, as though such payment had
not been made.
          (j) Until the Obligations have been paid in full and all of the
Revolver Commitments terminated, each Borrower hereby agrees that it will not
enforce any of its rights of contribution or subrogation against any other
Borrower with respect to any liability incurred by it hereunder or under any of
the other Loan Documents, any payments made by it to Agent or Lenders with
respect to any of the Obligations or any collateral security therefor until such
time as all of the Obligations have been paid in full in cash. Any claim which
any Borrower may have against any other Borrower with respect to any payments to
any Agent or Lender hereunder or under any other Loan Documents are hereby
expressly made subordinate and junior in right of payment, without limitation as
to any increases in the Obligations arising hereunder or thereunder, to the
prior payment in full in cash of the Obligations and, in the event of any
insolvency, bankruptcy, receivership, liquidation, reorganization or other
similar proceeding under the laws of any jurisdiction relating to any Borrower,
its debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.
          (k) Each Borrower hereby agrees that, after the occurrence and during
the continuance of any Default or Event of Default, the payment of any amounts
due with respect to the indebtedness owing by any Borrower to any other Borrower
is hereby subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default, such Borrower will not demand, sue for or
otherwise attempt to collect any indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Borrower as trustee for Agent, and such
Borrower shall deliver any such amounts to Agent for application to the
Obligations in accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
     3.1 Conditions Precedent to the Initial Extension of Credit. The obligation
of each Lender to make its initial extension of credit provided for hereunder,
is subject to the fulfillment, to the satisfaction of Agent and each Lender of
each of the conditions precedent set forth on Schedule 3.1 (the making of such

-19-

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

 

CONFIDENTIAL TREATMENT REQUESTED
initial extension of credit by a Lender being conclusively deemed to be its
satisfaction or waiver of the conditions precedent).
     3.2 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Advances hereunder (or to
extend any other credit hereunder) at any time shall be subject to the following
conditions precedent:
          (a) the representations and warranties of Parent or its Subsidiaries
contained in this Agreement or in the other Loan Documents shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) on and as of the date
of such extension of credit, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date); and
          (b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof.
     3.3 Maturity. This Agreement shall continue in full force and effect for a
term ending on October 2, 2013 (the “Maturity Date”); provided that if on or
prior to August 12, 2010, a 2010 Event has not occurred, then the Maturity Date
shall be August 12, 2010. The foregoing notwithstanding, the Lender Group, upon
the election of the Required Lenders, shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.
     3.4 Effect of Maturity. On the Maturity Date, all commitments of the Lender
Group to provide additional credit hereunder shall automatically be terminated
and all Obligations (including contingent reimbursement obligations of Borrowers
with respect to outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(and, as a part of such Obligations becoming due and payable, Borrowers shall
immediately and automatically be obligated to provide (a) Letter of Credit
Collateralization, and (b) Bank Product Collateralization). No termination of
the obligations of the Lender Group (other than payment in full of the
Obligations and termination of the Revolver Commitments) shall relieve or
discharge any Loan Party of its duties, Obligations, or covenants hereunder or
under any other Loan Document and Agent’s Liens in the Collateral shall continue
to secure the Obligations and shall remain in effect until all Obligations have
been paid in full and the Revolver Commitments have been terminated. When all of
the Obligations have been paid in full and the Lender Group’s obligations to
provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrowers’ sole expense, execute and deliver any
termination statements, lien releases, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, Agent’s Liens and
all notices of security interests and liens previously filed by Agent with
respect to the Obligations.
     3.5 Early Termination by Borrowers. Borrowers have the option, at any time
upon 10 Business Days prior written notice to Agent, to terminate this Agreement
and terminate the Revolver Commitments hereunder by paying to Agent the
Obligations (including (a) providing Letter of Credit Collateralization with
respect to the then existing Letter of Credit Usage, and (b) providing Bank
Product Collateralization with respect to the then existing Bank Products), in
full.
4. REPRESENTATIONS AND WARRANTIES.
          In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects (except
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof), as of the Closing Date, and

-20-

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

 

CONFIDENTIAL TREATMENT REQUESTED
shall be true, correct, and complete, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), as of the date of the making of each Advance (or other extension of
credit) made thereafter, as though made on and as of the date of such Advance
(or other extension of credit) (except to the extent that such representations
and warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
     4.1 Due Organization and Qualification; Subsidiaries.
          (a) Except as set forth on Schedule 4.1(a), each Loan Party (i) is
duly organized and existing and in good standing under the laws of the
jurisdiction of its organization, (ii) is qualified to do business in any state
where the failure to be so qualified could reasonably be expected to result in a
Material Adverse Change, and (iii) has all requisite power and authority to own
and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents to which it is a
party and to carry out the transactions contemplated thereby.
          (b) Set forth on Schedule 4.1(b) is a complete and accurate
description of the authorized capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 4.1(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of any Borrower’s capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
          (c) Set forth on Schedule 4.1(c) (as such Schedule may be updated from
time to time to reflect changes resulting from transactions permitted under this
Agreement), is a complete and accurate list of the Loan Parties’ direct and
indirect Subsidiaries, showing: (i) the number of shares of each class of common
and preferred Stock authorized for each of such Subsidiaries, and (ii) the
number and the percentage of the outstanding shares of each such class owned
directly or indirectly by Parent. All of the outstanding capital Stock of each
such Subsidiary has been validly issued and is fully paid and non-assessable.
          (d) Except as set forth on Schedule 4.1 (c) (as such Schedule may be
updated from time to time to reflect changes resulting from transactions
permitted under this Agreement), there are no subscriptions, options, warrants,
or calls relating to any shares of Parent’s Subsidiaries’ capital Stock,
including any right of conversion or exchange under any outstanding security or
other instrument. Neither Parent nor any of its Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of Parent’s Subsidiaries’ capital Stock or any security
convertible into or exchangeable for any such capital Stock.
     4.2 Due Authorization; No Conflict.
          (a) As to each Loan Party, the execution, delivery, and performance by
such Loan Party of the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Loan Party.
          (b) As to each Loan Party, the execution, delivery, and performance by
such Loan Party of the Loan Documents to which it is a party do not and will not
(i) violate any material provision of federal, state, or local law or regulation
applicable to any Loan Party or its Subsidiaries, the Governing Documents of any
Loan Party or its Subsidiaries, or any order, judgment, or decree of any court
or other Governmental Authority binding on any Loan Party or its Subsidiaries,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract of any Loan Party
or its Subsidiaries except to the extent that any such conflict, breach or
default could not individually or in the aggregate reasonably be expected to
have a Material Adverse Change, (iii) result in or require the creation or

-21-

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

 

CONFIDENTIAL TREATMENT REQUESTED
imposition of any Lien of any nature whatsoever upon any assets of any Loan
Party, other than Permitted Liens, or (iv) require any approval of any Loan
Party’s interest holders or any approval or consent of any Person under any
Material Contract of any Loan Party, other than consents or approvals that have
been obtained and that are still in force and effect and except, in the case of
Material Contracts, for consents or approvals, the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Change.
     4.3 Governmental Consents. The execution, delivery, and performance by each
Loan Party of the Loan Documents to which such Loan Party is a party and the
consummation of the transactions contemplated by the Loan Documents do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority, other than
registrations, consents, approvals, notices, or other actions that have been
obtained and that are still in force and effect and except for filings and
recordings with respect to the Collateral to be made, or otherwise delivered to
Agent for filing or recordation, as of the Closing Date, and except for actions
with or by Governmental Authorities the failure to take which could not
reasonably be expected to result in a Material Adverse Change.
     4.4 Binding Obligations; Perfected Liens.
          (a) Each Loan Document has been duly executed and delivered by each
Loan Party that is a party thereto and is the legally valid and binding
obligation of such Loan Party, enforceable against such Loan Party in accordance
with its respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors’ rights generally.
          (b) Agent’s Liens are validly created, perfected (other than (i) in
respect of motor vehicles that are subject to a certificate of title and as to
which Agent has not caused its Lien to be noted on the applicable certificate of
title, and (ii) any Deposit Accounts and Securities Accounts not subject to a
Control Agreement as permitted by Section 6.11, and subject only to the filing
of financing statements, the recordation of the Copyright Security Agreement,
and the recordation of the Mortgages, in each case, in the appropriate filing
offices), and first priority Liens, subject only to Permitted Liens.
     4.5 Title to Assets; No Encumbrances. Each of the Loan Parties and its
Subsidiaries has (i) good, sufficient and legal title to (in the case of fee
interests in Real Property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (iii) good and marketable
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 5.1, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby. All of such assets are free
and clear of Liens except for Permitted Liens.
     4.6 Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.
          (a) The name of (within the meaning of Section 9-503 of the Code) and
jurisdiction of organization of each Loan Party and each of its Subsidiaries is
set forth on Schedule 4.6(a) (as such Schedule may be updated from time to time
to reflect changes resulting from transactions permitted under this Agreement).
          (b) The chief executive office of each Loan Party and each of its
Subsidiaries is located at the address indicated on Schedule 4.6(b) (as such
Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under this Agreement).

-22-

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (c) Each Loan Party’s and each of its Subsidiaries’ tax identification
numbers and organizational identification numbers, if any, are identified on
Schedule 4.6(c) (as such Schedule may be updated from time to time to reflect
changes resulting from transactions permitted under this Agreement).
          (d) As of the Closing Date, no Loan Party and no Subsidiary of a Loan
Party holds any commercial tort claims, except as set forth on Schedule 4.6(d).
     4.7 Litigation.
          (a) There are no actions, suits, or proceedings pending or, to the
knowledge of each Borrower, after due inquiry, threatened in writing against a
Loan Party or any of its Subsidiaries that either individually or in the
aggregate could reasonably be expected to result in a Material Adverse Change.
          (b) Schedule 4.7(b) sets forth a complete and accurate description,
with respect to each of the actions, suits, or proceedings with asserted
liabilities in excess of, or that could reasonably be expected to result in
liabilities in excess of, $500,000, that, as of the Closing Date, is pending or,
to the knowledge of each Borrower, after due inquiry, threatened against a Loan
Party or any of its Subsidiaries, of (i) the parties to such actions, suits, or
proceedings, (ii) the nature of the dispute that is the subject of such actions,
suits, or proceedings, (iii) the status, as of the Closing Date, with respect to
such actions, suits, or proceedings, and (iv) whether any liability of the Loan
Parties’ and their Subsidiaries in connection with such actions, suits, or
proceedings is covered by insurance.
     4.8 Compliance with Laws. Except as set forth on Schedule 4.8, no Loan
Party nor any of its Subsidiaries (a) is in violation of any applicable laws,
rules, regulations, executive orders, or codes (including Environmental Laws)
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Change, or (b) is subject to or in default with respect to
any final judgments, writs, injunctions, decrees, rules or regulations of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change.
     4.9 No Material Adverse Change. All historical financial statements
relating to the Loan Parties and their Subsidiaries that have been delivered by
Borrowers to Agent have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and present fairly in all material
respects, the Loan Parties’ and their Subsidiaries’ consolidated financial
condition as of the date thereof and results of operations for the period then
ended. Since April 30, 2009, no event, circumstance, or change has occurred that
has or could reasonably be expected to result in a Material Adverse Change with
respect to the Loan Parties and their Subsidiaries.
     4.10 Fraudulent Transfer.
          (a) Each Loan Party is Solvent.
          (b) No transfer of property is being made by any Loan Party and no
obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of such
Loan Party.
     4.11 Employee Benefits. Except as set forh on Schedule 4.11, no Loan Party,
none of their Subsidiaries, nor any of their ERISA Affiliates maintains or
contributes to any Benefit Plan.
     4.12 Environmental Condition. (a) To each Borrower’s knowledge, no Loan
Party’s nor any of its Subsidiaries’ properties or assets has ever been used by
a Loan Party, its Subsidiaries, or by previous

-23-

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

 

CONFIDENTIAL TREATMENT REQUESTED
owners or operators in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials, where such disposal, production,
storage, handling, treatment, release or transport was in violation, in any
material respect, of any applicable Environmental Law, (b) to each Borrower’s
knowledge, after due inquiry, no Loan Party’s nor any of its Subsidiaries’
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) no Loan Party nor any of its Subsidiaries has received notice
that a Lien arising under any Environmental Law has attached to any revenues or
to any Real Property owned or operated by a Loan Party or its Subsidiaries, and
(d) no Loan Party nor any of its Subsidiaries nor any of their respective
facilities or operations is subject to any outstanding written order, consent
decree, or settlement agreement with any Person relating to any Environmental
Law or Environmental Liability that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change.
     4.13 Intellectual Property. Each Loan Party and its Subsidiaries own, or
hold licenses in, all trademarks, trade names, copyrights, patents, and licenses
that are necessary to the conduct of its business as currently conducted, and
attached hereto as Schedule 4.13 (as updated each fiscal quarter of Parent) is a
true, correct, and complete listing of all trademarks, trade names, copyrights,
patents, and material licenses as to which Parent or one of its Subsidiaries is
the owner or is an exclusive licensee; provided, however, that Administrative
Borrower may amend Schedule 4.13 to add additional intellectual property so long
as such amendment occurs by written notice to Agent at the time that Parent
provides its Compliance Certificate for each fiscal quarter pursuant to
Section 5.1.
     4.14 Leases. Each Loan Party and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating, and, subject to Permitted
Protests, all of such material leases are valid and subsisting and no material
default by the applicable Loan Party or its Subsidiaries exists under any of
them.
     4.15 Deposit Accounts and Securities Accounts. Set forth on Schedule 4.15
(as updated pursuant to the provisions of the Security Agreement from time to
time) is a listing of all of the Loan Parties’ and their Subsidiaries’ Deposit
Accounts and Securities Accounts, including, with respect to each bank or
securities intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.
     4.16 Complete Disclosure. All factual information taken as a whole (other
than forward-looking information and projections and information of a general
economic nature and general information about Borrowers’ industry) furnished by
or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement or
the other Loan Documents, and all other such factual information taken as a
whole (other than forward-looking information and projections and information of
a general economic nature and general information about Borrowers’ industry)
hereafter furnished by or on behalf of a Loan Party or its Subsidiaries in
writing to Agent or any Lender will be, true and accurate, in all material
respects, on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. The Projections
delivered to Agent on September 1, 2009 represent, and as of the date on which
any other Projections are delivered to Agent, such additional Projections
represent, Borrowers’ good faith estimate, on the date such Projections are
delivered, of the Loan Parties’ and their Subsidiaries’ future performance for
the periods covered thereby based upon assumptions believed by Borrowers to be
reasonable at the time of the delivery thereof to Agent (it being understood
that such Projections are subject to uncertainties and contingencies, many of
which are beyond the control of the Loan Parties and their Subsidiaries, that no
assurances can be given that such Projections will be realized, and that actual
results may differ in a material manner from such Projections).

-24-

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

 

CONFIDENTIAL TREATMENT REQUESTED
     4.17 Material Contracts. Set forth on Schedule 4.17 (as such Schedule may
be updated from time to time in accordance herewith) is a reasonably detailed
description of the Material Contracts of each Loan Party and its Subsidiaries as
of the most recent date on which Borrowers provided its Compliance Certificate
pursuant to Section 5.1; provided, however, that Administrative Borrower may
amend Schedule 4.17 to add additional Material Contracts so long as such
amendment occurs by written notice to Agent on the date that Parent provides its
Compliance Certificate. Except for matters which, either individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Change, each Material Contract (other than those that have expired at the end of
their normal terms or in accordance with the termination provisions therein)
(a) is in full force and effect and is binding upon and enforceable against the
applicable Loan Party or its Subsidiary and, to each Borrower’s knowledge, after
due inquiry, each other Person that is a party thereto in accordance with its
terms, (b) has not been otherwise amended or modified (other than amendments or
modifications permitted by Section 6.7(b)), and (c) is not in default due to the
action or inaction of the applicable Loan Party or its Non-CFC Subsidiary.
     4.18 Patriot Act. To the extent applicable, each Loan Party is in
compliance, in all material respects, with the (a) Trading with the Enemy Act,
as amended, and each of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any
other enabling legislation or executive order relating thereto, and (b) Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of
the proceeds of the loans made hereunder will be used by any Loan Party or any
of their Affiliates, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.
     4.19 Indebtedness. Set forth on Schedule 4.19 is a true and complete list
of all Indebtedness of each Loan Party and each of its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding immediately
after giving effect to the closing hereunder on the Closing Date and such
Schedule accurately sets forth the aggregate principal amount of such
Indebtedness as of the Closing Date.
     4.20 Payment of Taxes. Except as otherwise permitted under Section 5.5, all
tax returns and reports of each Loan Party and its Subsidiaries required to be
filed by any of them have been timely filed, and all taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental
charges upon a Loan Party and its Subsidiaries and upon their respective assets,
income, businesses and franchises that are due and payable have been paid when
due and payable. Each Loan Party and each of its Subsidiaries have made adequate
provision in accordance with GAAP for all taxes not yet due and payable. No
Borrower knows of any proposed tax assessment against a Loan Party or any of its
Subsidiaries that is not being actively contested by such Loan Party or such
Subsidiary diligently, in good faith, and by appropriate proceedings; provided
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
     4.21 Margin Stock. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the loans made to Borrowers will be used to purchase or carry
any such Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any such Margin Stock or for any purpose that violates
the provisions of Regulation T, U or X of the Board of Governors of the United
States Federal Reserve.
     4.22 Governmental Regulation. No Loan Party nor any of its Subsidiaries is
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Loan Party nor any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal

-25-

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

 

CONFIDENTIAL TREATMENT REQUESTED
underwriter” of a “registered investment company” as such terms are defined in
the Investment Company Act of 1940.
     4.23 OFAC. No Loan Party nor any of its Subsidiaries is in violation of any
of the country or list based economic and trade sanctions administered and
enforced by OFAC. No Loan Party nor any of its Subsidiaries (a) is a Sanctioned
Person or a Sanctioned Entity, (b) has its assets located in Sanctioned
Entities, or (c) derives revenues from investments in, or transactions with
Sanctioned Persons or Sanctioned Entities. The proceeds of any Advance will not
be used to fund any operations in, finance any investments or activities in, or
make any payments to, a Sanctioned Person or a Sanctioned Entity.
     4.24 Employee and Labor Matters. There is (i) no unfair labor practice
complaint pending or, to the knowledge of Borrowers, threatened against Parent
or its Subsidiaries before any Governmental Authority and no grievance or
arbitration proceeding pending or threatened against Parent or its Subsidiaries
which arises out of or under any collective bargaining agreement and that could
reasonably be expected to result in a material liability, (ii) no strike, labor
dispute, slowdown, stoppage or similar action or grievance pending or threatened
in writing against Parent or its Subsidiaries that could reasonably be expected
to result in a material liability, or (iii) except as set forth on
Schedule 4.24, to the knowledge of any Borrower, after due inquiry, no union
representation question existing with respect to the employees of Parent or its
Subsidiaries and no union organizing activity taking place with respect to any
of the employees of Parent or its Subsidiaries. None of Parent or its
Subsidiaries has incurred any liability or obligation under the Worker
Adjustment and Retraining Notification Act or similar state law, which remains
unpaid or unsatisfied. The hours worked and payments made to employees of Parent
or its Subsidiaries have not been in violation of the Fair Labor Standards Act
or any other applicable legal requirements, except to the extent such violations
could not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Change. All material payments due from Parent or its
Subsidiaries on account of wages and employee health and welfare insurance and
other benefits have been paid or accrued as a liability on the books of Parent,
except where the failure to do so could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change.
     4.25 Eligible Accounts, Eligible Investment Grade Foreign Accounts and
Eligible Credit Insured Accounts. As to each Account that is identified by
Administrative Borrower as an Eligible Account, an Eligible Investment Grade
Account or an Eligible Credit Insured Account in a Borrowing Base Certificate
submitted to Agent, such Account is (a) a bona fide existing payment obligation
of the applicable Account Debtor created by the sale and delivery of Inventory
or the rendition of services to such Account Debtor in the ordinary course of
Borrowers’ business, (b) owed to a Borrower without any known defenses,
disputes, offsets, counterclaims, or rights of return or cancellation, and
(c) not excluded as ineligible by virtue of one or more of the excluding
criteria (other than Agent-discretionary criteria) set forth in the definition
of Eligible Accounts, Eligible Investment Grade Accounts or Eligible Credit
Insured Accounts, as applicable.
     4.26 Eligible Inventory. As to each item of Inventory that is identified by
Administrative Borrower as Eligible Inventory in a Borrowing Base Certificate
submitted to Agent, such Inventory is (a) of good and merchantable quality, free
from known defects, and (b) not excluded as ineligible by virtue of one or more
of the excluding criteria (other than Agent-discretionary criteria) set forth in
the definition of Eligible Inventory.
     4.27 Eligible Equipment. As to each item of Equipment that is identified by
Administrative Borrower as Eligible Equipment in a Borrowing Base Certificate
submitted to Agent, such Equipment is (a) of good and merchantable quality, free
from known defects, and (b) not excluded as ineligible by virtue of one or more
of the excluding criteria (other than Agent-discretionary criteria) set forth in
the definition of Eligible Equipment.
     4.28 Locations of Inventory and Equipment. The Inventory and Equipment
(other than vehicles or Equipment out for repair) of the Loan Parties and their
Subsidiaries are not stored with a bailee,

-26-

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

 

CONFIDENTIAL TREATMENT REQUESTED
warehouseman, or similar party and are located only at, or in-transit between or
to, the locations identified on Schedule 4.28 (as such Schedule may be updated
pursuant to Section 5.15).
     4.29 Inventory Records. Each Loan Party keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries’ Inventory and the book value thereof.
     4.30 The Indentures. Neither the execution or performance of the Loan
Documents nor the incurrence of any Obligations by Parent or any of its
Subsidiaries violates any of the 2003 Indenture, the 2006 Indenture or the
Subordinated Notes. The Revolver Commitments and Obligations constitute
“Designated Senior Indebtedness” under each Indenture. Agent may condition
Borrowings, Letters of Credit and other credit accommodations under the Loan
Documents from time to time upon Agent’s receipt of evidence that the Revolver
Commitments and Obligations continue to constitute “Designated Senior
Indebtedness” at such time.
5. AFFIRMATIVE COVENANTS.
          Each Borrower covenants and agrees that, until termination of all of
the Revolver Commitments and payment in full of the Obligations, the Loan
Parties shall and shall cause each of their Subsidiaries to comply with each of
the following:
     5.1 Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender, each of the financial statements, reports, and other
items set forth on Schedule 5.1 no later than the times specified therein. In
addition, each Borrower agrees that no Subsidiary of a Loan Party will have a
fiscal year different from that of Parent. In addition, Parent agrees to
maintain a system of accounting that enables Parent to produce financial
statements in accordance with GAAP. Each Loan Party shall also (a) keep a
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to its and its Subsidiaries’ sales, and (b) maintain its
billing systems/practices consistent with those disclosed by Borrowers to Agent
prior to the Closing Date and shall only make material modifications thereto
with notice to, and with the consent of, Agent (such consent not to be
unreasonably withheld, delayed or conditioned).
     5.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with
copies for each Lender) with each of the reports set forth on Schedule 5.2 at
the times specified therein. In addition, Borrowers agree to use commercially
reasonable efforts in cooperation with Agent to facilitate and implement a
system of electronic collateral reporting in order to provide electronic
reporting of each of the items set forth on such Schedule.
     5.3 Existence. Except as otherwise permitted under Section 6.3 or
Section 6.4, at all times maintain and preserve in full force and effect its
existence (including being in good standing in its jurisdiction of organization)
and all rights and franchises, licenses and permits material to its business;
provided, however, that no Loan Party or any of its Subsidiaries shall be
required to preserve any such right or franchise, licenses or permits if such
Person’s board of directors (or similar governing body) shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
such Person, and that the loss thereof is not disadvantageous in any material
respect to such Person or to the Lenders.
     5.4 Maintenance of Properties. Maintain and preserve all of its assets that
are necessary or useful in the proper conduct of its business in good working
order and condition, ordinary wear, tear, and casualty excepted and Permitted
Dispositions excepted, and comply with the material provisions of all material
leases to which it is a party as lessee, so as to prevent the loss or forfeiture
thereof, unless such provisions are the subject of a Permitted Protest.
     5.5 Taxes. Cause all assessments and taxes imposed, levied, or assessed
against any Loan Party or its Subsidiaries, or any of their respective assets or
in respect of any of its income, businesses, or franchises to be paid in full,
before delinquency or before the expiration of any extension period, except to
the extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest and so long as, in the case of

-27-

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

 

CONFIDENTIAL TREATMENT REQUESTED
an assessment or tax that has or may become a Lien against any of the
Collateral, such contest proceedings conclusively operate to stay the sale of
any portion of the Collateral to satisfy such assessment or tax. Parent will and
will cause each of its Subsidiaries to make timely payment or deposit of all tax
payments and withholding taxes required of it and them by applicable laws,
including those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Agent with
proof reasonably satisfactory to Agent indicating that Parent and its
Subsidiaries have made such payments or deposits.
     5.6 Insurance. At Borrowers’ expense, maintain insurance respecting each of
the Loan Parties’ and their Subsidiaries’ assets wherever located, covering loss
or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other Persons engaged in the same or similar
businesses. Borrowers also shall maintain (with respect to each of the Loan
Parties and their Subsidiaries) business interruption, general liability,
product liability insurance, director’s and officer’s liability insurance,
fiduciary liability insurance, and employment practices liability insurance, as
well as insurance against larceny, embezzlement, and criminal misappropriation.
All such policies of insurance shall be with responsible and reputable insurance
companies acceptable to Agent and in such amounts as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated and located and in any event in amount, adequacy and scope
reasonably satisfactory to Agent. All property insurance policies covering the
Collateral are to be made payable to Agent for the benefit of Agent and the
Lenders, as their interests may appear, in case of loss, pursuant to a standard
loss payable endorsement with a standard non contributory “lender” or “secured
party” clause and are to contain such other provisions as Agent may reasonably
require to fully protect the Lenders’ interest in the Collateral and to any
payments to be made under such policies. All certificates of property and
general liability insurance are to be delivered to Agent, with the loss payable
(but only in respect of Collateral) and additional insured endorsements in favor
of Agent and shall provide for not less than 30 days (10 days in the case of
non-payment) prior written notice to Agent of the exercise of any right of
cancellation. If any Borrower fails to maintain such insurance, Agent may
arrange for such insurance, but at Borrowers’ expense and without any
responsibility on Agent’s part for obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of claims.
Administrative Borrower shall give Agent prompt notice of any loss exceeding
$500,000 covered by its casualty or business interruption insurance. Upon the
occurrence and during the continuance of an Event of Default, Agent shall have
the sole right to file claims under any property and casualty insurance policies
in respect of the Collateral, to receive, receipt and give acquittance for any
payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.
     5.7 Inspection. Permit Agent and each of its duly authorized
representatives or agents to visit any of its properties and inspect any of its
assets or books and records, to conduct appraisals and valuations, to examine
and make copies of its books and records, and to discuss its affairs, finances,
and accounts with, and to be advised as to the same by, its officers and
employees at such reasonable times and intervals as Agent may designate and, so
long as no Default or Event of Default exists, with reasonable prior notice to
Administrative Borrower.
     5.8 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority (including,
without limitation, all laws restricting or governing the export of Inventory
from the United States), other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.
     5.9 Environmental.

-28-

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (a) Keep any property either owned or operated by Parent or its
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens,
          (b) Comply, in all material respects, with Environmental Laws and
provide to Agent documentation of such compliance which Agent reasonably
requests,
          (c) Promptly notify Agent of any release of which any Borrower has
knowledge of a Hazardous Material in any reportable quantity from or onto
property owned or operated by Parent or its Subsidiaries and take any Remedial
Actions required to abate said release or otherwise to come into compliance, in
all material respects, with applicable Environmental Law, and
          (d) Promptly, but in any event within 5 Business Days of its receipt
thereof, provide Agent with written notice of any of the following: (i) notice
that an Environmental Lien has been filed against any of the real or personal
property of Parent or its Subsidiaries, (ii) commencement of any Environmental
Action or written notice that an Environmental Action will be filed against
Parent or its Subsidiaries, and (iii) written notice of a violation, citation,
or other administrative order from a Governmental Authority, which could
reasonably be expected to result in a Material Adverse Change.
     5.10 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained, at the time it was
furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules hereto.
     5.11 Formation of Subsidiaries. At the time that any Loan Party forms any
direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Closing Date, such Loan Party shall (a) within 10 days of such
formation or acquisition (or such later date as permitted by Agent in its sole
discretion) cause any such new Subsidiary to provide to Agent a joinder to the
Guaranty and the Security Agreement, together with such other security documents
(including mortgages with respect to any Real Property owned in fee of such new
Subsidiary, as well as appropriate financing statements (and with respect to all
property subject to a mortgage, fixture filings), all in form and substance
reasonably satisfactory to Agent (including being sufficient to grant Agent a
first priority Lien (subject to Permitted Liens) in and to the assets of such
newly formed or acquired Subsidiary); provided that the Guaranty, the Security
Agreement, and such other security documents shall not be required to be
provided to Agent with respect to any Subsidiary of Parent that is a CFC if
providing such documents would result in adverse tax consequences or the costs
to the Loan Parties of providing such Guaranty, executing any security documents
or perfecting the security interests created thereby are unreasonably excessive
(as determined by Agent in consultation with Administrative Borrower) in
relation to the benefits of Agent and the Lenders of the security or guarantee
afforded thereby, (b) within 10 days of such formation or acquisition (or such
later date as permitted by Agent in its sole discretion) provide to Agent a
pledge agreement (or an addendum to the Security Agreement) and appropriate
certificates and powers or financing statements, pledging all of the direct or
beneficial ownership interest in such new Subsidiary reasonably satisfactory to
Agent; provided that only 65% of the total outstanding voting Stock of any first
tier Subsidiary of Parent that is a CFC (and none of the Stock of any Subsidiary
of such CFC) shall be required to be pledged if pledging a greater amount would
result in adverse tax consequences or the costs to the Loan Parties of providing
such pledge or perfecting the security interests created thereby are
unreasonably excessive (as determined by Agent in consultation with
Administrative Borrower) in relation to the benefits of Agent and the Lenders of
the security or guarantee afforded thereby (which pledge, if reasonably
requested by Agent, shall be governed by the laws of the jurisdiction of such
Subsidiary), and (c) within 10 days of such formation or acquisition (or such
later date as permitted by Agent in its sole discretion) provide to Agent all
other

-29-

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

 

CONFIDENTIAL TREATMENT REQUESTED
documentation, including one or more opinions of counsel reasonably satisfactory
to Agent, which in its opinion is appropriate with respect to the execution and
delivery of the applicable documentation referred to above (including policies
of title insurance or other documentation with respect to all Real Property
owned in fee and subject to a mortgage). Any document, agreement, or instrument
executed or issued pursuant to this Section 5.11 shall be a Loan Document.
     5.12 Further Assurances. At any time upon the reasonable request of Agent,
execute or deliver to Agent any and all financing statements, fixture filings,
security agreements, pledges, assignments, endorsements of certificates of
title, mortgages, deeds of trust, opinions of counsel, and all other documents
(collectively, the “Additional Documents”) that Agent may reasonably request in
form and substance reasonably satisfactory to Agent, to create, perfect, and
continue perfected or to better perfect Agent’s Liens in all of the assets of
Parent and its Subsidiaries (whether now owned or hereafter arising or acquired,
tangible or intangible, real or personal), to create and perfect Liens in favor
of Agent in any Real Property acquired by Parent or its Subsidiaries after the
Closing Date, and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents; provided that the
foregoing shall not apply to any Subsidiary of Parent that is a CFC if providing
such documents would result in adverse tax consequences or the costs to the Loan
Parties of providing such documents are unreasonably excessive (as determined by
Agent in consultation with Administrative Borrower) in relation to the benefits
of Agent and the Lenders of the benefits afforded thereby. To the maximum extent
permitted by applicable law, each Borrower authorizes Agent to execute any such
Additional Documents in the applicable Loan Party’s or its Subsidiary’s name, as
applicable, and authorizes Agent to file such executed Additional Documents in
any appropriate filing office. In furtherance and not in limitation of the
foregoing, each Loan Party shall take such actions as Agent may reasonably
request from time to time to ensure that the Obligations are guarantied by the
Guarantors and are secured by substantially all of the assets of Parent and its
Subsidiaries and all of the outstanding capital Stock of Parent’s Subsidiaries
(subject to exceptions and limitations contained in the Loan Documents with
respect to CFCs).
     5.13 Lender Meetings. Within 90 days after the close of each fiscal year of
Parent, at the request of Agent or of the Required Lenders and upon reasonable
prior notice, hold a meeting (at a mutually agreeable location and time or, at
the option of Agent, by conference call) with all Lenders who choose to attend
such meeting at which meeting shall be reviewed the financial results of the
previous fiscal year and the financial condition of Parent and its Subsidiaries
and the projections presented for the current fiscal year of Parent.
     5.14 Material Contracts. Contemporaneously with the delivery of each
Compliance Certificate pursuant to Section 5.1, provide Agent with copies of
(a) each Material Contract entered into since the delivery of the previous
Compliance Certificate, and (b) each material amendment or modification of any
Material Contract entered into since the delivery of the previous Compliance
Certificate.
     5.15 Location of Inventory and Equipment. Keep each Loan Parties’ and its
Subsidiaries’ Inventory and Equipment (other than vehicles and Equipment out for
repair) only at the locations identified on Schedule 4.28 and their chief
executive offices only at the locations identified on Schedule 4.6(b); provided,
however, that Administrative Borrower may amend Schedule 4.28 or Schedule 4.6(b)
so long as such amendment occurs by written notice to Agent not less than
10 days prior to the date on which such Inventory or Equipment is moved to such
new location or such chief executive office is relocated and so long as such new
location is within the continental United States, and so long as, at the time of
such written notification, Administrative Borrower uses commercially reasonable
efforts to provide Agent a Collateral Access Agreement with respect thereto.
     5.16 Assignable Material Contracts. Use commercially reasonable efforts to
ensure that any Material Contract entered into after the Closing Date by Parent
or one of its Non-CFC Subsidiaries that generates or, by its terms, will
generate revenue, permits the assignment of such agreement (and all rights of
Parent or such Non-CFC Subsidiary, as applicable, thereunder) to Parent’s or
such Non-CFC Subsidiary’s lenders or an agent for any lenders (and any
transferees of such lenders or such agent, as applicable).

-30-

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

 

CONFIDENTIAL TREATMENT REQUESTED
6. NEGATIVE COVENANTS.
          Each Borrower covenants and agrees that, until termination of all of
the Revolver Commitments and payment in full of the Obligations, the Loan
Parties will not and will not permit any of their Subsidiaries to do any of the
following:
     6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except for Permitted Indebtedness.
     6.2 Liens. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.
     6.3 Restrictions on Fundamental Changes.
          (a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock, except for (i) any merger between
Loan Parties, provided that to the extent the merger involves a Borrower, a
Borrower must be the surviving entity of any such merger, (ii) any merger
between Loan Parties and Subsidiaries of Parent that are not Loan Parties so
long as such Loan Party is the surviving entity of any such merger, and
(iii) any merger between Subsidiaries of Parent that are not Loan Parties,
          (b) Liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of Parent with nominal assets and nominal liabilities, (ii) the
liquidation or dissolution of a Loan Party (other than any Borrower) or any of
its wholly-owned Subsidiaries so long as all of the assets (including any
interest in any Stock) of such liquidating or dissolving Loan Party or
Subsidiary are transferred to a Loan Party that is not liquidating or
dissolving, or (iii) the liquidation or dissolution of a Subsidiary of Parent
that is not a Loan Party (other than any such Subsidiary the Stock of which (or
any portion thereof) is subject to a Lien in favor of Agent) so long as all of
the assets of such liquidating or dissolving Subsidiary are transferred to a
Subsidiary of Parent that is not liquidating or dissolving, or
          (c) Suspend or go out of a substantial portion of its or their
business, except as permitted pursuant to clauses (a) or (b) above or in
connection with the transactions permitted pursuant to Section 6.4.
     6.4 Disposal of Assets. Other than Permitted Dispositions, Permitted
Investments, or transactions expressly permitted by Sections 6.3 and 6.11,
convey, sell, lease, license, assign, transfer, or otherwise dispose of (or
enter into an agreement to convey, sell, lease, license, assign, transfer, or
otherwise dispose of) any of Parent’s or its Subsidiaries assets.
     6.5 Change Name. Change Parent’s or any of its Subsidiaries’ name,
organizational identification number, state of organization or organizational
identity; provided, however, that Parent or any of its Subsidiaries may change
their names upon at least 10 days prior written notice to Agent of such change.
     6.6 Nature of Business. Make any change in the nature of its or their
business as described in Schedule 6.6 or acquire any properties or assets that
are not reasonably related to the conduct of such business activities; provided,
however, that the foregoing shall not prevent Parent and its Subsidiaries from
engaging in any business that is reasonably related or ancillary to its or their
business.
     6.7 Prepayments and Amendments.
          (a) Except in connection with Refinancing Indebtedness permitted by
Section 6.1,

-31-

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

 

CONFIDENTIAL TREATMENT REQUESTED
               (i) optionally prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of Parent or its Subsidiaries, other than (A) the
Obligations in accordance with this Agreement, (B) Permitted Intercompany
Advances and (C) Permitted Notes Redemptions,
               (ii) make any payment on account of Indebtedness that has been
contractually subordinated in right of payment if such payment is not permitted
at such time under the subordination terms and conditions, or
          (b) Directly or indirectly, amend, modify, or change any of the terms
or provisions of
               (i) any agreement, instrument, document, indenture, or other
writing evidencing or concerning Permitted Indebtedness other than (A) the
Obligations in accordance with this Agreement, (B) Permitted Intercompany
Advances, and (C) Indebtedness permitted under clauses (c), (f), (h) and (i) of
the definition of Permitted Indebtedness,
               (ii) any Material Contract except to the extent that such
amendment, modification, or change could not, individually or in the aggregate,
reasonably be expected to be materially adverse to the interests of the Lenders,
or
               (iii) the Governing Documents of any Loan Party or any of its
Subsidiaries if the effect thereof, either individually or in the aggregate,
could reasonably be expected to be materially adverse to the interests of the
Lenders.
     6.8 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
     6.9 Distributions. Make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Parent’s or any other Borrower’s Stock, of any class,
whether now or hereafter outstanding; provided, however, that, so long as it is
permitted by law:
               (a) so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, Parent may make distributions to
former employees, officers, or directors (or any spouses, ex-spouses, or estates
of any of the foregoing) on account of redemptions of Stock of Parent held by
such Persons, provided, however, that the aggregate amount of such distributions
made by Parent to such Persons during any fiscal year of Parent does not exceed
$500,000 per year; and Parent may make distributions to former employees,
officers, or directors (or any spouses, ex-spouses, or estates of any of the
foregoing), solely in the form of forgiveness of Indebtedness of such Persons
owing to Parent or a Borrower on account of repurchases of the Stock of Parent
or a Borrower held by such Persons; provided that such Indebtedness was incurred
by such Persons solely to acquire Stock of Parent or such Borrower; and
               (b) Parent’s Subsidiaries may make distributions to Parent for
the sole purpose of allowing Parent to, and Parent shall use the proceeds
thereof solely to (i) pay federal and state income taxes and franchise taxes
solely arising out of the consolidated operations of Parent and its
Subsidiaries, after taking into account all available credits and deductions
(provided that neither a Borrower nor any of its Subsidiaries shall make any
distribution to Parent in any amount greater than the share of such taxes
arising out of such Borrower’s consolidated net income), and (ii) so long as no
Event of Default shall have occurred and be continuing or would result
therefrom, pay other reasonable administrative and maintenance expenses arising
solely out of the consolidated operations (including maintenance of existence)
of Parent and its Subsidiaries.
     6.10 Accounting Methods. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP).
     6.11 Investments; Controlled Investments.

-32-

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (a) Except for Permitted Investments, directly or indirectly, make or
acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment.
          (b) Other than (i) an aggregate amount of not more than $10,000 at any
one time, in the case of Parent and its Subsidiaries (other than those
Subsidiaries that are CFCs), (ii) amounts deposited into Deposit Accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for Parent’s or its Subsidiaries’ employees, and
(iii) in the case of Subsidiaries of Parent that are CFCs, an aggregate amount
of not more than: (A) $10,000,000 in any five (5) consecutive day period, and
(B) $25,000,000 at any one time (in each case, calculated at current exchange
rates); make, acquire, or permit to exist Permitted Investments consisting of
cash, Cash Equivalents, or amounts credited to Deposit Accounts or Securities
Accounts unless Parent or its Subsidiary, as applicable, and the applicable bank
or securities intermediary have entered into Control Agreements with Agent
governing such Permitted Investments in order to perfect (and further establish)
Agent’s Liens in such Permitted Investments. Except as provided in
Section 6.11(b)(i), (ii), and (iii), Parent shall not and shall not permit its
Non-CFC Subsidiaries to establish or maintain any Deposit Account or Securities
Account unless Agent shall have received a Control Agreement in respect of such
Deposit Account or Securities Account.
     6.12 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Parent or any of its
Subsidiaries except for:
          (a) transactions (other than the payment of management, consulting,
monitoring, or advisory fees) between Parent or its Subsidiaries, on the one
hand, and any Affiliate of Parent or its Subsidiaries, on the other hand, so
long as such transactions (i) are fully disclosed to Agent prior to the
consummation thereof, if they involve one or more payments by Parent or its
Subsidiaries in excess of $500,000 for any single transaction or series of
related transactions, and (ii) are no less favorable, taken as a whole, to
Parent or its Subsidiaries, as applicable, than would be obtained in an arm’s
length transaction with a non-Affiliate,
          (b) so long as it has been approved by Parent’s or its applicable
Subsidiary’s board of directors (or comparable governing body) in accordance
with applicable law, any indemnity provided for the benefit of directors (or
comparable managers) of Parent or its applicable Subsidiary,
          (c) so long as it has been approved by Parent’s or its applicable
Subsidiary’s board of directors (or comparable governing body) in accordance
with applicable law, the payment of reasonable compensation, severance, or
employee benefit arrangements to employees, officers, and outside directors of
Parent and its Subsidiaries in the ordinary course of business and consistent
with industry practice,
          (d) transactions permitted by Section 6.3 or Section 6.9, or any
Permitted Intercompany Advance, and
          (e) purchases of Inventory by the Loan Parties from Non-Loan Parties
in the ordinary course of business so long as such transactions are no less
favorable, taken as a whole, to the Loan Parties than would be obtained in an
arm’s length transaction with a non-Affiliate.
     6.13 Use of Proceeds. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing under or in
connection with the Existing Credit Facility, and (ii) to pay transactional
fees, costs, and expenses incurred in connection with this Agreement, the other
Loan Documents, and the transactions contemplated hereby and thereby, and
(b) thereafter, consistent with the terms and conditions hereof, for its lawful
and permitted purposes.
     6.14 Consignments. Consign any of its or their Inventory or sell any of its
or their Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale; provided, however, that Parent

-33-

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

 

CONFIDENTIAL TREATMENT REQUESTED
and its Subsidiaries may consign their Inventory with customers so long as the
aggregate value of all such Inventory (valued at the higher of cost or market)
consigned at any one time does not exceed $25,000,000.
     6.15 Inventory and Equipment with Bailees. Store the Inventory or Equipment
of any Loan Party at any time now or hereafter with a bailee, warehouseman, or
similar party, other than Inventory with an aggregate book value of less than
$100,000 at any one time.
7. FINANCIAL COVENANTS.
          Each Borrower covenants and agrees that, until termination of all of
the Revolver Commitments and payment in full of the Obligations, Borrowers will
comply with each of the following financial covenants:
          (a) Excess Liquidity. Have Excess Liquidity plus Qualified Cash in an
aggregate amount of least [****] at all times.
          (b) Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage Ratio,
measured at the end of each fiscal quarter of Parent on a trailing 4 fiscal
quarter basis, of at least the required amount set forth in the following table
for the applicable period set forth opposite thereto:

      Applicable Ratio   Applicable Period       [****]   For the 4 fiscal
quarter period ending November 1, 2009       [****]   For the 4 fiscal quarter
period ending January 31, 2010       [****]   For the 4 fiscal quarter period
ending April 30, 2010,
and for the 4 fiscal quarter period ending at the end of
each fiscal quarter thereafter

          (c) Capital Expenditures. Make Capital Expenditures in any fiscal year
in an amount less than or equal to, but not greater than, the amount set forth
in the following table for the applicable period:

         
Fiscal year ending on or about April 30, 2010
  $ 26,500,000  
 
       
Fiscal year ending on or about April 30, 2011
  $ 28,750,000  
 
       
Fiscal year ending on or about April 30, 2012 and each fiscal year ending
thereafter
  $ 30,000,000  

8. EVENTS OF DEFAULT.
          Any one or more of the following events shall constitute an event of
default (each, an “Event of Default”) under this Agreement:
     8.1 If Borrowers fail to pay when due and payable, or when declared due and
payable, (a) all or any portion of the Obligations consisting of interest, fees,
or charges due the Lender Group, reimbursement of

-34-

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

 

CONFIDENTIAL TREATMENT REQUESTED
Lender Group Expenses, or other amounts (other than any portion thereof
constituting principal) constituting Obligations (including any portion thereof
that accrues after the commencement of an Insolvency Proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in any such
Insolvency Proceeding), and such failure continues for a period of 3 Business
Days, or (b) all or any portion of the principal of the Obligations;
     8.2 If any Loan Party or any of its Subsidiaries:
          (a) fails to perform or observe any covenant or other agreement
contained in any of (i) Sections 5.1, 5.2, 5.3 (solely if a Borrower is not in
good standing in its jurisdiction of organization), 5.6, 5.7 (solely if a
Borrower refuses to allow Agent or its representatives or agents to visit such
Borrower’s properties, inspect its assets or books or records, examine and make
copies of its books and records, or discuss such Borrower’s affairs, finances,
and accounts with officers and employees of such Borrower), 5.10, 5.11, 5.13, or
5.14 of this Agreement, (ii) Sections 6.1 through 6.15 of this Agreement,
(iii) Section 7 of this Agreement, or (iv) Section 6 of the Security Agreement;
          (b) fails to perform or observe any covenant or other agreement
contained in any of Sections 5.3 (other than if a Borrower is not in good
standing in its jurisdiction of organization), 5.4, 5.5, 5.8, 5.12, and 5.15 of
this Agreement and such failure continues for a period of 10 days after the
earlier of (i) the date on which such failure shall first become known to any
officer of any Borrower or (ii) the date on which written notice thereof is
given to Administrative Borrower by Agent; or
          (c) fails to perform or observe any covenant or other agreement
contained in this Agreement, or in any of the other Loan Documents, in each
case, other than any such covenant or agreement that is the subject of another
provision of this Section 8 (in which event such other provision of this
Section 8 shall govern), and such failure continues for a period of 30 days
after the earlier of (i) the date on which such failure shall first become known
to any officer of any Borrower or (ii) the date on which written notice thereof
is given to Administrative Borrower by Agent;
     8.3 If one or more judgments, orders, or awards for the payment of money
involving an aggregate amount of $500,000, or more (except to the extent fully
covered (other than to the extent of customary deductibles) by insurance
pursuant to which the insurer has not denied coverage) is entered or filed
against a Loan Party or any of its Non-CFC Subsidiaries, or with respect to any
of their respective assets, and either (a) there is a period of 30 consecutive
days at any time after the entry of any such judgment, order, or award during
which (1) the same is not discharged, satisfied, vacated, or bonded pending
appeal, or (2) a stay of enforcement thereof is not in effect, or
(b) enforcement proceedings are commenced upon such judgment, order, or award;
     8.4 If an Insolvency Proceeding is commenced by a Loan Party or any of its
Subsidiaries;
     8.5 If an Insolvency Proceeding is commenced against a Loan Party or any of
its Subsidiaries and any of the following events occur: (a) such Loan Party or
such Subsidiary consents to the institution of such Insolvency Proceeding
against it, (b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Loan Party or its Subsidiary, or (e) an order
for relief shall have been issued or entered therein;
     8.6 If a Loan Party or any of its Subsidiaries is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of the business affairs of Parent and its Subsidiaries, taken as a
whole;

-35-

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

 

CONFIDENTIAL TREATMENT REQUESTED
     8.7 If there is a default in one or more agreements to which a Loan Party
or any of its Subsidiaries is a party with one or more third Persons relative to
a Loan Party’s or any of its Subsidiaries’ Indebtedness involving: (a) an
aggregate amount of $2,500,000 or more, and such default results in a right by
such third Person, irrespective of whether exercised, to accelerate the maturity
of such Loan Party’s or its Subsidiary’s obligations thereunder, or (b) an
aggregate amount of $500,000 or more, and such default (i) occurs at the final
maturity of the obligations thereunder, (ii) results in the actual acceleration
by such Person or Persons of the maturity of such Loan Party’s obligations
thereunder, or (iii) is not cured or waived within thirty (30) days of its
occurrence;
     8.8 If any warranty, representation, certificate, statement, or Record made
herein or in any other Loan Document or delivered in writing to Agent or any
Lender in connection with this Agreement or any other Loan Document proves to be
untrue in any material respect (except that such materiality qualifier shall not
be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof) as of the date of issuance or
making or deemed making thereof;
     8.9 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor (other than in accordance
with the terms of this Agreement or the Guaranty);
     8.10 If the Security Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on the Collateral covered thereby, except as a result of a
disposition of the applicable Collateral in a transaction permitted under this
Agreement; or
     8.11 The validity or enforceability of any Loan Document shall at any time
for any reason (other than solely as the result of an action or failure to act
on the part of Agent or the Lenders) be declared to be null and void by a court
of competent jurisdiction, or a proceeding shall be commenced by a Loan Party or
its Subsidiaries, or by any Governmental Authority having jurisdiction over a
Loan Party or its Subsidiaries, seeking to establish the invalidity or
unenforceability thereof, or a Loan Party or its Subsidiaries shall deny that
such Loan Party or its Subsidiaries has any liability or obligation purported to
be created under any Loan Document.
     8.12 If a “fundamental change”, as described in Exhibit P-l, or as
otherwise defined in any documents evidencing the Permitted Convertible Note
Debt, occurs.
9. RIGHTS AND REMEDIES.
     9.1 Rights and Remedies. Upon the occurrence and during the continuation of
an Event of Default, Agent may, and, at the instruction of the Required Lenders,
shall, in each case by written notice to Administrative Borrower and in addition
to any other rights or remedies provided for hereunder or under any other Loan
Document or by applicable law, do any one or more of the following on behalf of
the Lender Group:
          (a) declare the Obligations, whether evidenced by this Agreement or by
any of the other Loan Documents immediately due and payable, whereupon the same
shall become and be immediately due and payable, without presentment, demand,
protest, or further notice or other requirements of any kind, all of which are
hereby expressly waived by each Borrower; and
          (b) declare the Revolver Commitments terminated, whereupon the
Revolver Commitments shall immediately be terminated together with any
obligation of any Lender hereunder to make Advances and the obligation of the
Issuing Lender to issue Letters of Credit.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to any Borrower or

-36-

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

 

CONFIDENTIAL TREATMENT REQUESTED
any other Person or any act by the Lender Group, the Revolver Commitments shall
automatically terminate and the Obligations then outstanding, together with all
accrued and unpaid interest thereon and all fees and all other amounts due under
this Agreement and the other Loan Documents, shall automatically and immediately
become due and payable, without presentment, demand, protest, or notice of any
kind, all of which are expressly waived by each Borrower.
     9.2 Remedies Cumulative. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. WAIVERS; INDEMNIFICATION.
     10.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any Borrower may in any way be liable.
     10.2 The Lender Group’s Liability for Collateral. Each Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.
     10.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons, and each Participant
(each, an “Indemnified Person”) harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages,
and all reasonable fees and disbursements of attorneys, experts, or consultants
and all other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery (provided that Borrowers
shall not be liable for costs and expenses (including attorneys fees) of any
Lender (other than WFF) incurred in advising, structuring, drafting, reviewing,
administering or syndicating the Loan Documents), enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Parent’s and its
Subsidiaries’ compliance with the terms of the Loan Documents (provided,
however, that the indemnification in this clause (a) shall not extend to
(i) disputes solely between or among the Lenders or (ii) disputes solely between
or among the Lenders and their respective Affiliates; it being understood and
agreed that the indemnification in this clause (a) shall extend to disputes
between or among Agent on the one hand, and one or more Lenders, or one or more
of their Affiliates, on the other hand), (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto, and (c) in connection with or
arising out of any presence or release of Hazardous Materials at, on, under, to
or from any assets or properties owned, leased or operated by Parent or any of
its Subsidiaries or any Environmental Actions, Environmental Liabilities or
Remedial Actions related in any way to any such assets or properties of Parent
or any of its Subsidiaries (each and all of the foregoing, the “Indemnified
Liabilities‘”). The foregoing to the contrary notwithstanding, no Borrower shall
have any obligation to any Indemnified Person under this Section 10.3 with
respect to any Indemnified Liability to the extent that a court of competent
jurisdiction finally determines

-37-

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

 

CONFIDENTIAL TREATMENT REQUESTED
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person or its officers, directors, employees, attorneys, or agents.
This provision shall survive the termination of this Agreement and the repayment
of the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
11. NOTICES.
          Unless otherwise provided in this Agreement, all notices or demands
relating to this Agreement or any other Loan Document shall be in writing and
(except for financial statements and other informational documents which may be
sent by first-class mail, postage prepaid) shall be personally delivered or sent
by registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or telefacsimile. In the case of notices or
demands to Borrowers in care of Administrative Borrower or Agent, as the case
may be, they shall be sent to the respective address set forth below:

         
 
  If to Administrative   FINISAR CORPORATION
 
  Borrower:    
 
      1389 Moffett Park Drive
 
      Sunnyvale, CA 94089
 
      Attn: Stephen Workman, CFO
 
      Fax No. (408) 541-6138
 
       
 
  with copies to:   DLA PIPER LLP (US)
 
      2000 University Avenue
 
      East Palo Alto, CA 94303
 
      Attn: Dennis Sullivan, Esq.
 
      Fax No.: (650) 687-1200
 
       
 
  If to Agent:   WELLS FARGO FOOTHILL, LLC
 
      2450 Colorado Avenue
 
      Suite 3000 West
 
      Santa Monica, California 90404
 
      Attn: Business Finance Division Manager
 
      Fax No.: (310) 453-7413
 
       
 
  with copies to:   DEWEY & LEBOEUF LLP
 
      333 South Grand Ave.
 
      Los Angeles, CA 90071
 
      Attn: Marshall Stoddard, Esq.
 
      Fax No.: (213) 621-6100

          Any party hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 11,
shall be deemed received on the earlier of the date of actual receipt or 3
Business Days after the deposit thereof in the mail; provided, that (a) notices
sent by overnight courier service shall be deemed to have been given when
received, (b) notices by facsimile shall be deemed to have been given when

-38-

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

 

CONFIDENTIAL TREATMENT REQUESTED
sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
Business Day for the recipient) and (c) notices by electronic mail shall be
deemed received upon the sender’s receipt of an acknowledgment from the intended
recipient (such as by the “return receipt requested” function, as available,
return email or other written acknowledgment).
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE.
          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).
          (c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER
AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
          (d) IF ANY ACTION OR PROCEEDING IS FILED IN A COURT OF THE STATE OF
CALIFORNIA BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO AND
EACH PARTY HERETO OR THERETO DOES NOT SUBSEQUENTLY WAIVE IN AN EFFECTIVE MANNER
UNDER CALIFORNIA LAW ITS RIGHT TO A TRIAL BY JURY, (a) THE COURT SHALL, AND IS
HEREBY DIRECTED TO, MAKE A GENERAL REFERENCE PURSUANT TO CALIFORNIA CODE OF
CIVIL PROCEDURE SECTION 638 TO A REFEREE OR REFEREES TO HEAR AND DETERMINE ALL
OF THE ISSUES IN SUCH ACTION OR PROCEEDING (WHETHER OF FACT OR OF LAW) AND TO
REPORT A STATEMENT OF DECISION, PROVIDED THAT ANY SUCH ISSUES PERTAINING TO A
“PROVISIONAL REMEDY” AS DEFINED IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
1281.8 SHALL BE HEARD AND DETERMINED BY THE COURT, AND (b) BORROWERS SHALL BE

-39-

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

 

CONFIDENTIAL TREATMENT REQUESTED
SOLELY RESPONSIBLE TO PAY ALL FEES AND EXPENSES OF ANY REFEREE APPOINTED IN SUCH
ACTION OR PROCEEDING.
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
     13.1 Assignments and Participations.
          (a) With the prior written consent of Agent, which consent of Agent
shall not be unreasonably withheld, delayed or conditioned, and shall not be
required in connection with an assignment to a Person that is a Lender or an
Affiliate (other than individuals) of a Lender, any Lender may assign and
delegate to one or more assignees (each, an “Assignee”; provided, however, that
no Loan Party or Affiliate of a Loan Party shall be permitted to become an
Assignee) all or any portion of the Obligations, the Revolver Commitments and
the other rights and obligations of such Lender hereunder and under the other
Loan Documents, in a minimum amount (unless waived by Agent) of $5,000,000
(except such minimum amount shall not apply to (x) an assignment or delegation
by any Lender to any other Lender or an Affiliate of any Lender or (y) a group
of new Lenders, each of which is an Affiliate of each other or a Related Fund of
such new Lender to the extent that the aggregate amount to be assigned to all
such new Lenders is at least $5,000,000); provided, however, that Borrowers and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Administrative
Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Administrative Borrower and Agent an Assignment and
Acceptance and Agent has notified the assigning Lender of its receipt thereof in
accordance with Section 13.1(b), and (iii) unless waived by Agent, the assigning
Lender or Assignee has paid to Agent for Agent’s separate account a processing
fee in the amount of $3,500.
          (b) From and after the date that Agent notifies the assigning Lender
(with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and, if applicable, payment of the required processing
fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assigning Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights (except with respect to Section 10.3) and be released from any future
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto); provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of this Agreement, including such assigning Lender’s
obligations under Section 15 and Section 17.9(a).
          (c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower or the performance or observance by any Borrower of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem

-40-

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

 

CONFIDENTIAL TREATMENT REQUESTED
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement, (v) such Assignee appoints and
authorizes Agent to take such actions and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to Agent, by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
          (d) Immediately upon Agent’s receipt of the required processing fee,
if applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Revolver Commitments arising therefrom. The Revolver
Commitment allocated to each Assignee shall reduce such Revolver Commitments of
the assigning Lender pro tanto.
          (e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons (a “Participant”) participating
interests in all or any portion of its Obligations, its Revolver Commitment, and
the other rights and interests of that Lender (the “Originating Lender”)
hereunder and under the other Loan Documents; provided, however, that (i) the
Originating Lender shall remain a “Lender” for all purposes of this Agreement
and the other Loan Documents and the Participant receiving the participating
interest in the Obligations, the Revolver Commitments, and the other rights and
interests of the Originating Lender hereunder shall not constitute a “Lender”
hereunder or under the other Loan Documents and the Originating Lender’s
obligations under this Agreement shall remain unchanged, (ii) the Originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) Borrowers, Agent, and the Lenders shall continue to deal solely and
directly with the Originating Lender in connection with the Originating Lender’s
rights and obligations under this Agreement and the other Loan Documents,
(iv) no Lender shall transfer or grant any participating interest under which
the Participant has the right to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the
extent such amendment to, or consent or waiver with respect to this Agreement or
of any other Loan Document would (A) extend the final maturity date of the
Obligations hereunder in which such Participant is participating, (B) reduce the
interest rate applicable to the Obligations hereunder in which such Participant
is participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender (other than a
waiver of default interest), or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, and (v) all amounts payable by
Borrowers hereunder shall be determined as if such Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrowers, the Collections of
Parent or its Subsidiaries, the Collateral, or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves.
          (f) In connection with any such assignment or participation or
proposed assignment or participation or any grant of a security interest in, or
pledge of, its rights under and interest in this Agreement, a Lender may,
subject to the provisions of Section 17.9, disclose all documents and
information which it now or hereafter may have relating to Parent and its
Subsidiaries and their respective businesses.
          (g) Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.

-41-

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

 

CONFIDENTIAL TREATMENT REQUESTED
Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
     13.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders’ prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 13.1 and, except as expressly required pursuant to
Section 13.1, no consent or approval by any Borrower is required in connection
with any such assignment.
14. AMENDMENTS; WAIVERS.
     14.1 Amendments and Waivers.
          (a) No amendment, waiver or other modification of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements or
the Fee Letter), and no consent with respect to any departure by any Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and the Loan Parties that are party thereto and then any such waiver or
consent shall be effective, but only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all of the Lenders
directly affected thereby and the Loan Parties that are party thereto, do any of
the following:
               (i) increase the amount of or extend the expiration date of the
Revolver Commitment of any Lender,
               (ii) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
               (iii) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document (except (y) in connection
with the waiver of applicability of Section 2.6(c) (which waiver shall be
effective with the written consent of the Required Lenders), and (z) that any
amendment or modification of defined terms used in the financial covenants in
this Agreement shall not constitute a reduction in the rate of interest or a
reduction of fees for purposes of this clause (iii)),
               (iv) amend or modify this Section or any provision of this
Agreement providing for consent or other action by all Lenders,
               (v) other than as permitted by Section 15.11, release Agent’s
Lien in and to any of the Collateral,
               (vi) change the definition of “Required Lenders” or “Pro Rata
Share”,
               (vii) contractually subordinate any of Agent’s Liens,
               (viii) other than in connection with a merger, liquidation,
dissolution or sale of such Person expressly permitted by the terms hereof or
the other Loan Documents, release any Borrower or any Guarantor from any
obligation for the payment of money or consent to the assignment or transfer by
any Borrower or any Guarantor of any of its rights or duties under this
Agreement or the other Loan Documents,

-42-

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

 

CONFIDENTIAL TREATMENT REQUESTED
               (ix) amend any of the provisions of Section 2.4(b)(i) or (ii) or
Section 2.4(e) or (f),
               (x) amend Section 13.1(a) to permit a Loan Party or an Affiliate
of a Loan Party to be permitted to become an Assignee, or
               (xi) change the definition of Borrowing Base or any of the
defined terms (including the definitions of Eligible Accounts, Eligible
Investment Grade Account, Eligible Credit Insured Account, Eligible Equipment
and Eligible Inventory) that are used in such definition to the extent that any
such change results in more credit being made available to Borrowers based upon
the Borrowing Base, but not otherwise, or the definitions of Maximum Revolver
Amount,
          (b) No amendment, waiver, modification, or consent shall amend,
modify, or waive (i) the definition of, or any of the terms or provisions of,
the Fee Letter, without the written consent of Agent and Borrowers (and shall
not require the written consent of any of the Lenders), and (ii) any provision
of Section 15 pertaining to Agent, or any other rights or duties of Agent under
this Agreement or the other Loan Documents, without the written consent of
Agent, Borrowers, and the Required Lenders,
          (c) No amendment, waiver, modification, or consent shall amend,
modify, or waive any provision of this Agreement or the other Loan Documents
pertaining to Issuing Lender, or any other rights or duties of Issuing Lender
under this Agreement or the other Loan Documents, without the written consent of
Issuing Lender, Agent, Borrowers, and the Required Lenders,
          (d) No amendment, waiver, modification, or consent shall amend,
modify, or waive any provision of this Agreement or the other Loan Documents
pertaining to Swing Lender, or any other rights or duties of Swing Lender under
this Agreement or the other Loan Documents, without the written consent of Swing
Lender, Agent, Borrowers, and the Required Lenders, and
          (e) Anything in this Section 14.1 to the contrary notwithstanding, any
amendment, modification, waiver, consent, termination, or release of, or with
respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of any Loan Party, shall not require
consent by or the agreement of any Loan Party.
     14.2 Replacement of Certain Lenders.
          (a) If (i) any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of any
Lender directly adversely affected thereby and if such action has received the
consent, authorization, or agreement of the Required Lenders but not such
greater number of the Lenders as may be required by Section 14.1 or (ii) any
Lender makes a claim for compensation under Section 16, then Borrowers or Agent,
upon at least 5 Business Days prior irrevocable notice, may permanently replace
any Lender (a “Holdout Lender”) that failed to give its consent, authorization,
or agreement or made a claim for compensation (a “Tax Lender”) with one or more
Replacement Lenders, and the Holdout Lender or Tax Lender, as applicable, shall
have no right to refuse to be replaced hereunder. Such notice to replace the
Holdout Lender or Tax Lender, as applicable, shall specify an effective date for
such replacement, which date shall not be later than 15 Business Days after the
date such notice is given.
          (b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Letters of Credit) without any premium or penalty of any kind whatsoever. If the
Holdout Lender shall refuse or fail to execute and deliver any such Assignment
and Acceptance prior to the effective date of such replacement, the Holdout
Lender shall be deemed to have executed and delivered such Assignment and

-43-

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

 

CONFIDENTIAL TREATMENT REQUESTED
Acceptance. The replacement of any Holdout Lender shall be made in accordance
with the terms of Section 13.1. Until such time as the Replacement Lenders shall
have acquired all of the Obligations, the Revolver Commitments, and the other
rights and obligations of the Holdout Lender hereunder and under the other Loan
Documents, the Holdout Lender shall remain obligated to make the Holdout
Lender’s Pro Rata Share of Advances and to purchase a participation in each
Letter of Credit, in an amount equal to its Pro Rata Share of such Letters of
Credit.
     14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent’s and each
Lender’s rights thereafter to require strict performance by each Borrower of any
provision of this Agreement. Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
15. AGENT; THE LENDER GROUP.
     15.1 Appointment and Authorization of Agent. Each Lender hereby designates
and appoints WFF as its agent under this Agreement and the other Loan Documents
and each Lender hereby irrevocably authorizes Agent to execute and deliver each
of the other Loan Documents on its behalf and to take such other action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
Agent by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Agent agrees to act as agent
for and on behalf of the Lenders (and the Bank Product Providers) on the
conditions contained in this Section 15. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein or in the other Loan Documents, nor shall Agent have or be deemed to have
any fiduciary relationship with any Lender (or Bank Product Provider), and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent. Without limiting the generality of the foregoing,
the use of the term “agent” in this Agreement or the other Loan Documents with
reference to Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only a representative relationship between independent
contracting parties. Each Lender hereby further authorizes (and by its
acceptance of the benefits of the Loan Documents, each Bank Product Provider
shall be deemed to authorize) Agent to act as the secured party under each of
the Loan Documents that create a Lien on any item of Collateral. Except as
expressly otherwise provided in this Agreement, Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections of Parent and its Non-CFC
Subsidiaries, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders, as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections of Parent and its Subsidiaries as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes with respect to the Collateral and the
Collections of Parent and its Non-CFC Subsidiaries, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Parent or its Non-CFC Subsidiaries, the Obligations, the Collateral, the
Collections of Parent

-44-

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

 

CONFIDENTIAL TREATMENT REQUESTED
and its Non-CFC Subsidiaries, or otherwise related to any of same as provided in
the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.
     15.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
     15.3 Liability of Agent. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders (or Bank Product
Providers) for any recital, statement, representation or warranty made by Parent
or any of its Subsidiaries or Affiliates, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
Parent or its Subsidiaries or any other party to any Loan Document to perform
its obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Lenders (or Bank Product Providers) to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the books and records or properties of Parent or its Subsidiaries.
     15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrowers or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders (and, if it so elects, the Bank Product Providers)
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action. Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the requisite
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders (and Bank Product Providers).
     15.5 Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a “notice of default.” Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to)

-45-

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

 

CONFIDENTIAL TREATMENT REQUESTED
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
     15.6 Credit Decision. Each Lender (and Bank Product Provider) acknowledges
that none of the Agent-Related Persons has made any representation or warranty
to it, and that no act by Agent hereinafter taken, including any review of the
affairs of Parent and its Subsidiaries or Affiliates, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender (or Bank Product Provider). Each Lender represents (and by its acceptance
of the benefits of the Loan Documents, each Bank Product Provider shall be
deemed to represent) to Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such due diligence, documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrowers or any other Person party to a
Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrowers. Each Lender also represents (and by
its acceptance of the benefits of the Loan Documents, each Bank Product Provider
shall be deemed to represent) that it will, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of Borrowers or any other Person party
to a Loan Document. Except for notices, reports, and other documents expressly
herein required to be furnished to the Lenders by Agent, Agent shall not have
any duty or responsibility to provide any Lender (or Bank Product Provider) with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Borrowers or any
other Person party to a Loan Document that may come into the possession of any
of the Agent-Related Persons. Each Lender acknowledges (and by its acceptance of
the benefits of the Loan Documents, each Bank Product Provider shall be deemed
to acknowledge) that Agent does not have any duty or responsibility, either
initially or on a continuing basis (except to the extent, if any, that is
expressly specified herein) to provide such Lender (or Bank Product Provider)
with any credit or other information with respect to any Borrower, its
Affiliates or any of their respective business, legal, financial or other
affairs, and irrespective of whether such information came into Agent’s or its
Affiliates’ or representatives’ possession before or after the date on which
such Lender became a party to this Agreement (or such Bank Product Provider
entered into a Bank Product Agreement).
     15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to this Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
the Collections of Parent and its Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders (or Bank Product Providers). In the event Agent is not
reimbursed for such costs and expenses by Parent or its Subsidiaries, each
Lender hereby agrees that it is and shall be obligated to pay to Agent such
Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers
and without limiting the obligation of Borrowers to do so), according to their
Pro Rata Shares, from and against any and all Indemnified Liabilities; provided,
however, that no Lender shall be liable for the payment to any Agent-Related
Person of any portion of such Indemnified Liabilities resulting solely from such
Person’s gross negligence or willful misconduct nor shall any Lender be liable
for the obligations of any Defaulting Lender in failing to make an Advance or
other extension of credit hereunder. Without limitation of the foregoing, each
Lender shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any
costs or out of pocket expenses (including attorneys, accountants, advisors, and
consultants fees and expenses) incurred

-46-

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

 

CONFIDENTIAL TREATMENT REQUESTED
by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
     15.8 Agent in Individual Capacity. WFF and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, provide
Bank Products to, acquire equity interests in, and generally engage in any kind
of banking, trust, financial advisory, underwriting, or other business with
Parent and its Subsidiaries and Affiliates and any other Person party to any
Loan Document as though WFF were not Agent hereunder, and, in each case, without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge (and by its acceptance of the benefits of the
Loan Documents, each Bank Product Provider shall be deemed to acknowledge) that,
pursuant to such activities, WFF or its Affiliates may receive information
regarding Parent or its Affiliates or any other Person party to any Loan
Documents that is subject to confidentiality obligations in favor of Parent or
such other Person and that prohibit the disclosure of such information to the
Lenders (or Bank Product Providers), and the Lenders acknowledge (and by its
acceptance of the benefits of the Loan Documents, each Bank Product Provider
shall be deemed to acknowledge) that, in such circumstances (and in the absence
of a waiver of such confidentiality obligations, which waiver Agent will use its
reasonable best efforts to obtain), Agent shall not be under any obligation to
provide such information to them. The terms “Lender” and “Lenders” include WFF
in its individual capacity.
     15.9 Successor Agent. Agent may resign as Agent upon 30 days prior written
notice to the Lenders (unless such notice is waived by the Required Lenders) and
Administrative Borrower (unless such notice is waived by Administrative
Borrower) and without any notice to the Bank Product Providers. If Agent resigns
under this Agreement, the Required Lenders shall be entitled, with (so long as
no Event of Default has occurred and is continuing) the consent of
Administrative Borrower (such consent not to be unreasonably withheld, delayed,
or conditioned), appoint a successor Agent for the Lenders (and the Bank Product
Providers). If, at the time that Agent’s resignation is effective, it is acting
as the Issuing Lender or the Swing Lender, such resignation shall also operate
to effectuate its resignation as the Issuing Lender or the Swing Lender, as
applicable, and it shall automatically be relieved of any further obligation to
issue Letters of Credit, to cause the Underlying Issuer to issue Letters of
Credit, or to make Swing Loans. If no successor Agent is appointed prior to the
effective date of the resignation of Agent, Agent may appoint, after consulting
with the Lenders and Administrative Borrower, a successor Agent. If Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Agent with a successor Agent from among the Lenders with (so
long as no Event of Default has occurred and is continuing) the consent of
Administrative Borrower (such consent not to be unreasonably withheld, delayed,
or conditioned). In any such event, upon the acceptance of its appointment as
successor Agent hereunder, such successor Agent shall succeed to all the rights,
powers, and duties of the retiring Agent and the term “Agent” shall mean such
successor Agent and the retiring Agent’s appointment, powers, and duties as
Agent shall be terminated. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Section 15 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor Agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.
     15.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, provide Bank Products to, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with Parent and its Subsidiaries and Affiliates
and any other Person party to any Loan Documents as though such Lender were not
a Lender hereunder without notice to or consent of the other members of the

-47-

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

 

CONFIDENTIAL TREATMENT REQUESTED
Lender Group (or the Bank Product Providers). The other members of the Lender
Group acknowledge (and by its acceptance of the benefits of the Loan Documents,
each Bank Product Provider shall be deemed to acknowledge) that, pursuant to
such activities, such Lender and its respective Affiliates may receive
information regarding Parent or its Affiliates or any other Person party to any
Loan Documents that is subject to confidentiality obligations in favor of Parent
or such other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge (and by its acceptance of the benefits of
the Loan Documents, each Bank Product Provider shall be deemed to acknowledge)
that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them.
     15.11 Collateral Matters.
          (a) The Lenders hereby irrevocably authorize (and by its acceptance of
the benefits of the Loan Documents, each Bank Product Provider shall be deemed
to authorize) Agent to release any Lien on any Collateral (i) upon the
termination of the Revolver Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 6.4 (and Agent may rely conclusively on any such
certificate, without further inquiry), (iii) constituting property in which
Parent or its Subsidiaries owned no interest at the time Agent’s Lien was
granted nor at any time thereafter, or (iv) constituting property leased to
Parent or its Subsidiaries under a lease that has expired or is terminated in a
transaction permitted under this Agreement. The Lenders hereby irrevocably
authorize (and by its acceptance of the benefits of the Loan Documents, each
Bank Product Provider shall be deemed to authorize) Agent, based upon the
instruction of the Required Lenders, to credit bid and purchase (either directly
or through one or more acquisition vehicles) all or any portion of the
Collateral at any sale thereof conducted by Agent under the provisions of the
Code, including pursuant to Sections 9-610 or 9-620 of the Code, at any sale
thereof conducted under the provisions of the Bankruptcy Code, including
Section 363 of the Bankruptcy Code, or at any sale or foreclosure conducted by
Agent (whether by judicial action or otherwise) in accordance with applicable
law. Except as provided above, Agent will not execute and deliver a release of
any Lien on any Collateral without the prior written authorization of (y) if the
release is of all or substantially all of the Collateral, all of the Lenders
(without requiring the authorization of the Bank Product Providers), or
(z) otherwise, the Required Lenders (without requiring the authorization of the
Bank Product Providers). Upon request by Agent or Administrative Borrower at any
time, the Lenders will (and is so requested, the Bank Product Providers will)
confirm in writing Agent’s authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 15.11; provided, however,
that (1) Agent shall not be required to execute any document necessary to
evidence such release on terms that, in Agent’s opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
Borrowers in respect of) all interests retained by Borrowers, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral. The Lenders further hereby irrevocably authorize (and by its
acceptance of the benefits of the Loan Documents, each Bank Product Provider
shall be deemed to authorize) Agent, at its option and in its sole discretion,
to subordinate any Lien granted to or held by Agent under any Loan Document to
the holder of any Permitted Lien on such property if such Permitted Lien secures
Permitted Purchase Money Indebtedness.
          (b) Agent shall have no obligation whatsoever to any of the Lenders
(or the Bank Product Providers) to assure that the Collateral exists or is owned
by Parent or its Subsidiaries or is cared for, protected, or insured or has been
encumbered, or that Agent’s Liens have been properly or sufficiently or lawfully
created, perfected, protected, or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in

-48-

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

 

CONFIDENTIAL TREATMENT REQUESTED
its sole discretion given Agent’s own interest in the Collateral in its capacity
as one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender (or Bank Product Provider) as to any of the foregoing,
except as otherwise provided herein.
     15.12 Restrictions on Actions by Lenders; Sharing of Payments.
          (a) Each of the Lenders agrees that it shall not, without the express
written consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the written request of Agent, set off against the
Obligations, any amounts owing by such Lender to Parent or its Non-CFC
Subsidiaries or any deposit accounts of Parent or its Non-CFC Subsidiaries now
or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so in writing by Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings to enforce any Loan Document against any Borrower or
any Guarantor or to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
          (b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that to the extent that such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
     15.13 Agency for Perfection. Agent hereby appoints each other Lender (and
each Bank Product Provider) as its agent (and each Lender hereby accepts (and by
its acceptance of the benefits of the Loan Documents, each Bank Product Provider
shall be deemed to accept) such appointment) for the purpose of perfecting
Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as
applicable, of the Code can be perfected by possession or control. Should any
Lender obtain possession or control of any such Collateral, such Lender shall
notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver
possession or control of such Collateral to Agent or in accordance with Agent’s
instructions.
     15.14 Payments by Agent to the Lenders. All payments to be made by Agent to
the Lenders (or Bank Product Providers) shall be made by bank wire transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, fees, or interest of the Obligations.
     15.15 Concerning the Collateral and Related Loan Documents. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents. Each member of the Lender Group agrees (and by its
acceptance of the benefits of the Loan Documents, each Bank Product Provider
shall be deemed to agree) that any action taken by Agent in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral
and the exercise by Agent of its powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders (and such Bank Product Provider).

-49-

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

 

CONFIDENTIAL TREATMENT REQUESTED
     15.16 Audits and Examination Reports: Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:
          (a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report respecting Parent or its Subsidiaries (each a “Report” and collectively,
“Reports”) prepared by or at the request of Agent, and Agent shall so furnish
each Lender with such Reports,
          (b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,
          (c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Parent and
its Subsidiaries and will rely significantly upon Parent’s and its Subsidiaries’
books and records, as well as on representations of Borrowers’ personnel,
          (d) agrees to keep all Reports and other material, non-public
information regarding Parent and its Subsidiaries and their operations, assets,
and existing and contemplated business plans in a confidential manner in
accordance with Section 17.9, and
          (e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or fail to take or any conclusion the indemnifying Lender may reach or draw
from any Report in connection with any loans or other credit accommodations that
the indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrowers, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Parent or its Subsidiaries to Agent that has not been
contemporaneously provided by Parent or such Subsidiary to such Lender, and,
upon receipt of such request, Agent promptly shall provide a copy of same to
such Lender, (y) to the extent that Agent is entitled, under any provision of
the Loan Documents, to request additional reports or information from Parent or
its Subsidiaries, any Lender may, from time to time, reasonably request Agent to
exercise such right as specified in such Lender’s notice to Agent, whereupon
Agent promptly shall request of Administrative Borrower the additional reports
or information reasonably specified by such Lender, and, upon receipt thereof
from Administrative Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Administrative Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
     15.17 Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Revolver Commitments, to make an amount of such credit not to exceed,
in principal amount, at any one time outstanding, the amount of their respective
Revolver Commitments. Nothing contained herein shall confer upon any Lender any
interest in, or subject any Lender to any liability for, or in respect of, the
business, assets, profits, losses, or liabilities of any other Lender. Each
Lender shall be solely responsible for notifying its Participants of any matters
relating to the Loan Documents

-50-

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

 

CONFIDENTIAL TREATMENT REQUESTED
to the extent any such notice may be required, and no Lender shall have any
obligation, duty, or liability to any Participant of any other Lender. Except as
provided in Section 15.7, no member of the Lender Group shall have any liability
for the acts of any other member of the Lender Group. No Lender shall be
responsible to any Borrower or any other Person for any failure by any other
Lender (or Bank Product Provider) to fulfill its obligations to make credit
available hereunder, nor to advance for such Lender (or Bank Product Provider)
or on its behalf, nor to take any other action on behalf of such Lender (or Bank
Product Provider) hereunder or in connection with the financing contemplated
herein.
16. WITHHOLDING TAXES.
          (a) All payments made by any Borrower hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense.
In addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Taxes, and in the event any
deduction or withholding of Taxes is required, each Borrower shall comply with
the next sentence of this Section 16(a). If any Taxes are so levied or imposed,
each Borrower agrees to pay the full amount of such Taxes and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement, any note, or Loan Document, including any amount paid pursuant to
this Section 16(a) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that no Borrower shall be required to increase any such amounts if the increase
in such amount payable results from Agent’s or such Lender’s own willful
misconduct or gross negligence (as finally determined by a court of competent
jurisdiction). Each Borrower will furnish to Agent as promptly as possible after
the date the payment of any Tax is due pursuant to applicable law, certified
copies of tax receipts evidencing such payment by any Borrower.
          (b) Each Borrower agrees to pay any present or future stamp, value
added or documentary taxes or any other excise or property taxes, charges, or
similar levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document.
          (c) If a Lender or Participant is entitled to claim an exemption or
reduction from United States withholding tax, such Lender or Participant agrees
with and in favor of Agent, to deliver to Agent (or, in the case of a
Participant, to the Lender granting the participation only) one of the following
before receiving its first payment under this Agreement:
               (i) if such Lender or Participant is entitled to claim an
exemption from United States withholding tax pursuant to the portfolio interest
exception, (A) a statement of the Lender or Participant, signed under penalty of
perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of
the IRC, (II) a 10% shareholder of any Borrower (within the meaning of
Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to any Borrower within the meaning of Section 864(d)(4) of the IRC, and
(B) a properly completed and executed IRS Form W-8BEN or Form W-8IMY (with
proper attachments);
               (ii) if such Lender or Participant is entitled to claim an
exemption from, or a reduction of, withholding tax under a United States tax
treaty, a properly completed and executed copy of IRS Form W-8BEN;
               (iii) if such Lender or Participant is entitled to claim that
interest paid under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or business of
such Lender, a properly completed and executed copy of IRS Form W-8ECI;
               (iv) if such Lender or Participant is entitled to claim that
interest paid under this Agreement is exempt from United States withholding tax
because such Lender or Participant serves as an intermediary, a properly
completed and executed copy of IRS Form W-8IMY (with proper attachments); or

-51-

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

 

CONFIDENTIAL TREATMENT REQUESTED
               (v) a properly completed and executed copy of any other form or
forms, including IRS Form W-9, as may be required under the IRC or other laws of
the United States as a condition to exemption from, or reduction of, United
States withholding or backup withholding tax.
Each Lender or Participant shall provide new forms (or successor forms) upon the
expiration or obsolescence of any previously delivered forms and to promptly
notify Agent (or, in the case of a Participant, to the Lender granting the
participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.
          (d) If a Lender or Participant claims an exemption from withholding
tax in a jurisdiction other than the United States, such Lender or such
Participant agrees with and in favor of Agent, to deliver to Agent (or, in the
case of a Participant, to the Lender granting the participation only) any such
form or forms, as may be required under the laws of such jurisdiction as a
condition to exemption from, or reduction of, foreign withholding or backup
withholding tax before receiving its first payment under this Agreement, but
only if such Lender or such Participant is legally able to deliver such forms,
provided, however, that nothing in this Section 16(d) shall require a Lender or
Participant to disclose any information that it deems to be confidential
(including without limitation, its tax returns). Each Lender and each
Participant shall provide new forms (or successor forms) upon the expiration or
obsolescence of any previously delivered forms and to promptly notify Agent (or,
in the case of a Participant, to the Lender granting the participation only) of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction.
          (e) If a Lender or Participant claims exemption from, or reduction of,
withholding tax and such Lender or Participant sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrowers to such Lender or Participant, such Lender or Participant agrees to
notify Agent (or, in the case of a sale of a participation interest, to the
Lender granting the participation only) of the percentage amount in which it is
no longer the beneficial owner of Obligations of Borrowers to such Lender or
Participant. To the extent of such percentage amount, Agent will treat such
Lender’s or such Participant’s documentation provided pursuant to Section 16(c)
or 16(d) as no longer valid. With respect to such percentage amount, such
Participant or Assignee may provide new documentation, pursuant to Section 16(c)
or 16(d), if applicable. Each Borrower agrees that each Participant shall be
entitled to the benefits of this Section 16 with respect to its participation in
any portion of the Revolver Commitments and the Obligations so long as such
Participant complies with the obligations set forth in this Section 16 with
respect thereto.
          (f) If a Lender or a Participant is entitled to a reduction in the
applicable withholding tax, Agent (or, in the case of a Participant, to the
Lender granting the participation) may withhold from any interest payment to
such Lender or such Participant an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other
documentation required by Section 16(c) or 16(d) are not delivered to Agent (or,
in the case of a Participant, to the Lender granting the participation), then
Agent (or, in the case of a Participant, to the Lender granting the
participation) may withhold from any interest payment to such Lender or such
Participant not providing such forms or other documentation an amount equivalent
to the applicable withholding tax.
          (g) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent (or, in the case of a
Participant, to the Lender granting the participation) did not properly withhold
tax from amounts paid to or for the account of any Lender or any Participant due
to a failure on the part of the Lender or any Participant (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent (or such Participant failed to notify the Lender
granting the participation) of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless (or, in the case of
a Participant, such Participant shall indemnify and hold the Lender granting the
participation harmless) for all amounts paid, directly or indirectly, by Agent
(or, in the case of a Participant, to the Lender granting the participation), as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to Agent (or, in the case of
a Participant, to the

-52-

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

 

CONFIDENTIAL TREATMENT REQUESTED
Lender granting the participation only) under this Section 16, together with all
costs and expenses (including attorneys fees and expenses). The obligation of
the Lenders and the Participants under this subsection shall survive the payment
of all Obligations and the resignation or replacement of Agent.
          (h) If Agent or a Lender determines, in its sole discretion, that it
has received a refund of any Taxes as to which it has been indemnified by any
Borrower or with respect to which any Borrower has paid additional amounts
pursuant to this Section 16, so long as no Default or Event of Default has
occurred and is continuing, it shall pay over such refund to such Borrower (but
only to the extent of payments made, or additional amounts paid, by such
Borrower under this Section 16 with respect to Taxes giving rise to such a
refund), net of all out-of-pocket expenses of Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such a refund); provided, that Borrowers, upon the request of
Agent or such Lender, agrees to repay the amount paid over to any Borrower (plus
any penalties, interest or other charges, imposed by the relevant Governmental
Authority, other than such penalties, interest or other charges imposed as a
result of the willful misconduct or gross negligence of Agent hereunder) to
Agent or such Lender in the event Agent or such Lender is required to repay such
refund to such Governmental Authority. Notwithstanding anything in this
Agreement to the contrary, this Section 16 shall not be construed to require
Agent or any Lender to make available its tax returns (or any other information
which it deems confidential) to any Borrower or any other Person.
17. GENERAL PROVISIONS.
     17.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by each Borrower, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
     17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
     17.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or any Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
     17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
     17.5 Bank Product Providers. Each Bank Product Provider shall be deemed a
third party beneficiary hereof and of the provisions of the other Loan Documents
for purposes of any reference in a Loan Document to the parties for whom Agent
is acting. Agent hereby agrees to act as agent for such Bank Product Providers
and, by virtue of providing a Bank Product, each Bank Product Provider shall be
automatically deemed to have appointed Agent as its agent; it being understood
and agreed that the rights and benefits of each Bank Product Provider under the
Loan Documents consist exclusively of such Bank Product Provider’s being a
beneficiary of the Liens and security interests (and, if applicable, guarantees)
granted to Agent and the right to share in payments and collections out of the
Collateral as more fully set forth herein. In connection with any such
distribution of payments and collections, Agent shall be entitled to assume no
amounts are owing to any Bank Product Provider unless such Bank Product Provider
has provided written notification to Agent of the amount that is owing to it and
such notification is received by Agent a reasonable period of time prior to the
making of such distribution.
     17.6 Debtor-Creditor Relationship. The relationship between the Lenders and
Agent, on the one hand, and the Loan Parties, on the other hand, is solely that
of creditor and debtor. No member of the Lender

-53-

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

 

CONFIDENTIAL TREATMENT REQUESTED
Group has (or shall be deemed to have) any fiduciary relationship or duty to any
Loan Party arising out of or in connection with the Loan Documents or the
transactions contemplated thereby, and there is no agency or joint venture
relationship between the members of the Lender Group, on the one hand, and the
Loan Parties, on the other hand, by virtue of any Loan Document or any
transaction contemplated therein.
     17.7 Counterparts; Electronic Execution. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
     17.8 Revival and Reinstatement of Obligations. If the incurrence or payment
of the Obligations by any Borrower or Guarantor or the transfer to the Lender
Group of any property should for any reason subsequently be asserted, or
declared, to be void or voidable under any state or federal law relating to
creditors’ rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (each, a “Voidable Transfer”), and if the
Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantors automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
     17.9 Confidentiality.
          (a) Agent and Lenders each individually (and not jointly or jointly
and severally) agree that material, non-public information regarding Parent and
its Subsidiaries, their operations, assets, and existing and contemplated
business plans (“Confidential Information”) shall be treated by Agent and the
Lenders in a confidential manner, and shall not be disclosed by Agent and the
Lenders to Persons who are not parties to this Agreement, except: (i) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group (“Lender Group Representatives”), (ii) to
Subsidiaries and Affiliates of any member of the Lender Group (including the
Bank Product Providers), provided that any such Subsidiary or Affiliate shall
have agreed to receive such information hereunder subject to the terms of this
Section 17.9, (iii) as may be required by regulatory authorities so long as such
authorities are informed of the confidential nature of such information, (iv) as
may be required by statute, decision, or judicial or administrative order, rule,
or regulation; provided that (x) prior to any disclosure under this clause (iv),
the disclosing party agrees to provide Administrative Borrower with prior notice
thereof, to the extent that it is practicable to do so and to the extent that
the disclosing party is permitted to provide such prior notice to Administrative
Borrower pursuant to the terms of the applicable statute, decision, or judicial
or administrative order, rule, or regulation and (y) any disclosure under this
clause (iv) shall be limited to the portion of the Confidential Information as
may be required by such statute, decision, or judicial or administrative order,
rule, or regulation, (v) as may be agreed to in advance by any Borrower or as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, provided, that, (x) prior to any disclosure under this
clause (v) the disclosing party agrees to provide Administrative Borrower with
prior notice thereof so as to allow Administrative Borrower the opportunity to
obtain a protective order or similar court protection, to the extent that it is
practicable to do so and to the extent that the disclosing party is permitted to
provide such prior notice to Administrative Borrower pursuant to the terms of
the subpoena or other legal process and (y) any disclosure under this clause
(v) shall be limited to the portion of the Confidential Information as may be
required by such governmental authority pursuant to such subpoena or other legal
process, (vi) as to any such information that is or becomes generally available
to the public (other than as a result of prohibited disclosure by Agent or the

-54-

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

 

CONFIDENTIAL TREATMENT REQUESTED
Lenders or the Lender Group Representatives), (vii) in connection with any
assignment, participation or pledge of any Lender’s interest under this
Agreement, provided that any such assignee, participant, or pledgee shall have
agreed in writing to receive such information hereunder subject to the terms of
this Section, (viii) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents; provided, that, prior to any
disclosure to any Person (other than any Loan Party, Agent, any Lender, any of
their respective Affiliates, or their respective counsel) under this clause
(viii) with respect to litigation involving any Person (other than Borrowers,
Agent, any Lender, any of their respective Affiliates, or their respective
counsel), the disclosing party agrees to provide Administrative Borrower with
prior notice thereof so as to allow Administrative Borrower the opportunity to
obtain a protective order or similar court protection, and (ix) in connection
with, and to the extent reasonably necessary for, the exercise of any secured
creditor remedy under this Agreement or under any other Loan Document.
          (b) Anything in this Agreement to the contrary notwithstanding, Agent
may provide information concerning the terms and conditions of this Agreement
and the other Loan Documents to loan syndication and pricing reporting services.
     17.10 Lender Group Expenses. Borrowers agree to pay any and all Lender
Group Expenses promptly after demand therefor by Agent and agree that their
obligations contained in this Section 17.10 shall survive payment or
satisfaction in full of all other Obligations.
     17.11 USA PATRIOT Act. Each Lender that is subject to the requirements of
the Patriot Act hereby notifies Borrowers that pursuant to the requirements of
the Act, it is required to obtain, verify and record information that identifies
Borrowers, which information includes the name and address of Borrowers and
other information that will allow such Lender to identify Borrowers in
accordance with the Patriot Act.
     17.12 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
     17.13 Parent as Agent for Borrowers. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the “Administrative Borrower”) which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group’s relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.13 with respect to any liability that has

-55-

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

 

CONFIDENTIAL TREATMENT REQUESTED
been finally determined by a court of competent jurisdiction to have resulted
solely from the gross negligence or willful misconduct of such Agent-Related
Person or Lender-Related Person, as the case may be.
     17.14 Designated Senior Indebtedness. (a) The Revolver Commitments and the
Obligations shall be “Designated Senior Indebtedness” (as defined in the 2003
Indenture) for purposes of the 2003 Indenture and the Subordinated Notes issued
pursuant to the 2003 Indenture; and
          (b) The Revolver Commitments and the Obligations shall be “Designated
Senior Indebtedness” (as defined in the 2006 Indenture) for purposes of the 2006
Indenture and the Subordinated Notes issued pursuant to the 2006 Indenture.
[Signature pages to follow.]

-56-

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

 

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

          BORROWERS:  FINISAR CORPORATION,
a Delaware corporation
      By:   /s/ S. K. Workman         Name:   S. K. WORKMAN        Title:   CFO 
   

[Signature page to Credit Agreement]

S-1

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

 

CONFIDENTIAL TREATMENT REQUESTED

            OPTIUM CORPORATION,
a Delaware corporation
      By:   /s/ S. K. Workman         Name:   S. K. WORKMAN        Title:   CFO 
   

[Signature page to Credit Agreement]

S-2

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

 

CONFIDENTIAL TREATMENT REQUESTED

          AGENT:   WELLS FARGO FOOTHILL, LLC,
a Delaware limited liability company,
as Agent and as a Lender
      By:   /s/ David R. Klages         Name:   David R. Klages         Title:  
Vice President     

[Signature page to Credit Agreement]

S-3

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

 

CONFIDENTIAL TREATMENT REQUESTED
Schedule 1.1
As used in the Agreement, the following terms shall have the following
definitions:
          “2003 Indenture” means the Indenture, dated October 15, 2003, by and
between Parent and U.S. Bank Trust National Association, as trustee, due 2010.
          “2006 Indenture” means the Indenture, dated October 12, 2006, by and
between Parent and U.S. Bank Trust National Association, as trustee, due 2010.
          “2010 Event” means any of the following:

  (i)   the Subordinated Notes have been paid in full pursuant to a Permitted
Notes Redemption; or     (ii)   the Subordinated Notes have been refinanced on
terms and conditions satisfactory to Agent, including without limitation, a
maturity date of no sooner than March 31, 2014.

          “Account” means an account (as that term is defined in the Code).
          “Account Debtor” means any Person who is obligated on an Account,
chattel paper, or a general intangible.
          “Accounting Changes” means changes in accounting principles required
by the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of Certified
Public Accountants (or successor thereto or any agency with similar functions).
          “ACH Transactions” means any cash management or related services
(including the Automated Clearing House processing of electronic fund transfers
through the direct Federal Reserve Fedline system) provided by a Bank Product
Provider for the account of Parent or its Subsidiaries.
          “Additional Documents” has the meaning specified therefor in
Section 5.12 of the Agreement.
          “Administrative Borrower” has the meaning specified therefor in
Section 17.13.
          “Advances” has the meaning specified therefor in Section 2.1 (a) of
the Agreement.
          “Affected Lender” has the meaning specified therefor in
Section 2.13(b) of the Agreement.
          “Affiliate” means, as applied to any Person, any other Person who
controls, is controlled by, or is under common control with, such Person. For
purposes of this definition, “control” means the possession, directly or
indirectly through one or more intermediaries, of the power to direct the
management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, for purposes of the definition
of Eligible Accounts, and Section 6.12 of the Agreement: (a) any Person which
owns directly or indirectly 10% or more of the Stock having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each

 

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

 

CONFIDENTIAL TREATMENT REQUESTED
director (or comparable manager) of a Person shall be deemed to be an Affiliate
of such Person, and (c) each partnership in which a Person is a general partner
shall be deemed an Affiliate of such Person.
          “Agent” has the meaning specified therefor in the preamble to the
Agreement.
          “Agent-Related Persons” means Agent, together with its Affiliates,
officers, directors, employees, attorneys, and agents.
          “Agent’s Account” means the Deposit Account of Agent identified on
Schedule A-1.
          “Agent’s Liens” means the Liens granted by Loan Parties to Agent under
the Loan Documents.
          “Agreement” means the Credit Agreement to which this Schedule 1.1 is
attached.
          “Application Event” means the occurrence of (a) a failure by Borrowers
to repay all of the Obligations in full on the Maturity Date, or (b) an Event of
Default and the election by Agent or the Required Lenders to require that
payments and proceeds of Collateral be applied pursuant to Section 2.4(b)(ii) of
the Agreement.
          “Assignee” has the meaning specified therefor in Section 13. (a) of
the Agreement.
          “Assignment and Acceptance” means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
          “Authorized Person” means any one of the individuals identified on
Schedule A-2, as such schedule is updated from time to time by written notice
from Administrative Borrower to Agent.
          “Availability” means, as of any date of determination, the amount that
Borrowers are entitled to borrow as Advances under Section 2.1 of the Agreement
(after giving effect to all then outstanding Obligations (other than Bank
Product Obligations)).
          “Average Daily Excess Availability” means, for any period, the result
of (a) the sum of the aggregate amount by which the Maximum Revolver Amount
exceeds the Revolver Usage as of each Business Day during such period
(calculated as of the end of each Business Day during such period) divided by
(b) the number of Business Days in such period.
          “Bank Product” means any financial accommodation extended to Parent or
its Subsidiaries by a Bank Product Provider (other than pursuant to the
Agreement) including: (a) credit cards, (b) credit card processing services,
(c) debit cards, (d) purchase cards (including so-called “procurement cards” or
“P-cards”), (e) ACH Transactions, (f) cash management, including controlled
disbursement, accounts or services, or (g) transactions under Hedge Agreements.
          “Bank Product Agreements” means those agreements entered into from
time to time by Parent or its Subsidiaries with a Bank Product Provider in
connection with the obtaining of any of the Bank Products.
          “Bank Product Collateralization” means providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent) to be held by Agent
for the benefit of the Bank Product Providers in an amount determined by Agent
as sufficient to satisfy the reasonably estimated credit exposure with respect
to the then existing Bank Product Obligations.

2

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Bank Product Obligations” means (a) all obligations, liabilities,
reimbursement obligations, fees, or expenses owing by Parent or its Subsidiaries
to any Bank Product Provider pursuant to or evidenced by a Bank Product
Agreement and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, (b) all obligations of Borrowers to reimburse an Underlying
Issuer in respect of Underlying Letters of Credit, and (c) all amounts that
Parent or its Subsidiaries are obligated to reimburse to Agent or any member of
the Lender Group as a result of Agent or such member of the Lender Group
purchasing participations from, or executing guarantees or indemnities or
reimbursement obligations to, a Bank Product Provider with respect to the Bank
Products provided by such Bank Product Provider to Parent or its Subsidiaries.
          “Bank Product Provider” means Wells Fargo or any of its Affiliates.
          “Bank Product Reserve” means, as of any date of determination, the
amount of reserves that Agent has established (based upon the Bank Product
Providers’ reasonable determination of the credit exposure of Parent and its
Subsidiaries in respect of Bank Products) in respect of Bank Products then
provided or outstanding.
          “Bankruptcy Code” means title 11 of the United States Code, as in
effect from time to time.
          “Base LIBOR Rate” means the greater of (a) 2.00 percent per annum, and
(b) the rate per annum rate appearing on Bloomberg L.P.’s (the “Service”) Page
BBAM1/(Official BBA USD Dollar Libor Fixings) (or on any successor or substitute
page of such Service, or any successor to or substitute for such Service) 2
Business Days prior to the commencement of the requested Interest Period, for a
term and in an amount comparable to the Interest Period and the amount of the
LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a
continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a
LIBOR Rate Loan) by Administrative Borrower in accordance with the Agreement,
which determination shall be conclusive in the absence of manifest error.
          “Base Rate” means the greatest of (a) 3.25 percent per annum, (b) the
Federal Funds Rate plus 1/2%, (c) the Base LIBOR Rate (which rate shall be
calculated based upon an Interest Period of 3 months and shall be determined on
a daily basis), plus 1 percentage point, and (d) the rate of interest announced,
from time to time, within Wells Fargo at its principal office in San Francisco
as its “prime rate”, with the understanding that the “prime rate” is one of
Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves
as the basis upon which effective rates of interest are calculated for those
loans making reference thereto and is evidenced by the recording thereof after
its announcement in such internal publications as Wells Fargo may designate.
          “Base Rate Loan” means each portion of the Advances that bears
interest at a rate determined by reference to the Base Rate.
          “Base Rate Margin” means, as of any date of determination, the
percentage points set forth below based upon the Average Daily Excess
Availability for the immediately preceding calendar quarter, as determined by
Agent in its Permitted Discretion:

          Level   Average Daily Excess Availability   Base Rate Margin
I
  If Average Daily Excess Availability is greater than $25,000,000  
3.75 percentage points

3

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

 

CONFIDENTIAL TREATMENT REQUESTED

          Level   Average Daily Excess Availability   Base Rate Margin
II
  If Average Daily Excess Availability is greater than or equal to $10,000,000
but less than or equal to $25,000,000   4.00 percentage points
 
       
III
  If Average Daily Excess Availability is less than $10,000,000  
4.25 percentage points

                    ; provided, however, that for the period commencing on the
Closing Date through the end of October 31, 2009, the Base Rate Margin shall be
the percentage points specified for Pricing Level II as set forth in this
definition; provided, further, however, that if the Borrowers fail to provide
any reports or certifications required to determine the Average Daily Excess
Availability when due, the Base Rate Margin shall be set at the percentage
points specified for Pricing Level III until such reports or certifications are
delivered, on which date (but not retroactively), without constituting a waiver
of any Default or Event of Default occasioned by the failure to timely deliver
such reports or certifications, the Base Rate Margin shall be set at the
percentage based upon the calculation determined pursuant to such reports or
certifications. For purposes of the preceding sentence (and subject to the
forgoing provisos), at the end of each calendar quarter Agent will test the
Borrowers’ Average Daily Excess Availability, which amount will be based upon
reports and certifications delivered to Agent in accordance with the terms of
this Agreement. If any such reports or certifications are subsequently
determined to be incorrect in any material respect in a manner that would result
in a lower Average Daily Excess Availability, Agent may increase the Base Rate
Margin retroactively to the beginning of the relevant quarter to the extent that
such error caused the applicable Base Rate Margin to be less than the Base Rate
Margin that would have been in effect if the error was not made.
          “Benefit Plan” means a “defined benefit plan” (as defined in
Section 3(35) of ERISA) for which Parent or any of its Subsidiaries or ERISA
Affiliates has been an “employer” (as defined in Section 3(5) of ERISA) within
the past six years.
          “Board of Directors” means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf of
the board of directors (or comparable managers).
          “Borrower” and “Borrowers” have the respective the meanings specified
therefor in the preamble to the Agreement.
          “Borrowing” means a borrowing hereunder consisting of Advances made on
the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender in
the case of a Swing Loan, or by Agent in the case of a Protective Advance.
          “Borrowing Base” means, as of any date of determination, the result
of:
     (a) 85% of the amount of Eligible Accounts, less the amount, if any, of the
Dilution Reserve, plus
     (b) 80% of the amount of Eligible Investment Grade Accounts, less the
amount, if any, of the Dilution Reserve, plus
     (c) the lesser of
     (i) $40,000,000, and

4

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

 

CONFIDENTIAL TREATMENT REQUESTED
     (ii) 80% of the amount of Eligible Credit Insured Accounts, less the
amount, if any, of the Dilution Reserve, plus
     (d) the lowest of
     (i) $10,000,000,
     (ii) 80% of the amount of Eligible Specified Accounts, less the amount, if
any, of the Dilution Reserve, plus
     (e) the lowest of
     (i) $10,000,000,
     (ii) 50% of the value (calculated at the lower of cost or market on a basis
consistent with Borrowers’ historical accounting practices) of Eligible
Inventory, and
     (iii) 85% times the most recently determined Net Liquidation Percentage
times the value (calculated at the lower of cost or market on a basis consistent
with Borrowers’ historical accounting practices) of Eligible Inventory, plus
     (f) the lesser of
     (i) the Eligible Equipment Sublimit, and
     (ii) 80% times the most recently determined Net Orderly Liquidation Value
of Eligible Equipment, minus
     (g) the sum of (i) the Bank Product Reserve, (ii) the Credit Insurance
Reserve, and (iii) the aggregate amount of reserves, if any, established by
Agent under Section 2. l(c) of the Agreement.
          “Borrowing Base Certificate” means a certificate in the form of
Exhibit B-l.
          “Borrowing Base Excess Amount” has the meaning set forth in
Section 2.4(e).
          “Business Day” means any day that is not a Saturday, Sunday, or other
day on which banks are authorized or required to close in the state of
California, except that, if a determination of a Business Day shall relate to a
LIBOR Rate Loan, the term “Business Day” also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.
          “Capital Expenditures” means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed; provided
that, notwithstanding anything to the contrary contained herein, Capital
Expenditures shall be deemed to be: (1) $5,121,000 for the fiscal quarter ended
February 1, 2009, (2) $3,265,000 for the fiscal quarter ended April 30, 2009,
and (3) $3,149,000 for the fiscal quarter ended August 2, 2009.
          “Capitalized Lease Obligation” means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.

5

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Capital Lease” means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
          “Cash Equivalents” means (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-l from S&P or at least P-l from Moody’s, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States or any state thereof or the District of Columbia or any
United States branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000, (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 $250,000,000, having a term of not more than seven
days, with respect to securities satisfying the criteria in clauses (a) or
(d) above, (g) debt securities with maturities of six months or less from the
date of acquisition backed by standby letters of credit issued by any commercial
bank satisfying the criteria described in clause (d) above, and (h) Investments
in money market funds substantially all of whose assets are invested in the
types of assets described in clauses (a) through (g) above.
          “CFC” means a controlled foreign corporation (as that term is defined
in the IRC).
          “Change of Control” means that (a) any “person” or “group” (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 30%, or more, of the Stock of Parent having the right to vote for the
election of members of the Board of Directors, (b) a majority of the members of
the Board of Directors do not constitute Continuing Directors, (c) a “Change of
Control” as defined in the Indentures occurs, or (d) Parent fails to own and
control, directly or indirectly, 100% of the Stock of each other Loan Party.
          “Closing Date” means the date of the making of the initial Advance (or
other extension of credit) hereunder.
          “Code” means the California Uniform Commercial Code, as in effect from
time to time.
          “Collateral” means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Parent or its Subsidiaries in or upon
which a Lien is granted by such Person in favor of Agent or the Lenders under
any of the Loan Documents. The term “Collateral” shall not include the assets or
the voting Stock of any CFC, solely to the extent that (y) such Stock represents
more than 65% of the outstanding voting Stock of such CFC, and (z) hypothecating
more than 65% of the total outstanding voting Stock of such CFC would result in
material adverse tax consequences.
          “Collateral Access Agreement” means a landlord waiver, bailee letter,
or acknowledgement agreement of any lessor, warehouseman, processor, consignee,
or other Person in
          

6

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

 

CONFIDENTIAL TREATMENT REQUESTED
possession of, having a Lien upon, or having rights or interests in Parent’s or
any of its Non-CFC Subsidiaries’ books and records, Equipment, or Inventory, in
each case, in form and substance reasonably satisfactory to Agent.
          “Collections” means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, cash proceeds of asset sales,
rental proceeds, and tax refunds).
          “Compliance Certificate” means a certificate substantially in the form
of Exhibit C-l delivered by the chief financial officer of Parent to Agent.
          “Confidential Information” has the meaning specified therefor in
Section 17.9(a) of the Agreement.
          “Continuing Director” means (a) any member of the Board of Directors
who was a director (or comparable manager) of Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was approved, appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Parent and whose initial assumption of office resulted
from such contest or the settlement thereof.
          “Control Agreement” means a control agreement, in form and substance
reasonably satisfactory to Agent, executed and delivered by Parent or one of its
Non-CFC Subsidiaries, Agent, and the applicable securities intermediary (with
respect to a Securities Account) or bank (with respect to a Deposit Account).
          “Controlled Account Agreement” has the meaning specified therefor in
the Security Agreement.
          “Copyright Security Agreement” has the meaning specified therefor in
the Security Agreement.
          “Credit Insurance Reserve” means, as of any date of determination, the
amount of reserves that Agent has established in respect of: (a) all deductibles
applicable to any credit insurance covering Eligible Credit Insured Accounts;
and (b) all potential offsets against any credit insurance covering Eligible
Credit Insured Accounts.
          “Daily Balance” means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.
          “Default” means an event, condition, or default that, with the giving
of notice, the passage of time, or both, would be an Event of Default.
          “Defaulting Lender” means any Lender that fails to make any Advance
(or other extension of credit, including the failure to make available to Agent
amounts required pursuant to a Settlement or to make payment in connection with
a Letter of Credit Disbursement) that it is required to make hereunder on the
date that it is required to do so hereunder.
          “Defaulting Lender Rate” means (a) for the first 3 days from and after
the date the relevant payment is due, the Base Rate, and (b) thereafter, the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto).
          

7

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Deposit Account” means any deposit account (as that term is defined
in the Code).
          “Designated Account” means the Deposit Account of Administrative
Borrower identified on Schedule D-l.
          “Designated Account Bank” has the meaning specified therefor in
Schedule D-l.
          “Dilution” means, as of any date of determination, a percentage, based
upon the experience of the immediately prior 180 consecutive days, that is the
result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to
Borrowers’ Accounts during such period, by (b) Borrowers’ billings with respect
to Accounts during such period.
          “Dilution Reserve” means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts, Eligible Credit
Insured Accounts and Eligible Investment Grade Accounts, as applicable, by
1 percentage point for each percentage point by which Dilution is in excess of
5%.
          “Dollars” or “$” means United States dollars.
          “EBITDA” means, with respect to any fiscal period, the result of:
          (a) Parent’s consolidated net earnings (or loss) (but excluding from
the determination of net earnings (or loss) any tax refunds, tax credits, or
other tax benefits), minus
          (b) to the extent included in the calculation of Parent’s consolidated
net earnings (or loss), the sum of: (i) extraordinary gains (including, without
limitation, gains from the sale of equipment and the repurchase of bonds),
(ii) interest income, (iii) any non-cash decrease in the cost of goods sold
attributed to the reversal of an inventory obsolescence and slow moving reserve
expensed in a prior period, consistent with historical processes for determining
such non-cash charges, (iv) the EBITDA Inventory Disposal Amount, and (v) any
reductions of the impaired rent reserve in such period, consistent with
historical processes for determining such reductions, plus
          (c) to the extent deducted in the calculation of Parent’s consolidated
net earnings (or loss), the sum of: (i) non-cash extraordinary losses (including
non-cash impairment related to minority investments), (ii) non-cash stock
compensation expense, (iii) interest expense, (iv) income taxes,
(v) depreciation and amortization, and (vi) any non-cash increase in cost of
goods sold attributed to the implementation of an inventory obsolescence and
slow moving reserve during the current period, consistent with historical
processes for determining such non-cash charges; provided. however, that the
amount calculated pursuant to this clause (c)(vi) shall in no event exceed 50%
of EBITDA prior to giving effect to this clause (c)(vi);
in each case, determined on a consolidated basis in accordance with GAAP;
provided that, notwithstanding anything to the contrary contained herein, EBITDA
shall be deemed to be: (1) $9,149,000 for the fiscal quarter ended February 1,
2009, (2) $7,592,000 for the fiscal quarter ended April 30, 2009, and (3)
$10,020,000 for the fiscal quarter ended August 2, 2009.
          “EBITDA Inventory Disposal Amount” means, with respect to any fiscal
period, an amount equal to the greater of (a) 1% of Parent’s consolidated net
revenues for such fiscal period, and (b) the value (calculated at cost) of all
Inventory of Parent and its Subsidiaries disposed of during such period.
          

8

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Eligible Accounts” means those Accounts created by Borrowers in the
ordinary course of their business, that arise out of Borrowers’ sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made in the Loan Documents, and that are
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, however, that such criteria may be revised from time
to time by Agent in Agent’s Permitted Discretion to address the results of any
audit performed by Agent from time to time after the Closing Date. In
determining the amount to be included, Eligible Accounts shall be calculated net
of customer deposits and unapplied cash. Eligible Accounts shall not include the
following:
          (a) Accounts that the Account Debtor has failed to pay within 120 days
of original invoice date, or Accounts that are more than 60 days past due,
          (b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
          (c) Accounts with respect to which the Account Debtor is an Affiliate
of a Borrower or an employee or agent of a Borrower or any Affiliate of a
Borrower,
          (d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,
          (e) Accounts that are not payable in Dollars,
          (f) Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States, or (ii) is not
organized under the laws of the United States or any state thereof, or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
the Account is supported by an irrevocable letter of credit reasonably
satisfactory to Agent (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Agent and is directly drawable by Agent,
          (g) Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC §3727), or (ii) any state of the United
States (exclusive, however, of (i) Accounts owed by any state that does not have
a statutory counterpart to the Assignment of Claims Act, or (ii) Accounts owed
by any state that has a statutory counterpart to the Assignment of Claims Act as
to which the Borrowers have complied to the Agent’s reasonable
satisfaction),
          (h) Accounts with respect to which the Account Debtor is a creditor of
Borrowers, has or has asserted a right of setoff, or has disputed its obligation
to pay all or any portion of the Account, to the extent of such claim, right of
setoff, or dispute,
          (i) Accounts with respect to an Account Debtor whose total obligations
owing to Borrowers (i) with respect to Accounts owed by [****] or [****] exceed
20%, and (ii) with respect to Accounts owed by any other Account Debtor, exceed
10%, (in each case, such percentage, as applied to a particular Account Debtor,
being subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
Eligible Credit Insured Accounts, Eligible Investment Grade Accounts and
Eligible
          

9

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

 

CONFIDENTIAL TREATMENT REQUESTED
Specified Accounts, to the extent of the obligations owing by such Account
Debtor in excess of such percentage; provided, however, that, in each case, the
amount of Eligible Accounts that are excluded because they exceed the foregoing
percentage shall be determined by Agent based on all of the otherwise Eligible
Accounts prior to giving effect to any eliminations based upon the foregoing
concentration limit,
          (j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
any Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,
          (k) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be materially impaired by reason of the Account Debtor’s
financial condition,
          (l) Accounts that are not subject to a valid and perfected first
priority Agent’s Lien,
          (m) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor,
          (n) Accounts with respect to which the Account Debtor is a Sanctioned
Person or Sanctioned Entity,
          (o) Accounts that represent the right to receive progress payments or
other advance billings that are due prior to the completion of performance by
Borrowers of the subject contract for goods or services, or
          (p) Accounts with respect to which (i) the Account Debtor has been
billed by the applicable Borrower from an office or location of the applicable
Borrower that is not located in the United States, or (ii) the collection
thereof is to occur via an office or location of the applicable Borrower that is
not located in the United States.
          “Eligible Credit Insured Accounts” means an Account (other than an
Eligible Investment Grade Account) that (a) satisfies all of the criteria set
forth in the definition of Eligible Accounts other than clause (f) of such
definition and (b) is covered by credit insurance in form, substance, and
amount, and by an insurer, satisfactory to Agent; provided, however, that such
criteria may be revised from time to time by Agent in Agent’s Permitted
Discretion to address the results of any audit performed by Agent from time to
time after the Closing Date. In determining the amount to be included, Eligible
Credit Insured Accounts shall be calculated net of customer deposits and
unapplied cash.
          “Eligible Equipment” means the Equipment owned by Borrowers, that
complies with each of the representations and warranties respecting Eligible
Equipment made in the Loan Documents, and that is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth below; provided,
however, that such criteria may be revised from time to time by Agent in Agent’s
Permitted Discretion to address the results of any audit or appraisal performed
by Agent from time to time after the Closing Date. A piece of Equipment shall
not be included in Eligible Equipment if:
          (a) the applicable Borrower does not have good, valid, and marketable
title thereto,
          

10

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (b) it is not subject to a valid and perfected first priority Agent’s
Lien,
          (c) the full purchase price for such equipment has not been paid by
Borrowers,
          (d) it is not located at one of the locations in the continental
United States set forth on Schedule E-l,
          (e) it is located on real property leased by a Borrower unless either
(i) it is subject to a Collateral Access Agreement executed by the lessor, or
(ii) Agent has established a reserve against the Borrowing Base in an amount
equal to three (3) months rent with respect to such premises (or such lesser
amount as agreed to by Agent in its sole discretion),
          (f) it is not in good working order and condition (ordinary wear and
tear excepted) or it is not used or held for use by Borrowers in the ordinary
course of business of the Borrowers,
          (g) it is subject to any agreement which restricts the ability of
Borrowers to use, sell, transport or dispose of such equipment or which
restricts the Agent’s ability to take possession of, sell or otherwise dispose
of such equipment, or
          (h) it constitutes “fixtures” under the applicable laws of the
jurisdiction in which such equipment is located.
          “Eligible Equipment Sublimit” means Six Million Five Hundred Thousand
Dollars ($6,500,000); provided, however, that beginning on January 31, 2010 and
on the last day of each fiscal quarter of Parent thereafter, the Eligible
Equipment Sublimit shall be reduced by Three Hundred Twenty-Five Thousand
Dollars ($325,000).
          “Eligible Inventory” means Inventory consisting of first quality
finished goods held for sale in the ordinary course of Borrowers’ business, that
complies with each of the representations and warranties respecting Eligible
Inventory made in the Loan Documents, and that is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth below; provided,
however, that such criteria may be revised from time to time by Agent in Agent’s
Permitted Discretion to address the results of any audit or appraisal performed
by Agent from time to time after the Closing Date. In determining the amount to
be so included, Inventory shall be valued at the lower of cost or market on a
basis consistent with Borrowers’ historical accounting practices. An item of
Inventory shall not be included in Eligible Inventory if:
          (a) the applicable Borrower does not have good, valid, and marketable
title thereto,
          (b) the applicable Borrower does not have actual and exclusive
possession thereof (either directly or through a bailee or agent of such
Borrower),
          (c) it is not located at one of the locations in the continental
United States set forth on Schedule E-l (or in-transit from one such location to
another such location),
          (d) it is in-transit to or from a location of a Borrower (other than
in-transit from one location set forth on Schedule E-l to another location set
forth on Schedule E-l),
          (e) it is located on real property leased by a Borrower or in a
contract warehouse, in each case, unless it is segregated or otherwise
separately identifiable from goods of others, if any, stored on the premises,
and either (i) it is subject to a Collateral Access Agreement

11

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

 

CONFIDENTIAL TREATMENT REQUESTED
executed by the lessor or warehouseman, as the case may be, or (ii) Agent has
established a reserve against the Borrowing Base in an amount equal to three
(3) months rent with respect to such premises or three (3) months warehouse
charges with respect to such premises, as applicable (or such lesser amount as
agreed to by Agent in its sole discretion),
          (f) it is the subject of a bill of lading or other document of title,
          (g) it is not subject to a valid and perfected first priority Agent’s
Lien,
          (h) it consists of goods returned or rejected by the applicable
Borrower’s customers, or
          (i) it consists of goods that are obsolete or slow moving, restrictive
or custom items, work-in-process, raw materials, or goods that constitute spare
parts, packaging and shipping materials, supplies used or consumed in Borrowers’
business, bill and hold goods, defective goods, “seconds,” or Inventory acquired
on consignment.
          “Eligible Investment Grade Accounts” means an Account (a) that
satisfies all of the criteria set forth in the definition of Eligible Accounts
other than clause (f) of such definition, and (b) is owed by an Account Debtor
that is an Eligible Investment Grade Account Debtor; provided. however, that
such criteria may be revised from time to time by Agent in Agent’s Permitted
Discretion to address the results of any audit performed by Agent from time to
time after the Closing Date. In determining the amount to be included, Eligible
Investment Grade Accounts shall be calculated net of customer deposits and
unapplied cash.
          “Eligible Investment Grade Account Debtors” means an Account Debtor
listed on Schedule E-2 (as such list may be added to from time to time by Agent
in its sole discretion): that (a) does not maintain its chief executive office
in the United States, or (b) is not organized under the laws of the United
States or any state thereof or the District of Columbia, in either case, so long
as such Account Debtor, or the owner of all of the Stock of such Account Debtor,
has a credit rating of at least “BBB-” by S&P or “Baa3” by Moody’s.
          “Eligible Specified Accounts” means an Account that (a) satisfies all
of the criteria set forth in the definition of Eligible Accounts other than
clause (f) of such definition, and (b) is owed by an Account Debtor that is an
Eligible Specified Account Debtor; provided, however, that such criteria may be
revised from time to time by Agent in Agent’s Permitted Discretion to address
the results of any audit performed by Agent from time to time after the Closing
Date. In determining the amount to be included, Eligible Specified Accounts
shall be calculated net of customer deposits and unapplied cash.
          “Eligible Specified Account Debtor” means an Account Debtor listed on
Schedule E-3 (as such list may be added to from time to time by Agent in its
sole discretion), so long as such Account Debtor, or the owner of all of the
Stock of such Account Debtor, has a credit rating of at least “BB+” by S&P or
“Bal” by Moody’s.
          “Environmental Action” means any written complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other written communication from
any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials (a) from any assets,
properties, or businesses of any Borrower, any Subsidiary of a Borrower, or any
of their predecessors in interest, (b) from adjoining properties or businesses,
or (c) from or onto any facilities which received Hazardous Materials generated
by any Borrower, any Subsidiary of a Borrower, or any of their predecessors in
interest.

12

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Environmental Law” means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on Parent
or its Subsidiaries, relating to the environment, the effect of the environment
on employee health, or Hazardous Materials, in each case as amended from time to
time.
          “Environmental Liabilities” means all liabilities, monetary
obligations, losses, damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand, or Remedial Action
required, by any Governmental Authority or any third party, and which relate to
any Environmental Action.
          “Environmental Lien” means any Lien in favor of any Governmental
Authority for Environmental Liabilities.
          “Equipment” means equipment (as that term is defined in the Code).
          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
          “ERISA Affiliate” means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Parent or its Subsidiaries under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of Parent or its Subsidiaries under IRC Section 414(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Parent or any of its Subsidiaries is a member under IRC Section 414(m), or
(d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
Person subject to ERISA that is a party to an arrangement with Parent or any of
its Subsidiaries and whose employees are aggregated with the employees of Parent
or its Subsidiaries under IRC Section 414(o).
          “Event of Default” has the meaning specified therefor in Section 8 of
the Agreement.
          “Excess Availability” means, as of any date of determination, the
amount equal to Availability minus the aggregate amount, if any, of all trade
payables of Parent and its Subsidiaries aged in excess of the greater of
historical levels with respect thereto or ninety (90) days and all book
overdrafts of Parent and its Subsidiaries in excess of historical practices with
respect thereto, in each case as determined by Agent in its Permitted
Discretion.
          “Excess Liquidity” means, as of any date of determination, the sum of
(a) Excess Availability as of such date, plus (b) Suppressed Availability as of
such date in an amount not to exceed [****].
          “Exchange Act” means the Securities Exchange Act of 1934, as in effect
from time to time.
          “Existing Credit Facility” means the credit facility provided to
Parent pursuant to the Loan and Security Agreement, dated as of March 14, 2008,
among Parent and Silicon Valley Bank, a California corporation.

13

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Fee Letter” means that certain fee letter, dated as of even date with
the Agreement, among Borrowers and Agent, in form and substance reasonably
satisfactory to Agent.
          “Federal Funds Rate” means, for any period, a fluctuating interest
rate per annum equal to, for each day during such period, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.
          “Fixed Charges” means, with respect to any fiscal period and with
respect to Parent determined on a consolidated basis in accordance with GAAP,
the sum, without duplication, of (a) Interest Expense accrued (other than
interest paid-in-kind, amortization of financing fees, and other non-cash
Interest Expense during such period), (b) principal payments in respect of
Indebtedness that are required to be paid during such period, and (c) all
federal, state, and local income taxes accrued during such period; provided
that, notwithstanding anything to the contrary contained herein, Fixed Charges
shall be deemed to be: (1) $3,473,000 for the fiscal quarter ended February 1,
2009, (2) $3,018,000 for the fiscal quarter ended April 30, 2009, and (3)
$2,872,000 for the fiscal quarter ended August 2, 2009.
          Fixed Charge Coverage Ratio” means, with respect to Parent and its
Subsidiaries for any period, the ratio of (i) EBITDA for such period minus
unfinanced Capital Expenditures made (to the extent not already incurred in a
prior period) or incurred during such period, to (ii) Fixed Charges for such
period.
          “Foreign Lender” means any Lender or Participant that is not a United
States person within the meaning of IRC section 7701(a)(30).
          “Funding Date” means the date on which a Borrowing occurs.
          “Funding Losses” has the meaning specified therefor in
Section 2.12(b)(ii) of the Agreement.
          “GAAP” means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
          “Governing Documents” means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
          “Governmental Authority” means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
          “Guarantors” means (a) each Subsidiary of Parent (other than any
Borrower or any Subsidiary that is not required to become a Guarantor pursuant
to Section 5.11), and (b) each other Person that becomes a guarantor after the
Closing Date pursuant to Section 5.11 of the Agreement, and “Guarantor” means
any one of them.
          “Guaranty” means that certain general continuing guaranty, dated as of
even date with the Agreement, executed and delivered by each Guarantor in favor
of Agent, for the benefit of
          

14

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

 

CONFIDENTIAL TREATMENT REQUESTED
the Lender Group and the Bank Product Providers, in form and substance
reasonably satisfactory to Agent.
          “Hazardous Materials” means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
          “Hedge Agreement” means any and all agreements or documents now
existing or hereafter entered into by Parent or any of its Subsidiaries that
provide for an interest rate, credit, commodity or equity swap, cap, floor,
collar, forward foreign exchange transaction, currency swap, cross currency rate
swap, currency option, or any combination of, or option with respect to, these
or similar transactions, for the purpose of hedging such Person’s exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security, or
currency valuations or commodity prices.
          “Holdout Lender” has the meaning specified therefor in Section 14.2(a)
of the Agreement.
          “Indebtedness” means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, or other financial products, (c) all obligations as a
lessee under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of such Person, irrespective of whether such
obligation or liability is assumed, (e) all obligations to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary
course of business and repayable in accordance with customary trade practices),
(f) all obligations owing under Hedge Agreements (which amount shall be
calculated based on the amount that would be payable by such Person if the Hedge
Agreement were terminated on the date of determination), (g) any Prohibited
Preferred Stock, and (h) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (g) above. For purposes of this
definition, (i) the amount of any Indebtedness represented by a guaranty or
other similar instrument shall be the lesser of the principal amount of the
obligations guaranteed and still outstanding and the maximum amount for which
the guaranteeing Person may be liable pursuant to the terms of the instrument
embodying such Indebtedness, and (ii) the amount of any Indebtedness described
in clause (d) above shall be the lower of the amount of the obligation and the
fair market value of the assets of such Person securing such obligation.
          “Indemnified Liabilities” has the meaning specified therefor in
Section 10.3 of the Agreement.
          “Indemnified Person” has the meaning specified therefor in
Section 10.3 of the Agreement.
          “Indentures” means, collectively, the 2003 Indenture and the 2006
Indenture.
          “Insolvency Proceeding” means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or
          

15

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

 

CONFIDENTIAL TREATMENT REQUESTED
insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
          “Intercompany Subordination Agreement” means an intercompany
subordination agreement, dated as of even date with the Agreement, executed and
delivered by Parent, each of its Subsidiaries, and Agent, the form and substance
of which is reasonably satisfactory to Agent.
          “Interest Expense” means, for any period, the aggregate of the
interest expense of Parent for such period, determined on a consolidated basis
in accordance with GAAP.
          “Interest Period” means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided, however,
that (a) interest shall accrue at the applicable rate based upon the LIBOR Rate
from and including the first day of each Interest Period to, but excluding, the
day on which any Interest Period expires, (b) any Interest Period that would end
on a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (c) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and
(d) Borrowers (or Administrative Borrower on behalf thereof) may not elect an
Interest Period which will end after the Maturity Date.
          “Inventory” means inventory (as that term is defined in the Code).
          “Investment” means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, capital contributions (excluding (a) commission, travel,
and similar advances to directors, officers, employees and consultants of such
Person made in the ordinary course of business, and (b) bona fide Accounts
arising in the ordinary course of business), or acquisitions of Indebtedness,
Stock, or all or substantially all of the assets of such other Person (or of any
division or business line of such other Person), and any other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP.
          “IRC” means the Internal Revenue Code of 1986, as in effect from time
to time.
          “Issuing Lender” means WFF or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent, agrees, in such Lender’s
sole discretion, to become an Issuing Lender for the purpose of issuing Letters
of Credit or Reimbursement Undertakings pursuant to Section 2.11 of the
Agreement.
          “Lender” and “Lenders” have the respective meanings set forth in the
preamble to the Agreement, includes the Issuing Lender, and shall include any
other Person made a party to the Agreement pursuant to the provisions of
Section 13.1 of the Agreement.
          “Lender Group” means each of the Lenders (including the Issuing
Lender) and Agent, or any one or more of them.
          “Lender Group Expenses” means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by Parent or its Subsidiaries
under any of the Loan
          

16

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

 

CONFIDENTIAL TREATMENT REQUESTED
Documents that are paid, advanced, or incurred by the Lender Group,
(b) out-of-pocket fees or charges paid or incurred by Agent in connection with
the Lender Group’s transactions with Parent or its Subsidiaries under any of the
Loan Documents, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in the Agreement or
the Fee Letter), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) out-of-pocket costs and expenses
incurred by Agent in the disbursement of funds to Borrowers or other members of
the Lender Group (by wire transfer or otherwise), (d) out-of-pocket charges paid
or incurred by Agent resulting from the dishonor of checks payable by or to any
Loan Party, (e) reasonable out-of-pocket costs and expenses paid or incurred by
the Lender Group to correct any default or enforce any provision of the Loan
Documents, or during the continuance of an Event of Default, in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (f) reasonable
out-of-pocket audit fees and expenses (including travel, meals, and lodging) of
Agent related to any inspections or audits to the extent of the fees and charges
(and up to the amount of any limitation) contained in the Agreement or the Fee
Letter, (g) reasonable out-of-pocket costs and expenses of third party claims or
any other suit paid or incurred by the Lender Group in enforcing or defending
the Loan Documents or in connection with the transactions contemplated by the
Loan Documents or the Lender Group’s relationship with Parent or any of its
Subsidiaries, (h) Agent’s reasonable costs and expenses (including reasonable
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering (including travel, meals, and lodging), syndicating, or amending
the Loan Documents, and (i) Agent’s and each Lender’s reasonable costs and
expenses (including reasonable attorneys, accountants, consultants, and other
advisors fees and expenses) incurred in terminating, enforcing (including
attorneys, accountants, consultants, and other advisors fees and expenses
incurred in connection with a “workout,” a “restructuring,” or an Insolvency
Proceeding concerning Parent or any of its Subsidiaries or in exercising rights
or remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.
          “Lender Group Representatives” has the meaning specified therefor in
Section 17.9 of the Agreement.
          “Lender-Related Person” means, with respect to any Lender, such
Lender, together with such Lender’s Affiliates, officers, directors, employees,
attorneys, and agents.
          “Letter of Credit” means a letter of credit issued by Issuing Lender
or a letter of credit issued by Underlying Issuer, as the context requires.
          “Letter of Credit Collateralization” means either (a) providing cash
collateral (pursuant to documentation reasonably satisfactory to Agent,
including provisions that specify that the Letter of Credit fee and all usage
charges set forth in the Agreement will continue to accrue while the Letters of
Credit are outstanding) to be held by Agent for the benefit of those Lenders
with a Revolver Commitment in an amount equal to 105% of the then existing
Letter of Credit Usage, (b) causing the Letters of Credit to be returned to the
Issuing Lender, or (c) providing Agent with a standby letter of credit, in form
and substance reasonably satisfactory to Agent, from a commercial bank
acceptable to Agent (in its sole discretion) in an amount equal to 105% of the
then existing Letter of Credit Usage (it being understood that the Letter of
Credit fee and all usage charges set forth in the Agreement will continue to
accrue while the Letters of Credit are outstanding and that any such fees that
accrue must be an amount that can be drawn under any such standby letter of
credit).

17

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Letter of Credit Disbursement” means a payment made by Issuing Lender
or Underlying Issuer pursuant to a Letter of Credit.
          “Letter of Credit Usage” means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
          “LIBOR Deadline” has the meaning specified therefor in
Section 2.12(b)(i) of the Agreement.
          “LIBOR Notice” means a written notice in the form of Exhibit L-l.
          “LIBOR Option” has the meaning specified therefor in Section 2.12(a)
of the Agreement.
          “LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan,
the rate per annum determined by Agent by dividing (a) the Base LIBOR Rate for
such Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate
shall be adjusted on and as of the effective day of any change in the Reserve
Percentage.
          “LIBOR Rate Loan” means each portion of an Advance that bears interest
at a rate determined by reference to the LIBOR Rate.
          “LIBOR Rate Margin” means, as of any date of determination (with
respect to any portion of the outstanding Advances on such date that is a LIBOR
Rate Loan), the applicable margin set forth in the following table based upon
the Average Daily Excess Availability for the immediately preceding calendar
quarter, as determined by Agent in its Permitted Discretion:

          Level   Average Daily Excess Availability   Base Rate Margin
I
  If Average Daily Excess Availability is greater than $25,000,000  
3.75 percentage points
 
       
II
  If Average Daily Excess Availability is greater than or equal to $10,000,000
but less than or equal to $25,000,000   4.00 percentage points
 
       
III
  If Average Daily Excess Availability is less than $10,000,000  
4.25 percentage points

                    ; provided, however, that for the period commencing on the
Closing Date through the end of October 31, 2009, the LIBOR Rate Margin shall be
the percentage points specified for Pricing Level II as set forth in this
definition; provided, further, however, that if the Borrowers fail to provide
any reports or certifications required to determine the Average Daily Excess
Availability when due, the LIBOR Rate Margin shall be set at the percentage
points specified for Pricing Level III until such reports or certifications are
delivered, on which date (but not retroactively), without constituting a waiver
of any Default or Event of Default occasioned by the failure to timely deliver
such reports or certifications, the LIBOR Rate Margin shall be set at the
percentage based upon the calculation determined pursuant to such reports or
certifications. For purposes of the preceding sentence (and subject to the
forgoing provisos), at the end of each calendar quarter Agent will test the
Borrowers’ Average Daily Excess Availability, which amount will be based upon
reports and certifications delivered to Agent in accordance with the terms of
this Agreement. If any such reports or certifications are subsequently
determined to be incorrect in any material respect in a manner that

18

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

 

CONFIDENTIAL TREATMENT REQUESTED
would result in a lower Average Daily Excess Availability, Agent may increase
the LIBOR Rate Margin retroactively to the beginning of the relevant quarter to
the extent that such error caused the applicable LIBOR Rate Margin to be less
than the LIBOR Rate Margin that would have been in effect if the error was not
made.
          “Lien” means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory
or other), security interest, or other security arrangement and any other
preference, priority, or preferential arrangement of any kind or nature
whatsoever, including any conditional sale contract or other title retention
agreement, the interest of a lessor under a Capital Lease and any synthetic or
other financing lease having substantially the same economic effect as any of
the foregoing.
          “Loan Account” has the meaning specified therefor in Section 2.9 of
the Agreement.
          “Loan Documents” means the Agreement, the Bank Product Agreements, any
Borrowing Base Certificate, the Controlled Account Agreements, the Control
Agreements, the Copyright Security Agreement, the Fee Letter, the Guaranty, the
Intercompany Subordination Agreement, the Letters of Credit, the Mortgages, the
Patent Security Agreement, the Security Agreement, the Trademark Security
Agreement, any note or notes executed by Borrowers in connection with the
Agreement and payable to any member of the Lender Group, any letter of credit
application entered into by any Borrower in connection with the Agreement, and
any other agreement entered into, now or in the future, by Parent or any of its
Subsidiaries and any member of the Lender Group in connection with the
Agreement.
          “Loan Party” means any Borrower or any Guarantor.
          “Margin Stock” as defined in Regulation U of the Board of Governors of
the Federal Reserve System as in effect from time to time.
          “Material Adverse Change” means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Parent and its Subsidiaries, taken as a whole, (b) a
material impairment of Parent’s and its Subsidiaries ability to perform their
obligations under the Loan Documents to which they are parties or of the Lender
Group’s ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of Agent’s Liens
with respect to the Collateral as a result of an action or failure to act on the
part of Parent or any of its Non-CFC Subsidiaries.
          “Material Contract” means, with respect to any Person, (i) each
contract or agreement to which such Person or any of its Subsidiaries is a party
involving aggregate consideration payable to or by such Person or such
Subsidiary of $500,000 or more (other than purchase orders in the ordinary
course of the business of such Person or such Subsidiary and other than
contracts that by their terms may be terminated by such Person or Subsidiary in
the ordinary course of its business upon less than 60 days notice without
penalty or premium) and (ii) all other contracts or agreements, the loss of
which could reasonably be expected to result in a Material Adverse Change.
          “Maturity Date” has the meaning specified therefor in Section 3.3 of
the Agreement.
          “Maximum Revolver Amount” means $70,000,000, decreased by the amount
of reductions in the Revolver Commitments made in accordance with Section 2.4(c)
of the Agreement.
          “Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.
          “Mortgage Policy” has the meaning specified therefor in Schedule
3.1(v).

19

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Mortgages” means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Parent or its Subsidiaries in favor of Agent, in form and substance reasonably
satisfactory to Agent, that encumber the Real Property Collateral.
          “Net Cash Proceeds” means, with respect to the issuance or incurrence
of any Indebtedness by Parent or any of its Subsidiaries, the aggregate amount
of cash received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by or on behalf of Parent or such Subsidiary in connection with such issuance or
incurrence, after deducting therefrom only (i) reasonable fees, commissions, and
expenses related thereto and required to be paid by Parent or such Subsidiary in
connection with such issuance or incurrence, (ii) taxes paid or payable to any
taxing authorities by Parent or such Subsidiary in connection with such issuance
or incurrence, in each case to the extent, but only to the extent, that the
amounts so deducted are, at the time of receipt of such cash, actually paid or
payable to a Person that is not an Affiliate of Parent or any of its
Subsidiaries, and are properly attributable to such transaction.
          “Net Liquidation Percentage” means the percentage of the book value of
Borrowers’ Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory net of all associated costs and expenses of such
liquidation, such percentage to be as determined from time to time by an
appraisal company selected by Agent.
          “Net Orderly Liquidation Value” means, with respect to Equipment of
any Person, the orderly liquidation value thereof as determined in a manner
acceptable to Agent by an appraiser acceptable to Agent, net of all costs of
liquidation thereof.
          “Non-CFC Subsidiary” means any Subsidiary of Parent that is not a CFC.
          “Non-Loan Party” means any Subsidiary of Parent that is not a Loan
Party.
          “Obligations” means (a) all loans, Advances, debts, principal,
interest (including any interest that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), contingent reimbursement or
indemnification obligations with respect to Reimbursement Undertaking or with
respect to Letters of Credit, premiums, liabilities (including all amounts
charged to the Loan Account pursuant to the Agreement), obligations (including
indemnification obligations), fees (including the fees provided for in the Fee
Letter), Lender Group Expenses (including any fees or expenses that accrue after
the commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
guaranties, covenants, and duties of any kind and description owing by Borrowers
to the Lender Group pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all other expenses or other
amounts that Borrowers are required to pay or reimburse by the Loan Documents or
by law or otherwise in connection with the Loan Documents, and (b) all Bank
Product Obligations. Any reference in the Agreement or in the Loan Documents to
the Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.
          “OFAC” means The Office of Foreign Assets Control of the U.S.
Department of the Treasury.
          “Originating Lender” has the meaning specified therefor in
Section 13.1 (e) of the Agreement.

20

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Overadvance” has the meaning specified therefor in Section 2.5 of the
Agreement.
          “Parent” has the meaning specified therefor in the preamble to the
Agreement.
          “Participant” has the meaning specified therefor in Section 13.1(e) of
the Agreement.
          “Participant Register” has the meaning set forth in Section 13.1(i) of
the Agreement.
          “Patent Security Agreement” has the meaning specified therefor in the
Security Agreement.
          “Patriot Act” has the meaning specified therefor in Section 4.18 of
the Agreement.
          “Payoff Date” means the first date on which all of the Obligations are
paid in full and the Revolver Commitments of the Lenders are terminated.
          “Permitted Convertible Note Debt” means the Indebtedness evidenced by
convertible notes and an indenture, the terms and conditions of which are
substantially similar to the terms and conditions described on Exhibit P-l, as
determined by Agent in its Permitted Discretion, which determination shall be
evidenced by a certificate executed and delivered by Agent to Borrowers.
          “Permitted Discretion” means a determination made in the exercise of
reasonable (from the perspective of a secured lender) business judgment.
          “Permitted Dispositions” means:
          (a) sales, abandonment, or other dispositions of: (i) Equipment (other
than Eligible Equipment) that is substantially worn, damaged, obsolete or no
longer used in the ordinary course of business; and (ii) Eligible Equipment that
is substantially worn, damaged, obsolete or no longer used in the ordinary
course of business so long as: (A) both before and after giving effect to any
such sale or other disposition, no Default or Event of Default has occurred and
is continuing, (B) both before and after giving effect to any such sale or other
disposition, Excess Availability is greater than $10,000,000, (C) Administrative
Borrower provides Agent with prior written notice of such sale or other
disposition, (D) the aggregate appraised value of all Eligible Equipment sold or
otherwise disposed of in any fiscal year of Parent does not exceed $1,000,000,
          (b) sales of Inventory to buyers 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 the Agreement or the other Loan Documents,
          (d) the licensing, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business,
          (e) the granting of Permitted Liens,
          (f) the sale or discount, in each case without recourse, of Accounts
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof,
          (g) any involuntary loss, damage or destruction of property,
          (h) any involuntary condemnation, seizure or taking, by exercise of
the power of eminent domain or otherwise, or confiscation or requisition of use
of property,
          

21

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (i) the leasing or subleasing of assets of Parent or its Subsidiaries
in the ordinary course of business,
          (j) the sale or issuance of Stock (other than Prohibited Preferred
Stock),
          (k) the lapse of registered patents, trademarks and other intellectual
property of Parent and its Subsidiaries to the extent not economically desirable
in the conduct of their business and so long as such lapse is not materially
adverse to the interests of the Lenders,
          (1) the making of a Permitted Investment, and
          (m) so long as no Event of Default has occurred and is continuing,
dispositions of assets (other than Eligible Equipment, Accounts, intellectual
property, licenses, Stock of Subsidiaries of Parent, or Material Contracts) not
otherwise permitted in clauses (a) through (1) above so long as made at fair
market value and the aggregate fair market value of all assets disposed of in
all such dispositions in any fiscal year (including the proposed disposition)
would not exceed $2,000,000.
          “Permitted Indebtedness” means:
          (a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,
          (b) Indebtedness set forth on Schedule 4.19 and any Refinancing
Indebtedness in respect of such Indebtedness,
          (c) Permitted Purchase Money Indebtedness and any Refinancing
Indebtedness in respect of such Indebtedness,
          (d) endorsement of instruments or other payment items for deposit,
          (e) Indebtedness consisting of (i) unsecured guarantees incurred in
the ordinary course of business with respect to surety and appeal bonds,
performance bonds, bid bonds, appeal bonds, completion guarantee and similar
obligations; and (ii) unsecured guarantees arising with respect to customary
indemnification obligations to purchasers in connection with Permitted
Dispositions,
          (f) Indebtedness incurred in the ordinary course of business under
performance, surety, statutory, and appeal bonds,
          (g) Indebtedness owed to any Person providing property, casualty,
liability, or other insurance to Parent or any of its Subsidiaries, so long as
the amount of such Indebtedness is not in excess of the amount of the unpaid
cost of, and shall be incurred only to defer the cost of, such insurance for the
year in which such Indebtedness is incurred and such Indebtedness is outstanding
only during such year,
          (h) the incurrence by Parent or its Subsidiaries of Indebtedness under
Hedge Agreements that are incurred for the bona fide purpose of hedging the
interest rate or foreign currency risk associated with Parent’s and its
Subsidiaries’ operations and not for speculative purposes,
          (i) unsecured Indebtedness incurred in respect of netting services,
overdraft protection, and other like services, in each case, incurred in the
ordinary course of business,
          (j) Indebtedness composing Permitted Investments,
          

22

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (k) the Subordinated Debt and any Refinancing Indebtedness in respect
thereof;
          (1) the Permitted Convertible Note Debt so long as Parent receives Net
Cash Proceeds therefrom in an amount not less than $60,000,000 at the time such
Indebtedness is incurred; provided, however, that no principal payments shall be
made by Parent or any of its Subsidiaries on account of such Indebtedness prior
to the Payoff Date; provided, further, however, that such principal payment
prohibition shall not apply to any cash payments made in lieu of issuance of
fractional shares upon conversion of any of the notes that constitute Permitted
Convertible Note Debt so long as the aggregate amount of all such cash payments
does not exceed $250,000; and
          (m) Indebtedness incurred by Non-Loan Parties in an aggregate amount
not to exceed $10,000,000; provided, however, that no Loan Party shall guaranty
or otherwise be liable on account of such Indebtedness.
          “Permitted Intercompany Advances” means loans made by (a) a Loan Party
to another Loan Party, (b) a Non-Loan Party to another Non-Loan Party, (c) a
Non-Loan Party to a Loan Party, so long as the parties thereto are party to the
Intercompany Subordination Agreement.
          “Permitted Investments” means:
          (a) Investments in cash and Cash Equivalents,
          (b) Investments in negotiable instruments deposited or to be deposited
for collection in the ordinary course of business,
          (c) advances made in connection with purchases of goods or services in
the ordinary course of business,
          (d) Investments received in settlement of amounts due to any Loan
Party or any of its Subsidiaries effected in the ordinary course of business or
owing to any Loan Party or any of its Subsidiaries as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of a Loan Party or its Subsidiaries,
          (e) Investments owned by any Loan Party or any of its Subsidiaries on
the Closing Date and set forth on Schedule P-l,
          (f) guarantees permitted under the definition of Permitted
Indebtedness,
          (g) Permitted Intercompany Advances,
          (h) Stock or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due or owing to a Loan
Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise
outside the ordinary course of business) or as security for any such
Indebtedness or claims,
          (i) deposits of cash made in the ordinary course of business to secure
performance of operating leases,
          (j) non-cash loans to employees, officers, and directors of Parent or
any of its Subsidiaries for the purpose of purchasing Stock in Parent so long as
the proceeds of such loans are used in their entirety to purchase such stock in
Parent,
          

23

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (k) Investments in the form of Hedge Agreements that are permitted
under the Agreement,
          (1) so long as no Default or Event of Default has occurred and is
continuing at the time of any such Investment or would result therefrom,
Investments in joint ventures to the extent that the aggregate amount invested
outstanding at any time does not exceed $2,000,000,
          (m) so long as no Event of Default has occurred and is continuing or
would result therefrom, any other Investments in an aggregate amount not to
exceed $2,000,000 in the aggregate amount outstanding at any time.
          “Permitted Liens” means
          (a) Liens held by Agent to secure the Obligations,
          (b) Liens for unpaid taxes, assessments, or other governmental charges
or levies that either (i) are not yet delinquent, or (ii) do not have priority
over Agent’s Liens and the underlying taxes, assessments, or charges or levies
are the subject of Permitted Protests,
          (c) judgment Liens arising solely as a result of the existence of
judgments, orders, or awards that do not constitute an Event of Default under
Section 8.3 of the Agreement,
          (d) Liens set forth on Schedule P-2; provided, however, that to
qualify as a Permitted Lien, any such Lien described on Schedule P-2 shall only
secure the Indebtedness that it secures on the Closing Date and any Refinancing
Indebtedness in respect thereof,
          (e) the interests of lessors under operating leases and non-exclusive
licensors under license agreements,
          (f) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as (i) such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, and (ii) such Lien only secures
the Indebtedness that was incurred to acquire the asset purchased or acquired or
any Refinancing Indebtedness in respect thereof,
          (g) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests,
          (h) Liens on amounts deposited to secure Parent’s and its Subsidiaries
obligations in connection with worker’s compensation or other unemployment
insurance,
          (i) Liens on amounts deposited to secure Parent’s and its Subsidiaries
obligations in connection with the making or entering into of bids, tenders, or
leases in the ordinary course of business and not in connection with the
borrowing of money,
          (j) Liens on amounts deposited to secure Parent’s and its Subsidiaries
reimbursement obligations with respect to surety or appeal bonds obtained in the
ordinary course of business,
          (k) with respect to any Real Property, easements, rights of way, and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof,
          

24

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

 

CONFIDENTIAL TREATMENT REQUESTED
          (1) non-exclusive licenses of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business,
          (m) Liens that are replacements of Permitted Liens to the extent that
the original Indebtedness is the subject of permitted Refinancing Indebtedness
and so long as the replacement Liens only encumber those assets that secured the
original Indebtedness,
          (n) rights of setoff or bankers’ liens upon deposits of cash in favor
of banks or other depository institutions, solely to the extent incurred in
connection with the maintenance of such deposit accounts in the ordinary course
of business,
          (o) Liens granted in the ordinary course of business on the unearned
portion of insurance premiums securing the financing of insurance premiums to
the extent the financing is permitted under the definition of Permitted
Indebtedness,
          (p) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods, and
          (q) any interest or title of a licensor or lessor under any lease or
license permitted by the Agreement.
          “Permitted Notes Redemption” means the optional redemption or
repurchase of the Subordinated Notes by Parent so long as: (a) such redemption
or repurchase is permitted by applicable law and the Indentures (as applicable),
(b) the purchase price is not in excess of the par value of the Subordinated
Notes being redeemed or repurchased, (c) no Default or Event of Default shall
have occurred and be continuing or would result therefrom, and (d) the sum of
Excess Liquidity plus Qualified Cash both before and immediately after giving
effect to such redemption or repurchase is greater than $10,000,000.
          “Permitted Protest” means the right of Parent or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on Parent’s or its Subsidiaries’
books and records in such amount as is required under GAAP, (b) any such protest
is instituted promptly and prosecuted diligently by Parent or its Subsidiary, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of Agent’s Liens.
          “Permitted Purchase Money Indebtedness” means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of
$10,000,000.
          “Person” means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
          “Preferred Stock” means, as applied to the Stock of any Person, the
Stock of any class or classes (however designated) that is preferred with
respect to the payment of dividends, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
shares of Stock of any other class of such Person.

25

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Prohibited Preferred Stock” means any Preferred Stock that by its
terms is mandatorily redeemable or subject to any other payment obligation
(including any obligation to pay dividends, other than dividends of shares of
Stock (so long as such Stock would not otherwise constitute Prohibited Preferred
Stock)) on or before a date that is less than 1 year after the Maturity Date,
or, on or before the date that is less than 1 year after the Maturity Date, is
redeemable at the option of the holder thereof for cash or assets or securities
(other than distributions in kind of shares of Stock (so long as such Stock
would not otherwise constitute Prohibited Preferred Stock)).
          “Projections” means Parent’s forecasted (a) balance sheets, (b) profit
and loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Parent’s historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
          “Pro Rata Share” means, as of any date of determination:
          (a) with respect to a Lender’s obligation to make Advances and right
to receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (i) prior to the Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender’s Revolver
Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and
(ii) from and after the time that the Revolver Commitments have been terminated
or reduced to zero, the percentage obtained by dividing (y) the outstanding
principal amount of such Lender’s Advances by (z) the outstanding principal
amount of all Advances,
          (b) with respect to a Lender’s obligation to participate in Letters of
Credit and Reimbursement Undertakings, to reimburse the Issuing Lender, and
right to receive payments of fees with respect thereto, (i) prior to the
Revolver Commitments being terminated or reduced to zero, the percentage
obtained by dividing (y) such Lender’s Revolver Commitment, by (z) the aggregate
Revolver Commitments of all Lenders, and (ii) from and after the time that the
Revolver Commitments have been terminated or reduced to zero, the percentage
obtained by dividing (y) the outstanding principal amount of such Lender’s
Advances by (z) the outstanding principal amount of all Advances; provided,
however, that if all of the Advances have been repaid in full and Letters of
Credit remain outstanding, Pro Rata Share under this clause shall be determined
based upon subclause (i) of this clause as if the Revolver Commitments had not
been terminated or reduced to zero and based upon the Revolver Commitments as
they existed immediately prior to their termination or reduction to zero, and
          (c) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 15.7 of the
Agreement), (i) prior to the Revolver Commitments being terminated or reduced to
zero, the percentage obtained by dividing (y) such Lender’s Revolver Commitment
by (z) the aggregate amount of Revolver Commitments of all Lenders, and
(ii) from and after the time that the Revolver Commitments have been terminated
or reduced to zero, the percentage obtained by dividing (y) the outstanding
principal amount of such Lender’s Advances, by (z) the outstanding principal
amount of all Advances; provided, however, that if all of the Advances have been
repaid in full and Letters of Credit remain outstanding, Pro Rata Share under
this clause shall be determined based upon subclause (i) of this clause as if
the Revolver Commitments had not been terminated or reduced to zero and based
upon the Revolver Commitments as they existed immediately prior to their
termination or reduction to zero.
          “Protective Advances” has the meaning specified therefor in Section
2.3(d)(i) of the Agreement.
          “Purchase Money Indebtedness” means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the

26

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

 

CONFIDENTIAL TREATMENT REQUESTED
acquisition of any fixed assets for the purpose of financing all or any part of
the acquisition cost thereof.
          “Qualified Cash” means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of Parent and its Subsidiaries that is in
Deposit Accounts or in Securities Accounts, or any combination thereof, and
which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States.
          “Real Property” means any estates or interests in real property now
owned or hereafter acquired by Parent or its Subsidiaries and the improvements
thereto.
          “Real Property Collateral” means the Real Property identified on
Schedule R-l and any Real Property hereafter acquired by any Loan Party.
          “Record” means information that is inscribed on a tangible medium or
that is stored in an electronic or other medium and is retrievable in
perceivable form.
          “Refinancing Indebtedness” means refinancings, renewals, or extensions
of Indebtedness so long as:
          (a) such refinancings, renewals, or extensions do not result in an
increase in the principal amount of the Indebtedness so refinanced, renewed, or
extended, other than by the amount of premiums paid thereon and the fees and
expenses incurred in connection therewith and by the amount of unfunded
commitments with respect thereto,
          (b) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity (measured as of the refinancing,
renewal, or extension) of the Indebtedness so refinanced, renewed, or extended,
nor are they on terms or conditions that, taken as a whole, are or could
reasonably be expected to be materially adverse to the interests of the Lenders,
          (c) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended Indebtedness, and
          (d) the Indebtedness that is refinanced, renewed, or extended is not
recourse to any Person that is liable on account of the Obligations other than
those Persons which were obligated with respect to the Indebtedness that was
refinanced, renewed, or extended.
          “Reimbursement Undertaking” has the meaning specified therefor in
Section 2.11(a) of the Agreement.
          “Related Fund” means, with respect to any Lender that is an investment
fund, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
          “Remedial Action” means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-

27

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

 

CONFIDENTIAL TREATMENT REQUESTED
remedial studies, investigations, or post-remedial operation and maintenance
activities, or (e) conduct any other actions with respect to Hazardous Materials
required by Environmental Laws.
          “Replacement Lender” has the meaning specified therefor in Section
2.13(b) of the Agreement.
          “Report” has the meaning specified therefor in Section 15.16 of the
Agreement.
          “Required Availability” means that the sum of (a) Excess Availability,
plus (b) Qualified Cash exceeds $30,000,000.
          “Required Lenders” means, at any time, Lenders whose aggregate Pro
Rata Shares (calculated under clause (c) of the definition of Pro Rata Shares)
exceed 50%; provided, however, that at any time there are 2 or more Lenders,
“Required Lenders” must include at least 2 Lenders.
          “Reserve Percentage” means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as “eurocurrency liabilities”) of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
          “Revolver Commitment” means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-l or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1 of the Agreement.
          “Revolver Usage” means, as of any date of determination, the sum of
(a) the amount of outstanding Advances (including Swing Loans), plus (b) the
amount of the Letter of Credit Usage.
          “Sanctioned Entity” means (a) a country or a government of a country,
(b) an agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.
          “Sanctioned Person” means a person named on the list of Specially
Designated Nationals maintained by OFAC.
          “S&P” has the meaning specified therefor in the definition of Cash
Equivalents.
          “SEC” means the United States Securities and Exchange Commission and
any successor thereto.
          “Securities Account” means a securities account (as that term is
defined in the Code).
          “Securities Act” means the Securities Act of 1933, as amended from
time to time, and any successor statute.
          “Security Agreement” means a security agreement, dated as of even date
with the Agreement, in form and substance reasonably satisfactory to Agent,
executed and delivered by Borrowers and Guarantors to Agent.

28

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

 

CONFIDENTIAL TREATMENT REQUESTED
          “Settlement” has the meaning specified therefor in Section 2.3(e)(i)
of the Agreement.
          “Settlement Date” has the meaning specified therefor in
Section 2.3(e)(i) of the Agreement.
          “Solvent” means, with respect to any Person on a particular date,
that, at fair valuations, the sum of such Person’s assets is greater than all of
such Person’s debts.
          “Stock” means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other “equity security” (as such term is defined in Rule 3a l1-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
          “Subordinated Debt” means the Indebtedness of the Parent issued
pursuant to the Subordinated Notes and the Indentures.
          “Subordinated Notes” means, collectively, the 21/2% Convertible
Subordinated Notes due 2010, and the 21/2% Convertible Senior Subordinated Notes
due 2010, issued pursuant to the Indentures.
          “Subsidiary” of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
          “Suppressed Availability” means, as of any date of determination, the
result (so long as it is a positive number) of (a) the Borrowing Base as of such
date, minus (b) the Maximum Revolver Amount as of such date; if the result of
the foregoing is a negative number, then Suppressed Availability is zero.
          “Swing Lender” means WFF or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent agrees, in such Lender’s
sole discretion, to become the Swing Lender under Section 2.3(b) of the
Agreement.
          “Swing Loan” has the meaning specified therefor in Section 2.3(b) of
the Agreement.
          “Taxes” means any taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein with respect
to such payments and all interest, penalties or similar liabilities with respect
thereto; provided, however, that Taxes shall exclude (i) any tax imposed on the
net income or net profits of any Lender or any Participant (including any branch
profits taxes) or any net worth or capital taxes imposed as a minimum tax in
lieu of a tax determined based upon the net income or net profits of any Lender
or any Participant, in each case imposed by the jurisdiction (or by any
political subdivision or taxing authority thereof) in which such Lender or such
Participant is organized or the jurisdiction (or by any political subdivision or
taxing authority thereof) in which such Lender’s or such Participant’s principal
office is located in each case as a result of a present or former connection
between such Lender or such Participant and the jurisdiction or taxing authority
imposing the tax (other than any such connection arising solely from such Lender
or such Participant having executed, delivered or performed its obligations or
received payment under, or enforced its rights or remedies under the Agreement
or any other Loan Document); (ii) taxes resulting from a Lender’s or a
Participant’s failure to comply with the requirements of Section 16(c) or (d) of
the Agreement, and (iii) any United States federal withholding taxes that would
be imposed on amounts payable to a

29

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

 

CONFIDENTIAL TREATMENT REQUESTED
Foreign Lender based upon the applicable withholding rate in effect at the time
such Foreign Lender becomes a party to the Agreement (or designates a new
lending office), except that Taxes shall include (A) any amount that such
Foreign Lender (or its assignor, if any) was previously entitled to receive
pursuant to Section 16(a) of this Agreement, if any, with respect to such
withholding tax at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office), and (B) additional United States
federal withholding taxes that may be imposed after the time such Foreign Lender
becomes a party to the Agreement (or designates a new lending office), as a
result of a change in law, rule, regulation, order or other decision with
respect to any of the foregoing by any Governmental Authority.
          “Tax Lender” has the meaning specified therefor in Section 14.2(a) of
the Agreement.
          “Trademark Security Agreement” has the meaning specified therefor in
the Security Agreement.
          “Underlying Issuer” means Wells Fargo or one of its Affiliates.
          “Underlying Letter of Credit” means a Letter of Credit that has been
issued by an Underlying Issuer.
          “United States” means the United States of America.
          “Unused Line Margin” means, as of any date of determination, the
percentage points set forth below based upon the Average Daily Excess
Availability for the immediately preceding calendar quarter, as determined by
Agent in its Permitted Discretion:

          Level   Average Daily Excess Availability   Unused Line Margin
I
  If Average Daily Excess Availability is greater than $25,000,000  
0.50 percentage points
 
       
II
  If Average Daily Excess Availability is greater than or equal to $10,000,000
but less than or equal to $25,000,000   0.625 percentage points
 
       
III
  If Average Daily Excess Availability is less than $10,000,000  
0.75 percentage points

                    ; provided, however, that for the period commencing on the
Closing Date through the end of October 31, 2009, the Unused Line Margin shall
be the percentage points specified for Pricing Level II as set forth in this
definition; provided, further, however, that if the Borrowers fail to provide
any reports or certifications required to determine the Average Daily Excess
Availability when due, the Unused Line Margin shall be set at the percentage
points specified for Pricing Level III until such reports or certifications are
delivered, on which date (but not retroactively), without constituting a waiver
of any Default or Event of Default occasioned by the failure to timely deliver
such reports or certifications, the Unused Line Margin shall be set at the
percentage based upon the calculation determined pursuant to such reports or
certifications. For purposes of the preceding sentence (and subject to the
forgoing provisos), at the end of each calendar quarter Agent will test the
Borrowers’ Average Daily Excess Availability, which amount will be based upon
reports and certifications delivered to Agent in accordance with the terms of
this Agreement. If any such reports or certifications are subsequently
determined to be incorrect in any material respect in a manner that

30

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

 

CONFIDENTIAL TREATMENT REQUESTED
would result in a lower Average Daily Excess Availability, Agent may increase
the Unused Line Margin retroactively to the beginning of the relevant quarter to
the extent that such error caused the applicable Unused Line Margin to be less
than the Unused Line Margin that would have been in effect if the error was not
made.
          “Voidable Transfer” has the meaning specified therefor in Section 17.8
of the Agreement.
          “Wells Fargo” means Wells Fargo Bank, National Association, a national
banking association.
          “WFF” means Wells Fargo Foothill, LLC, a Delaware limited liability
company.
          

31