Exhibit 10.1

Execution Copy

 

 

 

NEOPHOTONICS CORPORATION

REVOLVING CREDIT AND TERM LOAN AGREEMENT

DATED AS OF MARCH 21, 2013

COMERICA BANK

AS ADMINISTRATIVE AGENT AND LEAD ARRANGER

 

 

 

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TABLE OF CONTENTS

 

 

     Page  

1. DEFINITIONS

     1   

1.1 Certain Defined Terms

     1   

2. REVOLVING CREDIT

     25   

2.1 Commitment

     25   

2.2 Accrual of Interest and Maturity; Evidence of Indebtedness

     25   

2.3 Requests for and Refundings and Conversions of Advances

     25   

2.4 Disbursement of Advances

     27   

2.5 Swing Line

     28   

2.6 Interest Payments; Default Interest

     32   

2.7 Optional Prepayments

     32   

2.8 Base Rate Advance in Absence of Election or Upon Default

     33   

2.9 Revolving Credit Facility Fee

     33   

2.10 Mandatory Repayment of Revolving Credit Advances

     33   

2.11 Optional Reduction or Termination of Revolving Credit Aggregate Commitment

     34   

2.12 Use of Proceeds of Advances

     34   

3. LETTERS OF CREDIT

     35   

3.1 Letters of Credit

     35   

3.2 Conditions to Issuance

     35   

3.3 Notice

     36   

3.4 Letter of Credit Fees; Increased Costs

     36   

3.5 Other Fees

     37   

3.6 Participation Interests in and Drawings and Demands for Payment Under
Letters of Credit

     37   

3.7 Obligations Irrevocable

     39   

3.8 Risk Under Letters of Credit

     39   

3.9 Indemnification

     40   

3.10 Right of Reimbursement

     41   

4. TERM LOAN

     41   

4.1 Term Loan

     41   

4.2 Accrual of Interest and Maturity; Evidence of Indebtedness

     43   

4.3 Repayment of Principal

     44   

4.4 Term Loan Rate Requests; Refunding and Conversions of Advances of Term Loan

     44   

4.5 Base Rate Advance in Absence of Election or Upon Default

     44   

4.6 Interest Payments; Default Interest

     45   

4.7 Optional Prepayment of Term Loan

     45   

4.8 Mandatory Prepayment of Term Loan

     46   

4.9 Use of Proceeds

     47   

 

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5. CONDITIONS

     47   

5.1 Conditions to Initial Advances

     47   

5.2 Continuing Conditions

     49   

6. REPRESENTATIONS AND WARRANTIES

     49   

6.1 Corporate Authority

     49   

6.2 Due Authorization

     50   

6.3 Good Title; Leases; Assets; No Liens

     50   

6.4 Taxes

     50   

6.5 No Defaults

     50   

6.6 Enforceability of Agreement and Loan Documents

     50   

6.7 Compliance with Laws

     51   

6.8 Non-contravention

     51   

6.9 Litigation

     51   

6.10 Consents, Approvals and Filings, Etc

     51   

6.11 Agreements Affecting Financial Condition

     51   

6.12 No Investment Company or Margin Stock

     51   

6.13 ERISA

     52   

6.14 Conditions Affecting Business or Properties

     52   

6.15 Environmental and Safety Matters

     52   

6.16 Subsidiaries

     52   

6.17 Franchises, Patents, Copyrights, Tradenames, etc

     52   

6.18 Capital Structure

     53   

6.19 Accuracy of Information

     53   

6.20 Solvency

     53   

6.21 Employee Matters

     53   

6.22 No Misrepresentation

     53   

6.23 Corporate Documents and Corporate Existence

     53   

6.24 Intellectual Property

     54   

6.25 Inbound Licenses

     54   

7. AFFIRMATIVE COVENANTS

     54   

7.1 Financial Statements

     54   

7.2 Certificates; Other Information

     55   

7.3 Payment of Obligations

     56   

7.4 Conduct of Business and Maintenance of Existence; Compliance with Laws

     56   

7.5 Maintenance of Property; Insurance

     56   

7.6 Inspection of Property; Books and Records, Discussions

     56   

7.7 Notices

     57   

7.8 Hazardous Material Laws

     57   

7.9 Financial Covenants

     58   

7.10 Governmental and Other Approvals

     58   

7.11 Compliance with ERISA; ERISA Notices

     59   

7.12 Defense of Collateral

     59   

7.13 Future Subsidiaries; Additional Collateral

     59   

7.14 Accounts

     60   

7.15 Use of Proceeds

     61   

7.16 Further Assurances and Information

     61   

 

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7.17 Registration of Intellectual Property Rights

     61   

7.18 Consent of Inbound Licensors

     61   

7.19 Post-Closing Requirements

     62   

8. NEGATIVE COVENANTS

     62   

8.1 Limitation on Debt

     62   

8.2 Limitation on Liens

     64   

8.3 Acquisitions

     64   

8.4 Limitation on Mergers, Dissolution or Sale of Assets

     64   

8.5 Restricted Payments

     65   

8.6 Limitation on Capital Expenditures

     66   

8.7 Limitation on Investments, Loans and Advances

     66   

8.8 Transactions with Affiliates

     67   

8.9 Sale-Leaseback Transactions

     68   

8.10 Limitations on Other Restrictions

     68   

8.11 Prepayment of Debt

     68   

8.12 Amendment of Subordinated Debt Documents

     68   

8.13 Modification of Certain Agreements

     68   

8.14 Fiscal Year

     69   

9. DEFAULTS

     69   

9.1 Events of Default

     69   

9.2 Exercise of Remedies

     70   

9.3 Rights Cumulative

     71   

9.4 Waiver by the Borrower of Certain Laws

     71   

9.5 Waiver of Defaults

     71   

9.6 Set Off

     71   

10. PAYMENTS, RECOVERIES AND COLLECTIONS

     71   

10.1 Payment Procedure

     71   

10.2 Application of Proceeds of Collateral

     73   

10.3 Pro-rata Recovery

     73   

10.4 Treatment of a Defaulting Lender; Reallocation of Defaulting Lender’s
Fronting Exposure

     73   

11. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS

     74   

11.1 Reimbursement of Prepayment Costs

     74   

11.2 Eurodollar Lending Office

     75   

11.3 Circumstances Affecting LIBOR Rate Availability

     75   

11.4 Laws Affecting LIBOR Rate Availability

     75   

11.5 Increased Cost of Advances Carried at the LIBOR Rate

     75   

11.6 Capital Adequacy and Other Increased Costs

     76   

11.7 Right of Lenders to Fund through Branches and Affiliates

     76   

11.8 Margin Adjustment

     77   

 

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12. AGENT

     77   

12.1 Appointment of the Agent

     77   

12.2 Deposit Account with the Agent or any Lender

     77   

12.3 Scope of the Agent’s Duties

     78   

12.4 Successor Agent

     78   

12.5 Credit Decisions

     78   

12.6 Authority of the Agent to Enforce This Agreement

     79   

12.7 Indemnification of the Agent

     79   

12.8 Knowledge of Default

     79   

12.9 The Agent’s Authorization; Action by Lenders

     79   

12.10 Enforcement Actions by the Agent

     80   

12.11 Collateral Matters

     80   

12.12 The Agents in their Individual Capacities

     80   

12.13 The Agent’s Fees

     80   

12.14 Documentation Agent or other Titles

     81   

12.15 No Reliance on the Agent’s Customer Identification Program

     81   

13. MISCELLANEOUS

     81   

13.1 Accounting Principles

     81   

13.2 Choice of Law and Venue

     81   

13.3 Intentionally Omitted

     81   

13.4 Interest

     82   

13.5 Closing Costs and Other Costs; Indemnification

     82   

13.6 Notices

     83   

13.7 Further Action

     83   

13.8 Successors and Assigns; Participations; Assignments

     83   

13.9 Counterparts

     86   

13.10 Amendment and Waiver

     86   

13.11 Confidentiality

     88   

13.12 Substitution or Removal of Lenders

     88   

13.13 Withholding Taxes

     89   

13.14 Taxes and Fees

     90   

13.15 WAIVER OF JURY TRIAL

     90   

13.16 Judicial Reference

     90   

13.17 USA Patriot Act Notice

     92   

13.18 Complete Agreement; Conflicts

     92   

13.19 Severability

     92   

13.20 Table of Contents and Headings; Section References

     92   

13.21 Construction of Certain Provisions

     92   

13.22 Independence of Covenants

     92   

13.23 Electronic Transmissions

     93   

13.24 Advertisements

     93   

13.25 Reliance on and Survival of Provisions

     93   

 

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EXHIBITS    A    Form of Request for Revolving Credit Advance B    Form of
Revolving Credit Note C    Form of Swing Line Note D    Form of Request For
Swing Line Advance E    Form of Notice Of Letters Of Credit F    Form of
Security Agreement G    Form of Borrowing Base Certificate H    Form of
Assignment Agreement I    Form of Guaranty J    Form of Covenant Compliance
Report K    Form of Swing Line Participation Certificate L    Form of Request
For Term Loan Advance M    Form of Term Note N    Form of Term Loan Rate Request
SCHEDULES 1.1    Applicable Margin Grid 1.2    Percentages and Allocations 1.3
   Compliance Information 5.1(c)    Jurisdictions in which to file financing
statements 6.3(b)    Owned and Leased Real Property 6.4    Taxes 6.7   
Compliance with Laws 6.9    Litigation 6.10    Consents, Approvals, Filings 6.13
   ERISA 6.15    Environmental Matters 6.16    Subsidiaries 6.17    Management
Agreements 6.19    Trade Names 6.20    Capital Structure 6.23    Union Contracts
or Agreements 6.26    Intellectual Property 6.27    Inbound Licenses 7.19   
Jurisdictions in Which Credit Parties are Qualified to do Business 8.1   
Existing Debt 8.2    Existing Liens 8.7    Existing Investments 8.8   
Transactions with Affiliates 8.10    Existing Restrictions 13.6    Notices

 

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REVOLVING CREDIT AND TERM LOAN AGREEMENT

This Revolving Credit and Term Loan Agreement (“Agreement”) is made as of the
21st day of March, 2013, by and among the financial institutions from time to
time signatory hereto (individually a “Lender,” and any and all such financial
institutions collectively the “Lenders”), Comerica Bank, as the Administrative
Agent for the Lenders (in such capacity, the “Agent”), Lead Arranger, and
NeoPhotonics Corporation, a Delaware corporation (“Borrower”).

RECITALS

A. The Borrower has requested that Comerica Bank and the other Lenders extend to
it credit and letters of credit on the terms and conditions set forth herein.

B. The Lenders are prepared to extend such credit as aforesaid, but only the
terms and conditions set forth in this Agreement.

The Borrower, the Agent and Lenders do hereby agree as follows:

1. DEFINITIONS.

1.1 Certain Defined Terms. For the purposes of this Agreement the following
terms will have the following meanings:

“Account(s)” shall mean any account or account receivable as defined under the
UCC, including without limitation, with respect to any Person, any right of such
Person to payment for goods sold or leased or for services rendered.

“Account Debtor” shall mean the party who is obligated on or under any Account.

“Acquisition” shall mean any acquisition by the Borrower or any Subsidiary of
all or substantially all of the assets of another Person, or of a division or
line of business of another Person, or any Equity Interests of another Person.

“Adjusted EBITDA” shall mean, as of any date of determination, Net Income for
the four quarter period ending on such date plus, without duplication and only
to the extent reflected as a charge or reduction of Net Income for such period
and not included in Net Income pursuant to the definition thereof, the sum of
(a) Interest Expense, (b) Income Taxes, (c) depreciation and amortization
expense, (d) non-cash charges (credits) for the fair value of stock options,
stock appreciation units, employee stock purchase rights and restricted stock
units and other stock awards granted to former or current employees, officers,
directors and consultants, (e) the non-cash amortization of purchased intangible
assets acquired under prior Acquisitions, the Rohm Acquisition or Permitted
Acquisitions (f) the amount of various adjustments related to the Borrower’s
Acquisition of the Santur Corporation (as reflected in Borrower’s prior
financial statements) and similar adjustments for the Rohm Acquisition and
Permitted Acquisitions, (g) costs for due diligence, legal, accounting,
integration and other reasonable and customary closing costs relating to prior
Acquisitions, the Rohm Acquisition and Permitted Acquisitions, (h) goodwill
impairment charges, (i) Integration Costs, (j) following the consummation of the
Rohm Acquisition, for any fiscal period during which, on the first day thereof,
the Rohm Acquisition had not occurred, adjustments on a pro forma basis to give
effect to such Acquisition on the first day of the relevant fiscal period, and
(k) the amount of any other adjustments taken or made by the Borrower on a basis
consistent with the methodology employed by the Borrower in its prior financial
reporting and disclosed by the Borrower in its financial statements in
compliance with all applicable securities laws (including without limitation
Regulation G, as promulgated by the Securities and Exchange Commission),
provided, however, that the amount and nature of each of the foregoing
adjustments under clauses (a) through (k) of this definition shall be acceptable
to Agent and the Majority Lenders in their sole discretion, all of the foregoing
determined on a Consolidated basis.

 

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“Advance(s)” shall mean, as the context may indicate, a borrowing requested by
the Borrower, and made by the Revolving Credit Lenders under Section 2.1 hereof,
the Swing Line Lender under Section 2.5 hereof or the Term Loan Lenders under
Section 4.1 hereof, including without limitation any readvance, refunding or
conversion of such borrowing pursuant to Section 2.3, 2.5 or 4.4 hereof, and any
advance deemed to have been made in respect of a Letter of Credit under
Section 3.6(c) hereof, and shall include, as applicable, a Eurodollar-based
Advance, a Base Rate Advance and a Quoted Rate Advance.

“Affected Lender” shall have the meaning set forth in Section 13.12 hereof.

“Affiliate” shall mean, with respect to any Person, any Person that owns or
controls directly or indirectly such Person, any Person that controls or is
controlled by or is under common control with such Person, and each of such
Person’s senior executive officers, directors, and partners.

“Agent” shall have the meaning set forth in the preamble, and include any
successor agents appointed in accordance with Section 12.4 hereof.

“Agent’s Correspondent” shall mean for Eurodollar-based Advances, the Agent’s
Grand Cayman Branch (or for the account of said branch office, at the Agent’s
main office in Detroit, Michigan, United States).

“Agreement” shall mean this Revolving Credit and Term Loan Agreement, all
concurrent or subsequent Exhibits and Schedules to this Revolving Credit and
Term Loan Agreement, and all extensions, amendments, modifications and
alterations thereof or thereto, in writing, from time to time.

“Applicable Fee Percentage” shall mean, as of any date of determination thereof,
the applicable percentage used to calculate certain of the fees due and payable
hereunder, determined by reference to the appropriate columns in the Pricing
Matrix attached to this Agreement as Schedule 1.1.

“Applicable Interest Rate” shall mean, (i) with respect to each Revolving Credit
Advance and Term Loan Advance, the Eurodollar-based Rate or the Base Rate, and
(ii) with respect to each Swing Line Advance, the Base Rate or, if made
available to the Borrower by the Swing Line Lender at its option, the Quoted
Rate, in each case as selected by the Borrower from time to time subject to the
terms and conditions of this Agreement.

“Applicable Margin” shall mean, as of any date of determination thereof, the
applicable interest rate margin, determined by reference to the appropriate
columns in the Pricing Matrix attached to this Agreement as Schedule 1.1, such
Applicable Margin to be adjusted solely as specified in Section 11.8 hereof.

“Asset Sale” shall mean the sale, transfer or other disposition by any Credit
Party of any asset (other than the sale or transfer of less than one hundred
percent (100%) of the stock or other ownership interests of any Subsidiary and
other than the issuance of new Equity Interests) to any Person (other than to
any Credit Party), excluding such sales transfer or other dispositions of the
type described in clauses (a), (b), (f), (h), and (j) of Section 8.4 hereof.

“Assignment Agreement” shall mean an Assignment Agreement substantially in the
form of Exhibit H hereto.

“Authorized Signer” shall mean each person who has been authorized by the
Borrower to execute and deliver any requests for Advances hereunder pursuant to
a written authorization delivered to the Agent and whose signature card or
incumbency certificate has been received by the Agent.

“Bankruptcy Code” shall mean Title 11 of the United States Code and the rules
promulgated thereunder.

 

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“Base Rate” shall mean for any day, that rate of interest which is equal to the
sum of the Applicable Margin plus the greatest of (a) the Prime Rate for such
day, (b) the Federal Funds Effective Rate in effect on such day, plus one
percent (1.0%), and (c) the Daily Adjusting LIBOR Rate plus one percent (1.0%);
provided, however, for purposes of determining the Base Rate during any period
that LIBOR Rate is unavailable as determined under Sections 11.3 or 11.4 hereof,
the Base Rate shall be determined using, for clause (c) hereof, the Daily
Adjusting LIBOR Rate in effect immediately prior to the LIBOR Rate becoming
unavailable pursuant to Sections 11.3 or 11.4.

“Base Rate Advance” shall mean an Advance which bears interest at the Base Rate.

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

“Borrowing Base” shall mean, as of any date of determination thereof, an amount
equal to eighty percent (80%) of Eligible Accounts; provided that (x) the
Borrowing Base shall be determined on the basis of the most current Borrowing
Base Certificate required or permitted to be submitted hereunder, and (y) the
amount determined as the Borrowing Base shall be subject to, without
duplication, any reserves for contras/offsets, drop ship receivables, potential
offsets due to customer deposits, discount arrangements, chargebacks, disputed
accounts (or potential chargebacks or disputed accounts), and such other
reserves as reasonably established by the Agent, at the direction or with the
concurrence of the Majority Revolving Lenders from time to time, including,
without limitation any reserves or other adjustments established by the Agent or
the Majority Revolving Credit Lenders on the basis of any subsequent collateral
audits conducted hereunder, all in accordance with ordinary and customary
asset-based lending standards, as reasonably determined by the Agent and the
Majority Revolving Credit Lenders.

“Borrowing Base Certificate” shall mean a borrowing base certificate, in
substantially the form of Exhibit G attached hereto, executed by a Responsible
Officer of the Borrower.

“Borrowing Base Obligors” shall mean the Borrower and the Significant Domestic
Subsidiaries.

“Business Day” shall mean any day other than a Saturday or a Sunday on which
commercial banks are open for domestic and international business (including
dealings in foreign exchange) in Detroit, Michigan and New York, New York, and
in the case of a Business Day which relates to a Eurodollar-based Advance, on
which dealings are carried on in the London interbank eurodollar market.

“Capital Expenditures” shall mean, for any period, with respect to any Person
(without duplication), the aggregate of all expenditures incurred by such Person
and its Subsidiaries during such period for the acquisition or leasing (pursuant
to a Capitalized Lease) of fixed or capital assets or additions to equipment,
plant and property that should be capitalized under GAAP on a consolidated
balance sheet of such Person and its Subsidiaries.

“Capitalized Lease” shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) with respect to which the discounted
present value of the rental obligations of such Person as lessee thereunder, in
conformity with GAAP, is required to be capitalized on the balance sheet of that
Person.

“Cash” shall mean lawful money denominated in U.S. Dollars (“$”) and Cash
Equivalents, which in each case shall be unrestricted and shall not be subject
to any Lien other than a Lien in favor of Agent for the benefit of the Lenders.

“Cash Equivalents” shall mean:

(a) Marketable direct obligations issued or unconditionally guaranteed by the
United States of America, or any agency thereof, and maturing within one year
from the date of acquisition;

(b) Marketable obligations of a state or commonwealth of the United States or
the obligations of the District of Columbia or any possession of the United
States, or any political subdivision of any of the foregoing, which are
described in Section 103(a) of the Internal Revenue Code and are graded in any
of the highest three (3) major grades as determined by at least one rating
agency acceptable to Agent; or secured, as to payments of principal and
interest, by a letter of credit provided by a financial institution or insurance
provided by a bond insurance company which in each case is itself or its debt is
rated in one of the highest three (3) major grades as determined by at least one
rating agency acceptable to Agent, and in each case maturing within one year
from the date of acquisition;

 

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(c) Banker’s acceptances, commercial accounts, demand deposit accounts,
certificates of deposit, other time deposits or depository receipts issued by or
maintained with Agent or a Lender or any of their respective Affiliates, or any
bank, trust company, savings and loan association, savings bank or other
financial institution, whether foreign or domestic, whose deposits (in the case
of any U.S. financial institution) are insured by the Federal Deposit Insurance
Corporation and whose reported capital and surplus equal at least $1,000,000;

(d) For a period of up to six (6) months following the Effective Date (but not
thereafter), any short term Investment permitted under the Borrower’s Investment
Policy (as defined in “Permitted Investments”), provided that such Investment is
held by the Borrower on the Effective Date and that promptly following
Borrower’s ability to do so without breakage charges or similar costs or
penalties, Borrower converts such Investment to an Investment permitted under
clauses (a) through (c) hereof; and

(e) Any fund or other pooling arrangement which exclusively purchases and holds
the investments permitted under (a) through (d) above.

“Change in Law” shall mean the occurrence, after the Effective Date, of any of
the following: (i) the adoption or introduction of, or any change in any
applicable law, treaty, rule or regulation (whether domestic or foreign) now or
hereafter in effect and whether or not applicable to any Lender or Agent on such
date, or (ii) any change in interpretation, administration or implementation of
any such law, treaty, rule or regulation by any Governmental Authority, or
(iii) the issuance, making or implementation by any Governmental Authority of
any interpretation, administration, request, regulation, guideline, or directive
(whether or not having the force of law), including any risk-based capital
guidelines. For purposes of this definition, (x) a change in law, treaty, rule,
regulation, interpretation, administration or implementation shall include,
without limitation, any change made or which becomes effective on the basis of a
law, treaty, rule, regulation, interpretation administration or implementation
then in force, the effective date of which change is delayed by the terms of
such law, treaty, rule, regulation, interpretation, administration or
implementation, (y) the Dodd-Frank Wall Street Reform and Consumer Protection
Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations,
guidelines, interpretations or directives promulgated thereunder or issued in
connection therewith shall be deemed to be a “Change in “Law”, regardless of the
date enacted, adopted, issued or promulgated, whether before or after the
Effective Date and (z) all requests, rules, guidelines or directives promulgated
by the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States
regulatory authorities, in each case pursuant to Basel III, shall each be deemed
to be a “Change in Law”, regardless of the date enacted, adopted, issued or
implemented.

“Change in Control” shall mean a transaction in which any “person” or “group”
(within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended) becomes the “beneficial owner” (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended), directly or indirectly,
of a sufficient number of shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors, empowering
such “person” or “group” to elect a majority of the Board of Directors of the
Borrower, who did not have such power before such transaction.

“Collateral” shall mean all property or rights in which a security interest,
mortgage, lien or other encumbrance for the benefit of the Lenders is or has
been granted or arises or has arisen, under or in connection with this
Agreement, the other Loan Documents, or otherwise to secure the Indebtedness.

“Collateral Access Agreement” shall mean an agreement in form and substance
satisfactory to the Agent in its sole discretion, pursuant to which a mortgagee
or lessor of real property on which Collateral (including, without limitation,
books and records) is stored or otherwise located, or a warehouseman, processor
or other bailee of inventory or other property owned by any Loan Party, that
acknowledges the Liens under the Collateral Documents and subordinates or waives
any Liens held by such Person on such property and, includes such other
agreements with respect to the Collateral as the Agent may require in its sole
discretion, as the same may be amended, restated or otherwise modified from time
to time.

 

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“Collateral Documents” shall mean the Security Agreement, the Pledge Agreements,
the Collateral Access Agreements, and all other security documents (and any
joinders thereto) executed by any Loan Party in favor of the Agent on or after
the Effective Date, in connection with any of the foregoing collateral
documents, in each case, as such collateral documents may be amended or
otherwise modified from time to time.

“Comerica Bank” shall mean Comerica Bank, its successors or assigns.

“Commitments” shall mean the Revolving Credit Aggregate Commitment and the Term
Loan Aggregate Commitment.

“Condemnation Proceeds” shall mean the cash proceeds received by any Credit
Party in respect of any condemnation proceeding net of reasonable fees and
expenses (including without limitation attorneys’ fees and expenses) incurred in
connection with the collection thereof.

“Consolidated” (or “consolidated”) or “Consolidating” (or “consolidating”) shall
mean, when used with reference to any financial term in this Agreement, the
aggregate for two or more Persons of the amounts signified by such term for all
such Persons determined on a consolidated (or consolidating) basis in accordance
with GAAP, applied on a consistent basis. Unless otherwise specified herein,
“Consolidated” shall refer to the Borrower and its Subsidiaries, determined on a
Consolidated Basis and “Consolidating” shall refer to the Borrower and its
Subsidiaries on a Consolidating basis.

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

“Copyrights” shall have the meaning assigned to such term in the Security
Agreement.

“Covenant Compliance Report” shall mean the report to be furnished by the
Borrower to the Agent pursuant to Section 7.2(a) hereof, substantially in the
form attached hereto as Exhibit J and certified by a Responsible Officer of the
Borrower, in which report the Borrower shall set forth the information specified
therein and which shall include a statement of then applicable level for the
Applicable Margin and Applicable Fee Percentages as specified in Schedule 1.1
attached to this Agreement.

“Credit Parties” shall mean the Borrower and its Subsidiaries, and “Credit
Party” shall mean any one of them, as the context indicates or otherwise
requires.

“Daily Adjusting LIBOR Rate” shall mean for any day a per annum interest rate
which is equal to the quotient of the following:

 

  (a) the LIBOR Rate;

divided by

 

  (b) a percentage (expressed as a decimal) equal to 1.00 minus the maximum rate
on such date at which Agent is required to maintain reserves on “Euro-currency
Liabilities” as defined in and pursuant to Regulation D of the Board of
Governors of the Federal Reserve System or, if such regulation or definition is
modified, and as long as Agent is required to maintain reserves against a
category of liabilities which includes eurodollar deposits or includes a
category of assets which includes eurodollar loans, the rate at which such
reserves are required to be maintained on such category;

such sum to be rounded upward, if necessary, in the discretion of the Agent, to
the seventh decimal place.

“Debt” shall mean as to any Person, without duplication (a) all Funded Debt of a
Person, (b) all Guarantee Obligations of such Person, (c) all obligations of
such Person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person, (d) all indebtedness of such
Person arising in connection with any Hedging Transaction entered into by such
Person, (e) all recourse Debt of any partnership of which such Person is the
general partner, and (f) any Off Balance Sheet Liabilities.

 

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“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws of the United States or other applicable jurisdictions from
time to time in effect.

“Default” shall mean any event that with the giving of notice or the passage of
time, or both, would constitute an Event of Default under this Agreement.

“Defaulting Lender” shall mean any Lender that (a) has failed to (i) fund all or
any portion of its Advances within two (2) Business Days of the date such
Advances were required to be funded hereunder unless such Lender notifies the
Agent and the Borrower in writing that such failure is the result of such
Lender’s determination that one or more conditions precedent to funding (each of
which conditions precedent, together with any applicable default, shall be
specifically identified in such writing) has not been satisfied, or (ii) pay to
the Agent, any Issuing Lender, any Swing Line Lender or any other Lender any
other amount required to be paid by it hereunder (including in respect of its
participation in Letters of Credit or Swing Line Advances) within two
(2) Business Days of the date when due, (b) has notified the Borrower, the Agent
or any Issuing Lender or Swing Line Lender in writing that it does not intend to
comply with its funding obligations hereunder, or has made a public statement to
that effect (unless such writing or public statement is based on such Lender’s
good faith determination that a condition precedent to funding (which condition
precedent, together with any applicable default, shall be specifically
identified in such writing or public statement) has not been satisfied), (c) has
failed, within three Business Days after written request by the Agent or the
Borrower, to confirm in writing to the Agent and the Borrower that it will
comply with its prospective funding obligations hereunder (provided that such
Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon
receipt of such written confirmation by the Agent and the Borrower), or (d) has,
or has a direct or indirect parent company that has, (i) become the subject of a
proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver,
custodian, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or assets, including the Federal Deposit Insurance Corporation or any
other state or federal regulatory authority acting in such a capacity; provided
that a Lender shall not be a Defaulting Lender solely by virtue of the ownership
or acquisition of any equity interest in that Lender or any direct or indirect
parent company thereof by a Governmental Authority, so long as such ownership
interest does not result in or provide such Lender with immunity from the
jurisdiction of courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permit such Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts
or agreements made with such Lender. Any determination by the Agent that a
Lender is a Defaulting Lender under any one or more of clauses (a) through
(d) above shall be conclusive and binding absent manifest error, and such Lender
shall be deemed to be a Defaulting Lender upon delivery of written notice of
such determination to the Borrower, each Issuing Lender, each Swing Line Lender
and each Lender.

“Disclosure Letter” means the disclosure letter delivered to the Agent by the
Borrower on the Effective Date.

“Distribution” is defined in Section 8.5 hereof.

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

“Domestic Subsidiary” shall mean any Subsidiary of the Borrower incorporated or
organized under the laws of the United States of America, or any state or other
political subdivision thereof or which is considered to be a “disregarded
entity” for United States federal income tax purposes and which is not a
“controlled foreign corporation” as defined under Section 957 of the Internal
Revenue Code, in each case provided such Subsidiary is owned by the Borrower or
a Domestic Subsidiary of the Borrower, and “Domestic Subsidiaries” shall mean
any or all of them.

“Effective Date” shall mean the date on which all the conditions precedent set
forth in Sections 5.1 have been satisfied.

 

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“Electronic Transmission” shall mean each document, instruction, authorization,
file, information and any other communication transmitted, posted or otherwise
made or communicated by e-mail or E-Fax, or otherwise to or from an E-System or
other equivalent service.

“Eligible Accounts” shall mean an Account as to which the following is true and
accurate as of the date that such Account is included in the applicable
Borrowing Base Certificate:

(a) such Account arose in the ordinary course of the business of a Borrowing
Base Obligor out of either (i) a bona fide sale of Inventory by such Borrowing
Base Obligor, and in such case such Inventory has in fact been shipped to the
applicable Account Debtor or the Inventory has otherwise been accepted by the
applicable Account Debtor, or (ii) services performed by such Borrowing Base
Obligor under an enforceable contract (written or oral), and in such case such
services have in fact been performed for the applicable Account Debtor and
accepted by such Account Debtor;

(b) such Account represents a legally valid and enforceable claim which is due
and owing to a Borrowing Base Obligor by the applicable Account Debtor and for
such amount as is represented by the Borrower to the Agent in the applicable
Borrowing Base Certificate;

(c) it is evidenced by an invoice dated not later than three (3) Business Days
after the date of the delivery or shipment of the related Inventory giving rise
to such Account and not more than ninety (90) days have passed since the invoice
date corresponding to such Account (but one hundred twenty (120) days in the
case of Eligible Foreign Account Debtors) ;

(d) the unpaid balance of such Account (or portion thereof) that is included in
the applicable Borrowing Base Certificate is not subject to any defense or
counterclaim that has been asserted by the applicable Account Debtor, or any
setoff, contra account, credit, allowance or adjustment by the Account Debtor
because of returned, inferior or damaged Inventory or services, or for any other
reason, except for customary discounts allowed by the applicable Borrowing Base
Obligor in the ordinary course of business for prompt payment, and, to the
extent there is any agreement between the applicable Borrowing Base Obligor, the
related Account Debtor and any other Person, for any rebate, discount,
concession or release of liability in respect of such Account, in whole or in
part, the amount of such rebate, discount, concession or release of liability
shall be excluded from the Borrowing Base;

(e) the applicable Borrowing Base Obligor has granted to the Agent pursuant to
or in accordance with the Collateral Documents (except to the extent not
required to do so thereunder) a first priority perfected security interest in
such Account prior in right to all other Persons and such Account has not been
sold, transferred or otherwise assigned or encumbered by such Borrowing Base
Obligor, as applicable, to or in favor of any Person other than pursuant to or
in accordance with the Collateral Documents or this Agreement;

(f) it is not owing by any Account Debtor who, as of the date of determination,
has failed to pay thirty percent (30%) or more of the aggregate amount of its
Accounts owing to any Borrowing Base Obligor within ninety (90) days since the
original invoice date corresponding to such Accounts (within one hundred twenty
(120) days since the original invoice date corresponding to any Accounts of
Foreign Account Debtors);

(g) it is not an Account owing by any Account Debtor which when aggregated with
all other Accounts owing by such Account Debtor would cause the Borrowing Base
Obligors’ Accounts owing from such Account Debtor to exceed an amount equal to
twenty percent (20%) (fifty percent (50%) in the case of Accounts owing by
Shenzhen Huawei Technologies Co., Ltd.) of the Borrowing Base Obligors’
aggregate Eligible Accounts owing from all Account Debtors, to the extent such
obligations exceed the aforementioned percentage;

(h) such Account is not represented by any note, trade acceptance, draft or
other negotiable instrument or by any chattel paper, except to the extent any
such note, trade acceptance, draft, other negotiable instrument or chattel paper
has been endorsed and delivered by any Borrowing Base Obligor pursuant to or in
accordance with the Collateral Documents or this Agreement and/or otherwise in a
manner satisfactory to the Agent on or prior to such Account’s inclusion in any
applicable Borrowing Base Certificate;

 

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(i) the Borrowing Base Obligors have not received, with respect to such Account,
any notice of the dissolution, liquidation, termination of existence,
insolvency, business failure, appointment of a receiver for any part of the
property of, assignment for the benefit of creditors by, or the filing of a
petition in bankruptcy or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against, such Account Debtor;

(j) it is not an account billed in advance, payable on delivery, for consigned
goods, for guaranteed sales, for unbilled sales, payable at a future date,
bonded or insured by a surety company or subject to a retainage or holdback by
the Account Debtor;

(k) the Account Debtor on such Account is not:

 

  (i) an Affiliate of any Credit Party;

 

  (ii) the United States of America, or any department, agency, or
instrumentality thereof (unless the applicable Borrowing Base Obligor has
assigned its right to payment of such Account to the Agent in a manner
satisfactory to the Agent so as to comply with the provisions of the Federal
Assignment of Claims Act);

 

  (iii) a citizen or resident of any jurisdiction other than one of the United
States or Canada unless (A) such Account is secured by a letter of credit issued
by a bank acceptable to the Agent which letter of credit shall be in form and
substance acceptable to the Agent, (B) such Account is insured by a credit
insurer acceptable to Agent, or (C) such Account is owing by an Eligible Foreign
Account Debtor; or

 

  (iv) an Account Debtor whose Accounts the Agent, acting in its reasonable
credit judgment, has deemed not to constitute Eligible Accounts because the
collectibility of such Accounts is or is reasonably expected to be impaired; and

(l) such Account satisfies any other eligibility criteria established from time
to time by the Agent in its sole discretion or at the direction of the Majority
Revolving Credit Lenders.

Any Account, which is at any time an Eligible Account but which subsequently
fails to meet any of the foregoing requirements, shall (for purposes of the
succeeding Borrowing Base Certificate) forthwith cease to be an Eligible
Account.

“Eligible Assignee” shall mean (a) a Lender; (b) an Affiliate of a Lender;
(c) any Person (other than a natural person) that is or will be engaged in the
business of making, purchasing, holding or otherwise investing in commercial
loans or similar extensions of credit in the ordinary course of its business,
provided that such Person is administered or managed by a Lender, an Affiliate
of a Lender or an entity or Affiliate of an entity that administers or manages a
Lender; or (d) any other Person (other than a natural person) approved by the
(i) the Agent, in its reasonable discretion (and in the case of an assignment of
a commitment under the Revolving Credit, the Issuing Lender and Swing Line
Lender), and (ii) unless an Event of Default has occurred and is continuing, the
Borrower (each such approval not to be unreasonably withheld or delayed);
provided that (x) notwithstanding the foregoing, “Eligible Assignee” shall not
include the Borrower, or any of the Borrower’s Affiliates or Subsidiaries; and
(y) no assignment shall be made (A) to a Defaulting Lender (or any Person who
would be a Defaulting Lender if such Person was a Lender hereunder) without the
consent of the Agent, and in the case of an assignment of a commitment under the
Revolving Credit, the Issuing Lender and the Swing Line Lender, or (B) unless an
Event of Default has been continuing for thirty (30) Business Days (or more), to
a competitor of any Credit Party.

“Eligible Foreign Account Debtor” shall mean (i) Adva Optical Networking,
(ii) Alcatel-Lucent, (iii) Avanex Communication Technologies, (iv) Celestica,
(v) Fabrinet, (vi) Flextronics, (vii) Fujitsu, (viii) Huawei/HiSilicon, (ix) LG
Electronics Inc./LG Ericsson, (x) Mitsubishi Electronic Corporation, (xi) NEC,
(xii) Nokia, (xiii) Nokia Siemens Networks, (xiv) Oclaro/OpNext, (xv) ZTE
Corporation, (xvi) Fiberhome Technologies, (xvii) Jabil Circuit, or
(xviii) Venture Electronic Services.

 

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“Equity Interest” shall mean (i) in the case of any corporation, all capital
stock and any securities exchangeable for or convertible into capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents of corporate stock
(however designated) in or to such association or entity, (iii) in the case of a
partnership or limited liability company, partnership or membership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distribution of assets of, the issuing Person, and including, in all of the
foregoing cases described in clauses (i), (ii), (iii) or (iv), any warrants,
rights or other options to purchase or otherwise acquire any of the interests
described in any of the foregoing cases.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor act or code and the regulations in effect from time to
time thereunder.

“E-System” shall mean any electronic system and any other Internet or
extranet-based site, whether such electronic system is owned, operated, hosted
or utilized by the Agent, any of its Affiliates or any other Person, providing
for access to data protected by passcodes or other security system.

“Eurodollar-based Advance” shall mean any Advance which bears interest at the
Eurodollar-based Rate.

“Eurodollar-based Rate” shall mean a per annum interest rate which is equal to
the sum of the Applicable Margin, plus the quotient of:

(a) the LIBOR Rate, divided by

(b) a percentage equal to 100% minus the maximum rate on such date at which the
Agent is required to maintain reserves on ‘Eurocurrency Liabilities’ as defined
in and pursuant to Regulation D of the Board of Governors of the Federal Reserve
System or, if such regulation or definition is modified, and as long as the
Agent is required to maintain reserves against a category of liabilities which
includes eurocurrency deposits or includes a category of assets which includes
eurocurrency loans, the rate at which such reserves are required to be
maintained on such category,

such sum to be rounded upward, if necessary, in the discretion of the Agent, to
the seventh decimal place.

“Eurodollar-Interest Period” shall mean, for any Eurodollar-based Advance, an
Interest Period of one, two or three months (or any shorter or longer periods
agreed to in advance by the Borrower, the Agent and the Lenders) as selected by
the Borrower, for such Eurodollar-based Advance pursuant to Section 2.3 or 4.4
hereof, as the case may be.

“Eurodollar Lending Office” shall mean, (a) with respect to the Agent, the
Agent’s office located at its Grand Caymans Branch or such other branch of the
Agent, domestic or foreign, as it may hereafter designate as its Eurodollar
Lending Office by written notice to the Borrower and the Lenders and (b) as to
each of the Lenders, its office, branch or affiliate located at its address set
forth on the signature pages hereof (or identified thereon as its Eurodollar
Lending Office), or at such other office, branch or affiliate of such Lender as
it may hereafter designate as its Eurodollar Lending Office by written notice to
the Borrower and the Agent.

“Event of Default” shall mean each of the Events of Default specified in
Section 9.1 hereof.

“Excluded Taxes” shall mean, with respect to any Lender or Agent, (a) taxes
measured by net income (including branch profit taxes) and franchise taxes
imposed in lieu of net income taxes, in each case imposed on any Lender or Agent
as a result of a present or former connection between such Lender or Agent and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than such
connection arising solely from any Lender or Agent having executed, delivered or
performed its obligations or received a payment under, or enforced, any Loan
Document); (b) in the case of any Non-U.S. Lender, any U.S. withholding taxes to
the extent that the obligation to withhold amounts existed on the date that such
Person became a “Lender” under this Agreement in the capacity under which such
Person makes a claim under Section 10.1(d) or designates a new lending office,
except in each case to the extent such Person is a direct or indirect

 

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assignee of any other Lender that was entitled, at the time the assignment to
such Person became effective, to receive additional amounts under
Section 10.1(d); (c) backup withholding or other withholding taxes that are
directly attributable to the failure by any Lender to deliver the documentation
required to be delivered pursuant to Section 13.13; and (d) in the case of a
Non-U.S. Lender, any United States federal withholding taxes imposed on amounts
payable to such Non-U.S. Lender as a result of such Non-U.S. Lender’s failure to
comply with the applicable requirements set forth in FATCA after December 31,
2012.

“FATCA” shall mean sections 1471 through 1474 of the Internal Revenue Code as of
the date of this Agreement, and the United States Treasury Regulations
promulgated thereunder (or any amended or successor provisions substantively
comparable and not materially more onerous to comply with).

“Federal Funds Effective Rate” shall mean, for any day, a fluctuating interest
rate per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding 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 the Agent from three Federal funds brokers of recognized standing
reasonably selected by the Agent, all as conclusively determined by the Agent,
such sum to be rounded upward, if necessary, in the discretion of the Agent, to
the nearest whole multiple of 1/100th of 1%.

“Fee Letter” shall mean the fee letter by and between the Borrower and Comerica
Bank dated as of December 21, 2012 relating to the Indebtedness hereunder, as
amended, restated, replaced or otherwise modified from time to time.

“Fees” shall mean the Revolving Credit Facility Fee, the Term Loan Facility Fee,
the Letter of Credit Fees and the other fees and charges (including any agency
fees) payable by the Borrower to the Lenders, the Issuing Lender or the Agent
hereunder or under the Fee Letter.

“Final Maturity Date” shall mean later to occur of (i) the Revolving Credit
Maturity Date or (ii) the Term Loan Maturity Date.

“Fiscal Year” shall mean the twelve-month period ending on each December 31.

“Foreign Subsidiary” shall mean any Subsidiary, other than a Domestic
Subsidiary, and “Foreign Subsidiaries” shall mean any or all of them.

“Fronting Exposure” shall mean, at any time there is an Defaulting Lender,
(a) with respect to the Issuing Lender, such Defaulting Lender’s Percentage of
the outstanding Letter of Credit Obligations with respect to Letters of Credit
issued by such Issuing Lender, and (b) with respect to the Swing Line Lender,
such Defaulting Lender’s Percentage of outstanding Swing Line Advances made by
the Swing Line Lender.

“Funded Debt” of any Person shall mean, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services as of such date (other than operating leases and
trade liabilities incurred in the ordinary course of business and payable in
accordance with customary practices) or which is evidenced by a note, bond,
debenture or similar instrument, (b) the principal component of all obligations
of such Person under Capitalized Leases, (c) all direct reimbursement
obligations (actual, contingent or otherwise) of such Person in respect of
letters of credit, bankers acceptances or similar obligations issued or created
for the account of such Person, (d) all liabilities of the type described in
(a), (b) and (c) above that are secured by any Liens on any property owned by
such Person as of such date even though such Person has not assumed or otherwise
become liable for the payment thereof, the amount of which is determined in
accordance with GAAP; provided however that so long as such Person is not
personally liable for any such liability, the amount of such liability shall be
deemed to be the lesser of the fair market value at such date of the property
subject to the Lien securing such liability and the amount of the liability
secured, and (e) all Guarantee Obligations in respect of any liability which
constitutes Funded Debt; provided, however that Funded Debt shall not include
any indebtedness under any Hedging Transaction prior to the occurrence of a
termination event with respect thereto.

 

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“Funded Debt to EBITDA Ratio” shall mean, as of any date of determination, the
ratio of (a) the Funded Debt of the Borrower and its Consolidated Subsidiaries
as of such date to (b) the Adjusted EBITDA of Borrower and its Consolidated
Subsidiaries for the rolling four (4) quarter period ending on such date.

“GAAP” shall mean, as of any applicable date of determination, generally
accepted accounting principles in the United States of America, consistently
applied, as in effect from time to time.

“Governmental Authority” shall mean the government of the United States of
America or any other nation, or of any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including without limitation any supranational bodies such as the
European Union or the European Central Bank).

“Governmental Obligations” shall mean noncallable direct general obligations of
the United States of America or obligations the payment of principal of and
interest on which is unconditionally guaranteed by the United States of America.

“Guarantee Obligation” shall mean as to any Person (the “guaranteeing person”)
any obligation of the guaranteeing Person in respect of any obligation of
another Person (the “primary obligor”) (including, without limitation, any bank
under any letter of credit), the creation of which was induced by a
reimbursement agreement, guaranty agreement, keepwell agreement, purchase
agreement, counterindemnity or similar obligation issued by the guaranteeing
person, in either case guaranteeing or in effect guaranteeing any Funded Debt,
leases, dividends or other obligations (the “primary obligations”) of the
primary obligor in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person’s
maximum reasonably anticipated liability in respect thereof as determined by the
applicable Person in good faith.

“Guarantor(s)” shall mean each Subsidiary of the Borrower which has executed and
delivered to the Agent a Guaranty (or a joinder to a Guaranty), and a Security
Agreement (or a joinder to the Security Agreement).

“Guaranty” shall mean, collectively, the guaranty agreements, if any, executed
and delivered by the applicable Guarantors on the Effective Date pursuant to
Section 5.1 hereof and those guaranty agreements executed and delivered from
time to time after the Effective Date (whether by execution of joinder
agreements or otherwise) pursuant to Section 7.13 hereof or otherwise, in each
case in the form attached hereto as Exhibit I, as amended, restated or otherwise
modified from time to time.

“Hazardous Material” shall mean any hazardous or toxic waste, substance or
material defined or regulated as such in or for purposes of the Hazardous
Material Laws.

“Hazardous Material Law(s)” shall mean all laws, codes, ordinances, rules,
regulations and other governmental restrictions and requirements issued by any
federal, state, local or other governmental or quasi-governmental authority or
body (or any agency, instrumentality or political subdivision thereof)
pertaining to any Hazardous Material and which is present or alleged to be
present on or about or used in any facilities owned, leased or operated by any
Credit Party, or any portion thereof including, without limitation, those
relating to soil, surface,

 

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subsurface ground water conditions and the condition of the indoor and outdoor
ambient air; any so-called “superfund” or “superlien” law; and any other United
States federal, state or local statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to, or imposing liability or standards of
conduct concerning, any Hazardous Material, as now or at any time during the
term of the Agreement in effect.

“Hedging Agreement” shall mean any agreement relating to a Hedging Transaction
entered into between the Borrower and any Lender or an Affiliate of a Lender.

“Hedging Transaction” means each interest rate swap transaction, basis swap
transaction, forward rate transaction, equity transaction, equity index
transaction, foreign exchange transaction, cap transaction, floor transaction
and currency hedge (including any option with respect to any of these
transactions and any combination of any of the foregoing).

“Hereof”, “hereto”, “hereunder” and similar terms shall refer to this Agreement
and not to any particular paragraph or provision of this Agreement.

“Income Taxes” shall mean for any period the aggregate amount of taxes based on
income or profits for such period with respect to the operations of the Borrower
and its Subsidiaries (including, without limitation, all corporate franchise,
capital stock, net worth and value-added taxes assessed by state and local
governments) determined in accordance with GAAP on a Consolidated basis (to the
extent such income and profit were included in computing Consolidated Net
Income).

“Indebtedness” shall mean all indebtedness and liabilities (including without
limitation principal, interest (including without limitation interest accruing
at the then applicable rate provided in this Agreement or any other applicable
Loan Document after an applicable maturity date and interest accruing at the
then applicable rate provided in this Agreement or any other applicable Loan
Document after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Credit
Parties whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), fees, expenses and other charges) arising under
this Agreement or any of the other Loan Documents, whether direct or indirect,
absolute or contingent, of any Credit Party to any of the Lenders or Affiliates
thereof or to the Agent, in any manner and at any time, whether arising under
this Agreement, the Guaranty or any of the other Loan Documents (including
without limitation, payment obligations under Hedging Transactions evidenced by
Hedging Agreements), due or hereafter to become due, now owing or that may
hereafter be incurred by any Credit Party to any of the Lenders or Affiliates
thereof or to the Agent, and which shall be deemed to include protective
advances made by the Agent with respect to the Collateral under or pursuant to
the terms of any Loan Document and any liabilities of any Credit Party to the
Agent or any Lender arising in connection with any Lender Products, in each case
whether or not reduced to judgment, with interest according to the rates and
terms specified, and any and all consolidations, amendments, renewals,
replacements, substitutions or extensions of any of the foregoing; provided,
however that for purposes of calculating the Indebtedness outstanding under this
Agreement or any of the other Loan Documents, the direct and indirect and
absolute and contingent obligations of the Credit Parties (whether direct or
contingent) shall be determined without duplication.

“Insurance Proceeds” shall mean the cash proceeds received by any Credit Party
from any insurer in respect of any damage or destruction of any property or
asset net of reasonable fees and expenses (including without limitation
attorneys fees and expenses) incurred solely in connection with the recovery
thereof.

“Integration Costs” shall mean integration, consolidation, relocation and
severance costs, golden parachute payments, restructuring charges and other
costs associated with office openings and closings and lease termination costs,
all determined in accordance with GAAP.

 

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“Intellectual Property” shall mean all of the Borrower’s right, title, and
interest in and to the following:

(a) Copyrights, Trademarks and Patents;

(b) Any and all trade secrets, and any and all intellectual property rights in
computer software and computer software products now or hereafter existing,
created, acquired or held;

(c) Any and all design rights which may be available to the Borrower now or
hereafter existing, created, acquired or held;

(d) Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;

(e) All licenses or other rights to use any of the Copyrights, Patents or
Trademarks, and all license fees and royalties arising from such use to the
extent permitted by such license or rights; and

(f) All amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents.

“Intercompany Note” shall mean any promissory note issued or to be issued by any
Credit Party to evidence an intercompany loan in form and substance reasonably
satisfactory to the Agent.

“Interest Expense” shall mean for any period the interest expense of the
Borrower and its Consolidated Subsidiaries for such period (including all
imputed interest on Capital Leases), all as determined in accordance with GAAP
on a Consolidated basis.

“Interest Period” shall mean (a) with respect to a Eurodollar-based Advance, a
Eurodollar-Interest Period, commencing on the day a Eurodollar-based Advance is
made, or on the effective date of an election of the Eurodollar-based Rate made
under Section 2.3 or 4.4 hereof, and (b) with respect to a Swing Line Advance
carried at the Quoted Rate, an interest period of 30 days (or any lesser number
of days agreed to in advance by the Borrower, the Agent and the Swing Line
Lender); provided, however that (i) any Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day, except that as to an Interest Period in respect of a
Eurodollar-based Advance, if the next succeeding Business Day falls in another
calendar month, such Interest Period shall end on the next preceding Business
Day, (ii) when an Interest Period in respect of a Eurodollar-based Advance
begins on a day which has no numerically corresponding day in the calendar month
during which such Interest Period is to end, it shall end on the last Business
Day of such calendar month, and (iii) no Interest Period in respect of any
Advance shall extend beyond the Revolving Credit Maturity Date or the Term Loan
Maturity Date, as applicable.

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986 of the
United States of America, as amended from time to time, and the regulations
promulgated thereunder.

“Inventory” shall mean any inventory as defined under the UCC.

“Investment” shall mean, when used with respect to any Person, (a) any loan,
investment or advance made by such Person to any other Person (including,
without limitation, any Guarantee Obligation) in respect of any Equity Interest,
Debt, obligation or liability of such other Person and (b) any other investment
made by such Person (however acquired) in Equity Interests in any other Person,
including, without limitation, any investment made in exchange for the issuance
of Equity Interest of such Person and any investment made as a capital
contribution to such other Person.

“Issuing Lender” shall mean Comerica Bank in its capacity as issuer of one or
more Letters of Credit hereunder, or its successor designated by the Borrower
and the Revolving Credit Lenders.

“Issuing Office” shall mean such office as Issuing Lender shall designate as its
Issuing Office.

“Japanese Real Property” shall mean the real property described in the Real
Property Purchase Agreement (as defined in the Rohm Purchase Agreement).

 

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“Lender Products” shall mean any one or more of the following types of services
or facilities extended to the Credit Parties by any Lender: (i) credit cards,
(ii) credit card processing services, (iii) debit cards, (iv) purchase cards,
(v) Automated Clearing House (ACH) transactions, (vi) cash management, including
controlled disbursement services, and (vii) establishing and maintaining deposit
accounts.

“Lenders” shall have the meaning set forth in the preamble, and shall include
the Revolving Credit Lenders, the Term Loan Lenders, the Swing Line Lender and
any assignee which becomes a Lender pursuant to Section 13.8 hereof.

“Letter of Credit Agreement” shall mean, collectively, the letter of credit
application and related documentation executed and/or delivered by the Borrower
in respect of each Letter of Credit, in each case satisfactory to the Issuing
Lender, as amended, restated or otherwise modified from time to time.

“Letter of Credit Documents” shall have the meaning ascribed to such term in
Section 3.7(a) hereof.

“Letter of Credit Fees” shall mean the fees payable in connection with Letters
of Credit pursuant to Section 3.4(a) and (b) hereof.

“Letter of Credit Maximum Amount” shall mean Five Hundred Thousand Dollars
($500,000).

“Letter of Credit Obligations” shall mean at any date of determination, the sum
of (a) the aggregate undrawn amount of all Letters of Credit then outstanding,
and (b) the aggregate amount of Reimbursement Obligations which remain unpaid as
of such date.

“Letter of Credit Payment” shall mean any amount paid or required to be paid by
the Issuing Lender in its capacity hereunder as issuer of a Letter of Credit as
a result of a draft or other demand for payment under any Letter of Credit.

“Letter(s) of Credit” shall mean any standby letters of credit issued by Issuing
Lender at the request of or for the account of the Borrower pursuant to Article
3 hereof, including without limitation, which shall be deemed to be issued
pursuant to the Article 3 hereof.

“LIBOR Rate” shall mean,

(a) with respect to the principal amount of any Eurodollar-based Advance
outstanding hereunder, the per annum rate of interest determined on the basis of
the rate for deposits in United States Dollars for a period equal to the
relevant Eurodollar-Interest Period, commencing on the first day of such
Eurodollar-Interest Period, appearing on Page BBAM of the Bloomberg Financial
Markets Information Service as of 11:00 a.m. (Detroit, Michigan time) (or soon
thereafter as practical), two (2) Business Days prior to the first day of such
Eurodollar-Interest Period. In the event that such rate does not appear on Page
BBAM of the Bloomberg Financial Markets Information Service (or otherwise on
such Service), the “LIBOR Rate” shall be determined by reference to such other
publicly available service for displaying LIBOR rates as may be agreed upon by
the Agent and the Borrower, or, in the absence of such agreement, the “LIBOR
Rate” shall, instead, be the per annum rate equal to the average (rounded
upward, if necessary, to the nearest one-sixteenth of one percent (1/16%)) of
the rate at which the Agent is offered dollar deposits at or about 11:00 a.m.
(Detroit, Michigan time) (or soon thereafter as practical), two (2) Business
Days prior to the first day of such Eurodollar-Interest Period in the interbank
LIBOR market in an amount comparable to the principal amount of the relevant
Eurodollar-based Advance which is to bear interest at such Eurodollar-based Rate
and for a period equal to the relevant Eurodollar-Interest Period; and

(b) with respect to the principal amount of any Advance carried at the Daily
Adjusting LIBOR Rate outstanding hereunder, the per annum rate of interest
determined on the basis of the rate for deposits in United States Dollars for a
period equal to one (1) month appearing on Page BBAM of the Bloomberg Financial
Markets Information Service as of 11:00 a.m. (Detroit, Michigan time) (or soon
thereafter as practical) on such day, or if such day is not a Business Day, on
the immediately preceding

 

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Business Day. In the event that such rate does not appear on Page BBAM of the
Bloomberg Financial Markets Information Service (or otherwise on such Service),
the “LIBOR Rate” shall be determined by reference to such other publicly
available service for displaying eurodollar rates as may be agreed upon by the
Agent and the Borrower, or, in the absence of such agreement, the “LIBOR Rate”
shall, instead, be the per annum rate equal to the average of the rate at which
the Agent is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan
time) (or soon thereafter as practical) on such day in the interbank eurodollar
market in an amount comparable to the principal amount of the Indebtedness
hereunder which is to bear interest at such “LIBOR Rate” and for a period equal
to one (1) month.

“Lien” shall mean any security interest in or lien on or against any property
arising from any pledge, assignment, hypothecation, mortgage, security interest,
deposit arrangement, trust receipt, conditional sale or title retaining
contract, sale and leaseback transaction, Capitalized Lease, consignment or
bailment for security, or any other type of lien, charge, encumbrance, title
exception, preferential or priority arrangement affecting property (including
with respect to stock, any stockholder agreements, voting rights agreements,
buy-back agreements and all similar arrangements), whether based on common law
or statute.

“Loan Documents” shall mean, collectively, this Agreement, the Notes (if
issued), the Letter of Credit Agreements, the Letters of Credit, the Guaranty,
the Subordination Agreements, the Collateral Documents, each Hedging Agreement,
and any other documents, certificates or agreements that are executed and
required to be delivered pursuant to any of the foregoing documents, as such
documents may be amended, restated or otherwise modified from time to time.

“Loan Parties” shall mean the Borrower and the Guarantors, and “Loan Party”
shall mean any one of them, as the context indicates or otherwise requires.

“Majority Lenders” shall mean at any time, Lenders holding more than 50.0% of
the sum of (i) the Revolving Credit Aggregate Commitment (or, if the Revolving
Credit Aggregate Commitment has been terminated (whether by maturity,
acceleration or otherwise), the aggregate principal amount outstanding under the
Revolving Credit), plus (ii) the Term Loan Aggregate Commitment (or if the Term
Loan Draw Period has expired or the Term Loan Aggregate Commitment has been
terminated (whether by acceleration or otherwise), the aggregate principal
amount then outstanding under the Term Loan; provided that, for purposes of
determining Majority Lenders hereunder, the Letter of Credit Obligations and
principal amount outstanding under the Swing Line shall be allocated among the
Revolving Credit Lenders based on their respective Revolving Credit Percentages;
provided further that so long as there are fewer than three Lenders, considering
any Lender and its Affiliates as a single Lender, “Majority Lenders” shall mean
all Lenders. The Commitments of, and portion of the Indebtedness attributable
to, any Defaulting Lender shall be excluded for purposes of making a
determination of “Majority Lenders”; provided that the amount of any
participation in any Swing Line Advance and any Letter of Credit Obligations
that a Defaulting Lender has failed to fund that have not been reallocated to
and funded by another Lender shall be deemed to be held by the Lender that is
the Swing Line Lender or Issuing Lender, as the case may be, in making a
determination under this definition.

“Majority Revolving Credit Lenders” shall mean at any time, the Revolving Credit
Lenders holding more than 50.0% of the Revolving Credit Aggregate Commitment
(or, if the Revolving Credit Aggregate Commitment has been terminated (whether
by maturity, acceleration or otherwise), the aggregate principal amount then
outstanding under the Revolving Credit); provided that, for purposes of
determining Majority Revolving Credit Lenders hereunder, the Letter of Credit
Obligations and principal amount outstanding under the Swing Line shall be
allocated among the Revolving Credit Lenders based on their respective Revolving
Credit Percentages; provided further, that so long as there are fewer than three
Revolving Credit Lenders, considering any Revolving Credit Lender and its
Affiliates as a single Revolving Credit Lender, “Majority Revolving Credit
Lenders” shall mean all Revolving Credit Lenders. The Commitments of, and
portion of the Indebtedness attributable to, any Defaulting Lender shall be
excluded for purposes of making a determination of “Majority Revolving Credit
Lenders”.

“Majority Term Loan Lenders” shall mean at any time with respect to the Term
Loan, Term Loan Lenders holding more than 50.0% of the aggregate principal
amount then outstanding under Term Loan A; provided, however that so long as
there are fewer than three Term Loan Lenders, considering any Term Loan Lender
and its Affiliates as a single Term Loan Lender, “Majority Term Loan Lenders”
shall mean all Term Loan Lenders. The portion of the Indebtedness attributable
to, any Defaulting Lender shall be excluded for purposes of making a
determination of “Majority Term Loan Lenders”.

 

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“Material Adverse Effect” shall mean a material adverse effect on (i) the
business, operations, condition (financial or otherwise) or prospects of
Borrower and its Subsidiaries taken as a whole, (ii) the ability of Borrower to
repay the Indebtedness or otherwise perform its material obligations under the
Loan Documents, (iii) Borrower’s interest in, or the value, perfection or
priority of Bank’s security interest in the Collateral.

“Multiemployer Plan” shall mean a Pension Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.

“Net Cash Proceeds” shall mean the aggregate cash payments received by any
Credit Party from any Asset Sale or the issuance of Subordinated Debt, as the
case may be, net of the ordinary and customary direct costs incurred in
connection with such sale or issuance, as the case may be, such as legal,
accounting and investment banking fees, sales commissions, and other third party
charges, and net of property taxes, transfer taxes and any other taxes paid or
payable by such Credit Party in respect of any sale or issuance.

“Net Income” shall mean, for any period, the consolidated net income (or loss)
of the Borrower and its Consolidated Subsidiaries, as determined in accordance
with GAAP on a Consolidated basis.

“Non-Defaulting Lender” shall mean any Lender that is not, as of the date of
relevance, a Defaulting Lender

“Non-U.S. Lender” is defined in Section 13.13 hereof.

“Notes” shall mean the Revolving Credit Notes, the Term Notes and the Swing Line
Note.

“Off Balance Sheet Liability(ies)” of a Person shall mean (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivables sold by such Person, (ii) any liability under any sale and leaseback
transaction which is not a Capitalized Lease, (iii) any liability under any
so-called “synthetic lease” transaction entered into by such Person, or (iv) any
obligation arising with respect to any other transaction which is the functional
equivalent of Debt or any of the liabilities set forth in subsections
(i)-(iii) of this definition, but which does not constitute a liability on the
balance sheets of such Person.

“Patents” shall have the meaning assigned to such term in the Security
Agreement.

“PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.

“Pension Plan” shall mean any plan established and maintained or contributed to
by a Credit Party, which is organized under the laws of the United States, which
plan is qualified under Section 401(a) of the Internal Revenue Code and subject
to the minimum funding standards of Section 412 of the Internal Revenue Code.

“Percentage” shall mean, as applicable, the Revolving Credit Percentage, the
Term Loan Percentage or the Weighted Percentage.

“Permitted Acquisition” shall mean any Acquisition which satisfies and/or is
conducted in accordance with the following requirements:

(a) Such Acquisition is of a business or Person engaged in a line of business
which is compatible with, or complementary to, the business of the Borrower and
its Consolidated Subsidiaries, and such Acquisition is not an acquisition of
margin stock;

(b) If such Acquisition is structured as an Acquisition of the Equity Interests
of any Person, then, if such Person is an entity organized under the laws of the
United States or any territory thereof, the Person so acquired shall become a
wholly-owned direct or indirect domestic Subsidiary of Borrower and Borrower
shall cause such acquired Person to comply with Section 7.13 hereof;

 

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(c) Borrower shall have delivered to Bank not less than ten (10) (or such
shorter period of time agreed to by the Bank) nor more than ninety (90) days
prior to the date of such Acquisition, notice of such Acquisition together with,
copies of all material documents relating to such Acquisition (including the
Acquisition agreement and any related document) and, for each Acquisition where
the Acquisition consideration exceeds $3,000,000, historical financial
information and Pro Forma Projected Financial Information (including income
statements, balance sheets and cash flows) of the target of the Acquisition, if
available, prior to the effective date of the Acquisition;

(d) Both immediately before and after the consummation of such Acquisition, no
Default or Event of Default shall have occurred and be continuing;

(e) After giving effect to such acquisition and taking into account the Pro
Forma Projected Financial Information, Borrower shall be in compliance with the
financial covenant ratios required to be maintained under Section 7.9 of this
Agreement;

(f) The purchase price of such proposed new Acquisition, computed on the basis
of total Acquisition consideration paid or incurred, or required to be paid or
incurred, with respect thereto, including the amount of Debt (such Debt being
otherwise permitted under this Agreement) assumed or to which such assets,
businesses or business or Equity Interests, or any Person so acquired is subject
and including any portion of the purchase price allocated to any non-compete
agreements, (X) is less than Five Million Dollars ($5,000,000), (Y) when added
to the purchase price for each other Acquisition consummated hereunder as a
Permitted Acquisition during the same Fiscal Year as the applicable Acquisition
(not including Acquisitions specifically consented to which fall outside of the
terms of this definition), does not exceed Ten Million Dollars ($10,000,000);

(g) Such Acquisition shall not be hostile and shall have been approved by the
board of directors (or other similar body) and/or the stockholders or other
equityholders of the Acquisition target;

(h) Such Acquisition does not result in a Change in Control; and

(i) Borrower is the surviving entity, as applicable.

“Permitted Investments” shall mean with respect to any Person:

(a) Governmental Obligations;

(b) Obligations of a state or commonwealth of the United States or the
obligations of the District of Columbia or any possession of the United States,
or any political subdivision of any of the foregoing, which are described in
Section 103(a) of the Internal Revenue Code and are graded in any of the highest
three (3) major grades as determined by at least one Rating Agency; or secured,
as to payments of principal and interest, by a letter of credit provided by a
financial institution or insurance provided by a bond insurance company which in
each case is itself or its debt is rated in one of the highest three (3) major
grades as determined by at least one Rating Agency;

(c) Banker’s acceptances, commercial accounts, demand deposit accounts,
certificates of deposit, other time deposits or depository receipts issued by or
maintained with any Lender or any Affiliate thereof, or any bank, trust company,
savings and loan association, savings bank or other financial institution whose
deposits are insured by the Federal Deposit Insurance Corporation and whose
reported capital and surplus equal at least $250,000,000, provided that such
minimum capital and surplus requirement shall not apply to demand deposit
accounts maintained by any Credit Party in the ordinary course of business;

 

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(d) Commercial paper rated at the time of purchase within the two highest
classifications established by not less than two Rating Agencies, and which
matures within 270 days after the date of issue;

(e) Secured repurchase agreements against obligations itemized in paragraph
(a) above, and executed by a bank or trust company or by members of the
association of primary dealers or other recognized dealers in United States
government securities, the market value of which must be maintained at levels at
least equal to the amounts advanced;

(f) Any fund or other pooling arrangement which exclusively purchases and holds
the investments itemized in (a) through (e) above;

(g) Deposits of any Foreign Subsidiary maintained with regulated financial
institutions (reasonably determined by the applicable Credit Parties to be
reputable and solvent) located in countries outside of the United States of
America where the Credit Parties conduct business;

(h) Investments made pursuant to the Borrower’s written investment policy as in
effect on the Effective Date and as modified from time to time and approved by
Borrower’s board of directors or a committee thereof (“Investment Policy”); and

(i) Any other debt security approved by the Agent.

“Permitted Liens” shall mean with respect to any Person:

(a) Liens for (i) fees, assessments, taxes or governmental assessments, charges
or levies or (ii) customs duties in connection with the importation of goods to
the extent such Liens attach to the imported goods that are the subject of the
duties, in each case (x) to the extent not yet due, (y) as to which the period
of grace, if any, related thereto has not expired or (z) which are being
contested in good faith by appropriate proceedings, provided that in the case of
any such contest, any proceedings for the enforcement of such liens have been
suspended and adequate reserves with respect thereto are maintained on the books
of such Person in conformity with GAAP;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
processor’s, landlord’s liens or other like liens arising in the ordinary course
of business which secure obligations that are not overdue for a period of more
than 30 days or which are being contested in good faith by appropriate
proceedings, provided that in the case of any such contest, (x) any proceedings
commenced for the enforcement of such Liens have been suspended or such Liens
have been bonded in accordance with applicable law on terms reasonably
satisfactory to Agent, and (y) appropriate reserves with respect thereto are
maintained on the books of such Person in conformity with GAAP;

(c) (i) Liens incurred in the ordinary course of business to secure the
performance of statutory obligations arising in connection with progress
payments or advance payments due under contracts with the United States
government or any agency thereof entered into in the ordinary course of business
and (ii) Liens incurred or deposits made in the ordinary course of business to
secure the performance of statutory obligations (not otherwise permitted under
subsection (g) of this definition), bids, leases, fee and expense arrangements
with trustees and fiscal agents, trade contracts, surety and appeal bonds,
performance bonds and other similar obligations (exclusive of obligations
incurred in connection with the borrowing of money, any lease-purchase
arrangements or the payment of the deferred purchase price of property),
provided, that in each case full provision for the payment of all such
obligations has been made on the books of such Person as may be required by
GAAP;

(d) any attachment or judgment lien that remains unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period ending on the earlier of (i) forty
five (45) consecutive days from the date of its attachment or entry (as
applicable) or (ii) the commencement of enforcement steps with respect thereto,
other than the filing of notice thereof in the public record;

 

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(e) survey exceptions or encumbrances, easements or reservations, or rights of
others for rights-of-way, utilities and other similar purposes, or zoning or
other restrictions as to the use of real properties or any other non-monetary
encumbrance affecting real property, or any interest of any lessor or sublessor
under any lease permitted hereunder which, in each case, could not reasonably be
expected to materially interfere with the business of such Person;

(f) Liens arising in connection with worker’s compensation, unemployment
insurance, old age pensions and social security benefits and similar statutory
obligations (excluding Liens arising under ERISA), provided that no enforcement
proceedings in respect of such Liens are pending and provisions have been made
for the payment of such liens on the books of such Person as may be required by
GAAP;

(g) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), contracts for the purchase of property, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature, in each case, incurred in the ordinary course of business and not
representing an obligation for borrowed money;

(h) continuations of Liens that are permitted under subsections (a)-(g) hereof,
provided such continuations do not violate the specific time periods set forth
in subsections (b) and (d) and provided further that such Liens do not extend to
any additional property or assets of any Credit Party or secure any additional
obligations of any Credit Party;

(i) Liens arising solely by virtue of any statutory or common law provision or
granted to banks in the ordinary course of business relating to banker’s Liens,
rights of set-off or similar rights and remedies as to deposit accounts or other
funds maintained with a creditor depository institution;

(j) any interest or title of a lessor in the property (and the proceeds,
accession or products thereof) subject to any operating lease entered into by a
Credit Party in the ordinary course of business;

(k) Liens encumbering real property or fixtures under construction (and proceeds
or products thereof) arising from progress or partial payments by a customer of
a Credit Party relating to such property or assets;

(l) precautionary UCC or similar filings in respect of true leases; and

(m) Liens solely on any deposits, advances, contractual payments, including
implementation allowances, or escrows made or paid to or with customers or
clients or in connection with insurance arrangements, in each case, in the
ordinary course of business.

Regardless of the language set forth in this definition, no Lien over the Equity
Interests of any Credit Party granted to any Person other than to the Agent for
the benefit of the Lenders shall be deemed a “Permitted Lien” under the terms of
this Agreement.

“Person” shall mean a natural person, corporation, limited liability company,
partnership, limited liability partnership, trust, incorporated or
unincorporated organization, joint venture, joint stock company, firm or
association or a government or any agency or political subdivision thereof or
other entity of any kind.

“Pledge Agreement(s)” shall mean any pledge agreement executed and delivered by
a Loan Party on the Effective Date pursuant to Section 5.1 hereof, if any, and
executed and delivered from time to time after the Effective Date by any Loan
Party pursuant to Section 7.13 hereof or otherwise, and any agreements,
instruments or documents related thereto, in each case in form and substance
satisfactory to the Agent amended, restated or otherwise modified from time to
time.

“Prime Rate” shall mean the per annum rate of interest announced by the Agent,
at its main office from time to time as its “prime rate” (it being acknowledged
that such announced rate may not necessarily be the lowest rate charged by the
Agent to any of its customers), which Prime Rate shall change simultaneously
with any change in such announced rate.

 

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“Pro Forma Projected Financial Information” shall mean, as to any proposed
Acquisition, a statement executed by the Borrower (supported by reasonable
detail) setting forth the total consideration to be paid or incurred in
connection with the proposed Acquisition, and pro forma combined projected
financial information for the Credit Parties and the Acquisition target (if
applicable), consisting of projected balance sheets as of the proposed effective
date of the Acquisition and as of the end of at least the next succeeding three
(3) Fiscal Years following the Acquisition and projected statements of income
and cash flows for each of those years, including sufficient detail to permit
calculation of the ratios described in Section 7.9 hereof, as projected as of
the effective date of the Acquisition and as of the ends of those Fiscal Years
and accompanied by (i) a statement setting forth a calculation of the ratio so
described, (ii) a statement in reasonable detail specifying all material
assumptions underlying the projections and (iii) such other information as the
Agent or the Lenders shall reasonably request.

“Purchasing Lender” shall have the meaning set forth in Section 13.12.

“Quoted Rate” shall mean the rate of interest per annum offered by the Swing
Line Lender in its sole discretion with respect to a Swing Line Advance and
accepted by the Borrower.

“Quoted Rate Advance” means any Swing Line Advance which bears interest at the
Quoted Rate.

“Rating Agency” shall mean Moody’s Investor Services, Inc., Standard and Poor’s
Ratings Services, their respective successors or any other nationally recognized
statistical rating organization which is acceptable to the Agent.

“Register” is defined in Section 13.8(g) hereof.

“Reimbursement Obligation(s)” shall mean the aggregate amount of all
unreimbursed drawings under all Letters of Credit (excluding for the avoidance
of doubt, reimbursement obligations that are deemed satisfied pursuant to a
deemed disbursement under Section 3.6(c)).

“Reinvest” or “Reinvestment” shall mean, with respect to any Net Cash Proceeds,
Insurance Proceeds or Condemnation Proceeds received by any Person, the
application of such monies to (i) repair, improve or replace any tangible
personal (excluding Inventory) or real property of the Credit Parties or any
intellectual property reasonably necessary in order to use or benefit from any
property or (ii) acquire any such property (excluding Inventory) to be used in
the business of such Person.

“Reinvestment Certificate” is defined in Section 4.8(a) hereof.

“Reinvestment Period” shall mean a 180-day period from receipt of the applicable
proceeds, during which Reinvestment must be completed under Section 4.8(a) and
(c) of this Agreement.

“Request for Advance” shall mean a Request for Revolving Credit Advance, a
Request for Swing Line Advance or a Request for Term Loan Advance, as the
context may indicate or otherwise require.

“Request for Revolving Credit Advance” shall mean a request for a Revolving
Credit Advance issued by the Borrower under Section 2.3 of this Agreement in the
form attached hereto as Exhibit A.

“Request for Swing Line Advance” shall mean a request for a Swing Line Advance
issued by the Borrower under Section 2.5(b) of this Agreement in the form
attached hereto as Exhibit D.

“Request for Term Loan Advance” shall mean a request for the Term Loan Advance
issued by the Borrower under Section 4.1(c) of this Agreement in the form
annexed hereto as Exhibit L.

 

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“Requirement of Law” shall mean as to any Person, the certificate of
incorporation and bylaws, the partnership agreement or other organizational or
governing documents of such Person and any law, treaty, rule or regulation or
determination of an arbitration or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

“Responsible Officer” shall mean, with respect to any Person, the chief
executive officer, chief financial officer, treasurer, president or controller
of such Person, or with respect to compliance with financial covenants, the
chief financial officer, the treasurer or the controller of such Person, or any
other officer of such Person having substantially the same authority and
responsibility.

“Revolving Credit” shall mean the revolving credit loans to be advanced to the
Borrower by the applicable Revolving Credit Lenders pursuant to Article 2
hereof, in an aggregate amount (subject to the terms hereof), not to exceed, at
any one time outstanding, the Revolving Credit Aggregate Commitment.

“Revolving Credit Advance” shall mean a borrowing requested by the Borrower and
made by the Revolving Credit Lenders under Section 2.1 of this Agreement,
including without limitation any readvance, refunding or conversion of such
borrowing pursuant to Section 2.3 hereof and any deemed disbursement of an
Advance in respect of a Letter of Credit under Section 3.6(c) hereof, and may
include, subject to the terms hereof, Eurodollar-based Advances and Base Rate
Advances.

“Revolving Credit Aggregate Commitment” shall mean Twenty Million Dollars
($20,000,000), subject to reduction or termination under Section 2.11 or 9.2
hereof.

“Revolving Credit Commitment Amount” shall mean with respect to any Revolving
Credit Lender, (i) if the Revolving Credit Aggregate Commitment has not been
terminated, the amount specified opposite such Revolving Credit Lender’s name in
the column entitled “Revolving Credit Commitment Amount” on Schedule 1.2, as
adjusted from time to time in accordance with the terms hereof; and (ii) if the
Revolving Credit Aggregate Commitment has been terminated (whether by maturity,
acceleration or otherwise), the amount equal to its Percentage of the aggregate
principal amount outstanding under the Revolving Credit (including the
outstanding Letter of Credit Obligations and any outstanding Swing Line
Advances).

“Revolving Credit Facility Fee” shall mean the fee payable to the Agent for
distribution to the Revolving Credit Lenders in accordance with Section 2.9
hereof.

“Revolving Credit Lenders” shall mean the financial institutions from time to
time parties hereto as lenders of the Revolving Credit.

“Revolving Credit Maturity Date” shall mean the earlier to occur of
(i) March 21, 2016, and (ii) the date on which the Revolving Credit Aggregate
Commitment shall terminate in accordance with the provisions of this Agreement.

“Revolving Credit Notes” shall mean the revolving credit notes described in
Section 2.2 hereof, made by the Borrower to each of the Revolving Credit Lenders
in the form attached hereto as Exhibit B, as such notes may be amended or
supplemented from time to time, and any other notes issued in substitution,
replacement or renewal thereof from time to time.

“Revolving Credit Percentage” shall mean, with respect to any Revolving Credit
Lender, the percentage specified opposite such Revolving Credit Lender’s name in
the column entitled “Revolving Credit Percentage” on Schedule 1.2, as adjusted
from time to time in accordance with the terms hereof.

“Rohm Acquisition” shall mean the acquisition by NeoPhotonics Semiconductor GK,
a Japanese limited liability company and wholly-owned Subsidiary of Borrower
(“Purchaser”), of a portion of the assets of LAPIS Semiconductor Co, Ltd., a
wholly-owned Subsidiary of ROHM Co. Ltd. (“Seller”), in accordance with the
terms and conditions of the Rohm Purchase Agreement.

 

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“Rohm Acquisition Requirements” shall mean the satisfaction of the following
requirements or conditions, concurrently with (i) the consummation of such
Acquisition and (ii) the application of any proceeds of Advances hereunder to
such Acquisition:

(a) (x) no Material Adverse Effect shall have occurred and be continuing
following the Effective Date with respect to the Borrower and the Credit Parties
and (y) no Rohm Material Adverse Effect shall have occurred and be continuing
following the Effective Date with respect to Seller or the Purchased Assets (as
such term is defined in the Rohm Purchase Agreement), and there shall have been
delivered to Agent a certificate of a Responsible Officer of the Borrower, dated
as of the date of the consummation of such Acquisition, confirming such matters;

(b) The Rohm Acquisition shall have been (or concurrently therewith shall be)
consummated, on or before April 5, 2013, in accordance with the terms and
conditions of the Rohm Purchase Agreement for a purchase price of not more than
Two billion Japanese Yen (¥2,000,000,000) for the business, subject to
adjustments as set forth in the Rohm Purchase Agreement, and One Billion Five
Hundred Million Japanese Yen (¥1,500,000,000) for the real property, plus
applicable taxes, from sources approved by Agent, including without limitation
equity contributions and proceeds of the Term Loan; and

(c) No Default or Event of Default shall have occurred and be continuing after
giving effect to the Rohm Acquisition.

“Rohm Material Adverse Effect” shall mean a “Material Adverse Effect” as defined
under the Rohm Purchase Agreement.

“Rohm Purchase Agreement” shall mean that certain Agreement and Plan of Demerger
dated as of January 18, 2013 by and among Purchaser, Seller and Borrower, as
amended (subject to the terms hereof) from time to time.

“Santur” shall mean Santur Corporation, a Delaware corporation.

“Security Agreement” shall mean, collectively, the security agreement(s)
executed and delivered by the Borrower on the Effective Date pursuant to
Section 5.1 hereof, and any such agreements executed and delivered after the
Effective Date (whether by execution of a joinder agreement to any existing
security agreement or otherwise) pursuant to Section 7.13 hereof or otherwise,
in the form of the Security Agreement attached hereto as Exhibit F, as amended,
restated or otherwise modified from time to time.

“Significant Domestic Subsidiary” shall mean Santur Corporation (but only if the
condition referred to in clause (iii) of Section 7.13(a) is not timely
satisfied) and each Domestic Subsidiary with total assets or total revenue which
at any time exceeds five percent (5%) of the aggregate total assets or total
revenue (as applicable) of the Borrower and its Domestic Subsidiaries.

“Significant Foreign Subsidiary” shall mean each Foreign Subsidiary with total
assets, or total revenue which at any time exceeds five percent (5%) of the
aggregate total assets or total revenue (as applicable) of the Borrower and its
Consolidated Subsidiaries.

“Significant Subsidiaries” shall mean the Significant Domestic Subsidiaries and
the Significant Foreign Subsidiaries, and Significant Subsidiary shall mean any
one of them, as the context indicates or otherwise requires.

“Subordinated Debt” shall mean any unsecured Funded Debt of any Credit Party and
other obligations under the Subordinated Debt Documents and any other Funded
Debt of any Credit Party which has been subordinated in right of payment and
priority to the Indebtedness, all on terms and conditions satisfactory to the
Agent.

“Subordinated Debt Documents” shall mean and include any documents evidencing
any Subordinated Debt, in each case, as the same may be amended, modified,
supplemented or otherwise modified from time to time in compliance with the
terms of this Agreement.

 

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“Subordination Agreements” shall mean, collectively, any subordination
agreements entered into by any Person from time to time in favor of the Agent in
connection with any Subordinated Debt, the terms of which are acceptable to the
Agent, in each case as the same may be amended, restated or otherwise modified
from time to time, and “Subordination Agreement” shall mean any one of them.

“Subsidiary(ies)” shall mean any other corporation, association, joint stock
company, business trust, limited liability company, partnership or any other
business entity of which more than fifty percent (50%) of the outstanding voting
stock, share capital, membership, partnership or other interests, as the case
may be, is owned either directly or indirectly by any Person or one or more of
its Subsidiaries, or the management of which is otherwise controlled, directly,
or indirectly through one or more intermediaries, or both, by any Person and/or
its Subsidiaries. Unless otherwise specified to the contrary herein or the
context otherwise requires, Subsidiary(ies) shall refer to the Subsidiary(ies)
of the Borrower.

“Sweep Agreement” means any agreement relating to the “Sweep to Loan” automated
system of the Agent or any other cash management arrangement which the Borrower
and the Agent have executed for the purposes of effecting the borrowing and
repayment of Swing Line Advances.

“Swing Line” shall mean the revolving credit loans to be advanced to the
Borrower by the Swing Line Lender pursuant to Section 2.5 hereof, in an
aggregate amount (subject to the terms hereof), not to exceed, at any one time
outstanding, the Swing Line Maximum Amount.

“Swing Line Advance” shall mean a borrowing requested by the Borrower and made
by Swing Line Lender pursuant to Section 2.5 hereof and may include, subject to
the terms hereof, Quoted Rate-Advances and Base Rate Advances.

“Swing Line Lender” shall mean Comerica Bank in its capacity as lender of the
Swing Line under Section 2.5 of this Agreement, or its successor as subsequently
designated hereunder.

“Swing Line Maximum Amount” shall mean One Million Dollars ($1,000,000).

“Swing Line Note” shall mean the swing line note which may be issued by the
Borrower to Swing Line Lender pursuant to Section 2.5(b)(ii) hereof in the form
attached hereto as Exhibit C, as such note may be amended or supplemented from
time to time, and any note or notes issued in substitution, replacement or
renewal thereof from time to time.

“Swing Line Participation Certificate” shall mean the Swing Line Participation
Certificate delivered by the Agent to each Revolving Credit Lender pursuant to
Section 2.5(e)(ii) hereof in the form attached hereto as Exhibit K.

“Term Loan” shall mean the term loan to be made to the Borrower by the Term Loan
Lenders pursuant to Section 4.1(a) hereof, in the aggregate principal amount not
to exceed Twenty Eight Million Dollars ($28,000,000).

“Term Loan Advance” shall mean a borrowing made by the Term Loan Lenders to the
Borrower pursuant to Section 4.1 hereof, including without limitation any
refunding or conversion of such borrowing pursuant to Section 4.4 hereof, and
may include, subject to the terms hereof, Eurodollar-based Advances and Base
Rate Advances.

“Term Loan Aggregate Commitment” shall mean Twenty Eight Million Dollars
($28,000,000), subject to termination under Section 9.2 hereof.

“Term Loan Commitment Amount” shall mean with respect to any Term Loan Lender,
(i) if the Term Loan Advance has not been made and the Term Loan Aggregate
Commitment has not been terminated (whether by acceleration or otherwise), the
amount specified opposite such Term Loan Lender’s name in the column entitled
“Term Loan Commitment Amount” on Schedule 1.2, as adjusted from time to time in
accordance with the terms hereof; and (ii) if the Term Loan Advance has been
made or the Term Loan Aggregate Commitment has been terminated (whether by
acceleration or otherwise), the amount equal to its Percentage of the aggregate
principal amount outstanding under the Term Loan.

 

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“Term Loan Draw Period” shall mean the period commencing on the date hereof and
expiring on June 30, 2013, subject to termination if the Term Loan Aggregate
commitment is terminated under Section 9.2 hereof.

“Term Loan Lenders” shall mean the financial institutions from time to time
parties hereto as lenders of the Term Loan.

“Term Loan Maturity Date” shall mean June 30, 2017.

“Term Loan Notes” shall mean the term notes described in Section 4.2(e) hereof,
made by the Borrower to each of the Term Loan Lenders in the form attached
hereto as Exhibit M, as such notes may be amended or supplemented from time to
time, and any other notes issued in substitution, replacement or renewal thereof
from time to time.

“Term Loan Percentage” shall mean with respect to any Term Loan Lender, the
percentage specified opposite such Term Loan Lender’s name in the column
entitled “Term Loan Percentage” on Schedule 1.2 attached hereto, as adjusted
from time to time in accordance with the terms hereof.

“Term Loan Rate Request” shall mean a request for the refunding or conversion of
any Advance of the Term Loan submitted by Borrower under Section 4.4 of this
Agreement in the form attached hereto as Exhibit N.

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such Trademarks.

“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as in
effect in any applicable state; provided that, unless specified otherwise or the
context otherwise requires, such terms shall refer to the Uniform Commercial
Code as in effect in the State of California.

“Unused Revolving Credit Availability” shall mean, on any date of determination,
the amount equal to the lesser of (i) the Revolving Credit Aggregate Commitment
or (ii) the then applicable Borrowing Base, minus (x) the aggregate outstanding
principal amount of all Advances (including Swing Line Advances) and (y) the
Letter of Credit Obligations.

“U.S. Lender” is defined in Section 13.13 hereof.

“USA Patriot Act” is defined in Section 6.7.

“Weighted Percentage” shall mean with respect to any Lender, its weighted
percentage calculated by dividing (i) the sum of (x) its Revolving Credit
Commitment Amount plus (y) its Term Loan Commitment Amount, by (ii) the sum of
(x) the Revolving Credit Aggregate Commitment (or, if the Revolving Credit
Aggregate Commitment has been terminated (whether by maturity, acceleration or
otherwise), the aggregate principal amount outstanding under the Revolving
Credit, including any outstanding Letter of Credit Obligations and outstanding
Swing Line Advances), plus (y) the Term Loan Aggregate Commitment (or if the
Term Loan Draw Period has expired. Advances of the Term Loan in aggregate amount
of the Term Loan Aggregate Commitment have been made hereunder or the Term Loan
Aggregate Commitment has been terminated (whether by acceleration or otherwise),
the aggregate principal amount of Indebtedness outstanding under the Term Loan).
Schedule 1.2 reflects each Lender’s Weighted Percentage and may be revised by
the Agent from time to time to reflect changes in the Weighted Percentages of
the Lenders.

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

 

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2. REVOLVING CREDIT.

2.1 Commitment. Subject to the terms and conditions of this Agreement (including
without limitation Section 2.3 hereof), each Revolving Credit Lender severally
and for itself alone agrees to make Advances of the Revolving Credit in Dollars
to the Borrower from time to time on any Business Day during the period from the
Effective Date hereof until (but excluding) the Revolving Credit Maturity Date
in an aggregate amount, not to exceed at any one time outstanding such Lender’s
Revolving Credit Percentage of the Revolving Credit Aggregate Commitment.
Subject to the terms and conditions set forth herein, advances, repayments and
readvances may be made under the Revolving Credit.

2.2 Accrual of Interest and Maturity; Evidence of Indebtedness.

(a) The Borrower hereby unconditionally promises to pay to the Agent for the
account of each Revolving Credit Lender the then unpaid principal amount of each
Revolving Credit Advance (plus all accrued and unpaid interest) of such
Revolving Credit Lender to the Borrower on the Revolving Credit Maturity Date
and on such other dates and in such other amounts as may be required from time
to time pursuant to this Agreement. Subject to the terms and conditions hereof,
each Revolving Credit Advance shall, from time to time from and after the date
of such Advance (until paid), bear interest at its Applicable Interest Rate.

(b) Each Revolving Credit Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to the
appropriate lending office of such Revolving Credit Lender resulting from each
Revolving Credit Advance made by such lending office of such Revolving Credit
Lender from time to time, including the amounts of principal and interest
payable thereon and paid to such Revolving Credit Lender from time to time under
this Agreement.

(c) The Agent shall maintain the Register pursuant to Section 13.8(g), and a
subaccount therein for each Revolving Credit Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each Revolving
Credit Advance made hereunder, the type thereof and each Eurodollar-Interest
Period applicable to any Eurodollar-based Advance, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Revolving Credit Lender hereunder in respect of the Revolving
Credit Advances and (iii) both the amount of any sum received by the Agent
hereunder from the Borrower in respect of the Revolving Credit Advances and each
Revolving Credit Lender’s share thereof.

(d) The entries made in the Register maintained pursuant to paragraph (c) of
this Section 2.2 shall, absent manifest error, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Revolving Credit Lender or the Agent to maintain the Register or
any account, as applicable, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay the Revolving Credit Advances (and all
other amounts owing with respect thereto) made to the Borrower by the Revolving
Credit Lenders in accordance with the terms of this Agreement.

(e) The Borrower agrees that, upon written request to the Agent by any Revolving
Credit Lender, the Borrower will execute and deliver, to such Revolving Credit
Lender, at the Borrower’s own expense, a Revolving Credit Note evidencing the
outstanding Revolving Credit Advances owing to such Revolving Credit Lender.

2.3 Requests for and Refundings and Conversions of Advances. The Borrower may
request an Advance of the Revolving Credit, a refund of any Revolving Credit
Advance in the same type of Advance or to convert any Revolving Credit Advance
to any other type of Revolving Credit Advance only by delivery to the Agent of a
Request for Revolving Credit Advance executed by an Authorized Signer for the
Borrower, subject to the following:

(a) each such Request for Revolving Credit Advance shall set forth the
information required on the Request for Revolving Credit Advance, including
without limitation:

(i) the proposed date of such Revolving Credit Advance (or the refunding or
conversion of an outstanding Revolving Credit Advance), which must be a Business
Day;

 

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(ii) whether such Advance is a new Revolving Credit Advance or a refunding or
conversion of an outstanding Revolving Credit Advance; and

(iii) whether such Revolving Credit Advance is to be a Base Rate Advance or a
Eurodollar-based Advance, and, except in the case of a Base Rate Advance, the
first Eurodollar-Interest Period applicable thereto, provided, however, that the
initial Revolving Credit Advance made under this Agreement shall be a Base Rate
Advance, which may then be converted into a Eurodollar-based Advance in
compliance with this Agreement.

(b) each such Request for Revolving Credit Advance shall be delivered to the
Agent by 12:00 p.m. (Detroit time) three (3) Business Days prior to the proposed
date of the Revolving Credit Advance, except in the case of a Base Rate Advance,
for which the Request for Revolving Credit Advance must be delivered by 12:00
p.m. (Detroit time) on the proposed date for such Revolving Credit Advance;

(c) on the proposed date of such Revolving Credit Advance, the sum of (x) the
aggregate principal amount of all Revolving Credit Advances and Swing Line
Advances outstanding on such date (including, without duplication) the Advances
that are deemed to be disbursed by the Agent under Section 3.6(c) hereof in
respect of the Borrower’s Reimbursement Obligations hereunder), plus (y) the
Letter of Credit Obligations as of such date, in each case after giving effect
to all outstanding requests for Revolving Credit Advances and Swing Line
Advances and for the issuance of any Letters of Credit shall not exceed the
lesser of (i) the Revolving Credit Aggregate Commitment and (ii) the then
applicable Borrowing Base;

(d) in the case of a Base Rate Advance, the principal amount of the initial
funding of such Advance, as opposed to any refunding or conversion thereof,
shall be at least $500,000 or the remainder available under the Revolving Credit
Aggregate Commitment if less than $500,000;

(e) in the case of a Eurodollar-based Advance, the principal amount of such
Advance, plus the amount of any other outstanding Revolving Credit Advance to be
then combined therewith having the same Eurodollar-Interest Period, if any,
shall be at least $100,000 (or a larger integral multiple of $100,000) or the
remainder available under the Revolving Credit Aggregate Commitment if less than
$100,000 and at any one time there shall not be in effect more than four
(4) different Eurodollar-Interest Periods;

(f) a Request for Revolving Credit Advance, once delivered to the Agent, shall
not be revocable by the Borrower and shall constitute a certification by the
Borrower as of the date thereof that:

(i) all conditions to the making of Revolving Credit Advances set forth in this
Agreement have been satisfied and shall remain satisfied to the date of such
Revolving Credit Advance (both before and immediately after giving effect to
such Revolving Credit Advance);

(ii) there is no Default or Event of Default in existence, and none will exist
upon the making of such Revolving Credit Advance (both before and immediately
after giving effect to such Revolving Credit Advance); and

(iii) the representations and warranties of the Credit Parties contained in this
Agreement and the other Loan Documents are true and correct in all material
respects and shall be true and correct in all material respects as of the date
of the making of such Revolving Credit Advance (both before and immediately
after giving effect to such Revolving Credit Advance), other than any
representation or warranty that expressly speaks only as of a different date;

 

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The Agent, acting on behalf of the Revolving Credit Lenders, may also, at its
option, lend under this Section 2.3 upon the telephone or email request of an
Authorized Signer of the Borrower to make such requests and, in the event the
Agent, acting on behalf of the Revolving Credit Lenders, makes any such Advance
upon a telephone or email request, an Authorized Signer shall fax or deliver by
electronic file to the Agent, on the same day as such telephone or email
request, an executed Request for Revolving Credit Advance. The Borrower hereby
authorizes the Agent to disburse Advances under this Section 2.3 pursuant to the
telephone or email instructions of any person purporting to be an Authorized
Signer. Notwithstanding the foregoing, the Borrower acknowledges that the
Borrower shall bear all risk of loss resulting from disbursements made upon any
telephone or email request. Each telephone or email request for an Advance from
an Authorized Signer for the Borrower shall constitute a certification of the
matters set forth in the Request for Revolving Credit Advance form as of the
date of such requested Advance.

2.4 Disbursement of Advances.

(a) Upon receiving any Request for Revolving Credit Advance from the Borrower
under Section 2.3 hereof, the Agent shall promptly notify each Revolving Credit
Lender by wire, telex or telephone (confirmed by wire, telecopy or telex) of the
amount of such Advance being requested and the date such Revolving Credit
Advance is to be made by each Revolving Credit Lender in an amount equal to its
Revolving Credit Percentage of such Advance. Unless such Revolving Credit
Lender’s commitment to make Revolving Credit Advances hereunder shall have been
suspended or terminated in accordance with this Agreement, each such Revolving
Credit Lender shall make available the amount of its Revolving Credit Percentage
of each Revolving Credit Advance in immediately available funds to the Agent, as
follows:

(i) for Base Rate Advances, at the office of the Agent located at 411 West
Lafayette, 7th Floor, MC 3289, Detroit, Michigan 48226, not later than 1:00 p.m.
(Detroit time) on the date of such Advance; and

(ii) for Eurodollar-based Advances, at the Agent’s Correspondent for the account
of the Eurodollar Lending Office of the Agent, not later than 12:00 p.m. (the
time of the Agent’s Correspondent) on the date of such Advance.

(b) Subject to submission of an executed Request for Revolving Credit Advance by
the Borrower without exceptions noted in the compliance certification therein,
the Agent shall make available to the Borrower the aggregate of the amounts so
received by it from the Revolving Credit Lenders in like funds and currencies:

(i) for Base Rate Advances, not later than 4:00 p.m. (Detroit time) on the date
of such Revolving Credit Advance, by credit to an account of the Borrower
maintained with the Agent or to such other account or third party as the
Borrower may reasonably direct in writing, provided such direction is timely
given; and

(ii) for Eurodollar-based Advances, not later than 4:00 p.m. (the time of the
Agent’s Correspondent) on the date of such Revolving Credit Advance, by credit
to an account of the Borrower maintained with the Agent’s Correspondent or to
such other account or third party as the Borrower may direct, provided such
direction is timely given.

(c) The Agent shall deliver the documents and papers received by it for the
account of each Revolving Credit Lender to such Revolving Credit Lender. Unless
the Agent shall have been notified by any Revolving Credit Lender prior to the
date of any proposed Revolving Credit Advance that such Revolving Credit Lender
does not intend to make available to the Agent such Revolving Credit Lender’s
Percentage of such Advance, the Agent may assume that such Revolving Credit
Lender has made such amount available to the Agent on such date, as aforesaid.
The Agent may, but shall not be obligated to, make available to the Borrower the
amount of such payment in reliance on such assumption. If such amount is not in
fact made available to the Agent by such Revolving Credit Lender, as aforesaid,
the Agent shall be entitled to recover such amount on demand from such Revolving
Credit Lender. If such Revolving Credit Lender does not pay such amount
forthwith upon the Agent’s demand therefor and the Agent has in fact made a
corresponding amount available to the Borrower, the Agent shall promptly notify
the Borrower and the Borrower shall pay such amount to the Agent, if such notice
is delivered to the Borrower prior to 1:00 p.m. (Detroit time) on a Business
Day, on the day such notice is received, and otherwise on the next Business Day,
and such amount paid by the Borrower shall be applied as a prepayment of the
Revolving Credit (without any corresponding reduction in the Revolving Credit
Aggregate Commitment), reimbursing the Agent for having funded said amounts on
behalf of such Revolving Credit Lender. The Borrower shall retain its claim
against such

 

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Revolving Credit Lender with respect to the amounts repaid by it to the Agent
and, if such Revolving Credit Lender subsequently makes such amounts available
to the Agent, the Agent shall promptly make such amounts available to the
Borrower as a Revolving Credit Advance. The Agent shall also be entitled to
recover from such Revolving Credit Lender or the Borrower, as the case may be,
but without duplication, interest on such amount in respect of each day from the
date such amount was made available by the Agent to the Borrower, to the date
such amount is recovered by the Agent, at a rate per annum equal to:

(i) in the case of such Revolving Credit Lender, for the first two (2) Business
Days such amount remains unpaid, the Federal Funds Effective Rate, and
thereafter, at the rate of interest then applicable to such Revolving Credit
Advances; and

(ii) in the case of the Borrower, the rate of interest then applicable to such
Advance of the Revolving Credit.

Until such Revolving Credit Lender has paid the Agent such amount, such
Revolving Credit Lender shall have no interest in or rights with respect to such
Advance for any purpose whatsoever. The obligation of any Revolving Credit
Lender to make any Revolving Credit Advance hereunder shall not be affected by
the failure of any other Revolving Credit Lender to make any Advance hereunder,
and no Revolving Credit Lender shall have any liability to the Borrower or any
of its Subsidiaries, the Agent, any other Revolving Credit Lender, or any other
party for another Revolving Credit Lender’s failure to make any loan or Advance
hereunder.

2.5 Swing Line.

(a) Swing Line Advances. The Swing Line Lender may, on the terms and subject to
the conditions hereinafter set forth (including without limitation
Section 2.5(c) hereof), but shall not be required to, make one or more Advances
(each such advance being a “Swing Line Advance”) to the Borrower from time to
time on any Business Day during the period from the Effective Date hereof until
(but excluding) the Revolving Credit Maturity Date in an aggregate amount not to
exceed at any one time outstanding the Swing Line Maximum Amount. Subject to the
terms set forth herein, advances, repayments and readvances may be made under
the Swing Line.

(b) Accrual of Interest and Maturity; Evidence of Indebtedness.

(i) Swing Line Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to Swing Line Lender
resulting from each Swing Line Advance from time to time, including the amount
and date of each Swing Line Advance, its Applicable Interest Rate, its Interest
Period, if any, and the amount and date of any repayment made on any Swing Line
Advance from time to time. The entries made in such account or accounts of Swing
Line Lender shall be prima facie evidence, absent manifest error, of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of Swing Line Lender to maintain such
account, as applicable, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay the Swing Line Advances (and all other
amounts owing with respect thereto) in accordance with the terms of this
Agreement.

(ii) The Borrower agrees that, upon the written request of Swing Line Lender,
the Borrower will execute and deliver to Swing Line Lender a Swing Line Note.

(iii) The Borrower unconditionally promises to pay to the Swing Line Lender the
then unpaid principal amount of such Swing Line Advance (plus all accrued and
unpaid interest) on the Revolving Credit Maturity Date and on such other dates
and in such other amounts as may be required from time to time pursuant to this
Agreement. Subject to the terms and conditions hereof, each Swing Line Advance
shall, from time to time after the date of such Advance (until paid), bear
interest at its Applicable Interest Rate.

 

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(c) Requests for Swing Line Advances. The Borrower may request a Swing Line
Advance by the delivery to Swing Line Lender of a Request for Swing Line Advance
executed by an Authorized Signer for the Borrower, subject to the following:

(i) each such Request for Swing Line Advance shall set forth the information
required on the Request for Advance, including without limitation, (A) the
proposed date of such Swing Line Advance, which must be a Business Day,
(B) whether such Swing Line Advance is to be a Base Rate Advance or a Quoted
Rate Advance, and (C) in the case of a Quoted Rate Advance, the duration of the
Interest Period applicable thereto;

(ii) on the proposed date of such Swing Line Advance, after giving effect to all
outstanding requests for Swing Line Advances made by the Borrower as of the date
of determination, the aggregate principal amount of all Swing Line Advances
outstanding on such date shall not exceed the Swing Line Maximum Amount;

(iii) on the proposed date of such Swing Line Advance, after giving effect to
all outstanding requests for Revolving Credit Advances and Swing Line Advances
and Letters of Credit requested by the Borrower on such date of determination
(including, without duplication, Advances that are deemed disbursed pursuant to
Section 3.6(c) hereof in respect of the Borrower’s Reimbursement Obligations
hereunder), the sum of (x) the aggregate principal amount of all Revolving
Credit Advances and the Swing Line Advances outstanding on such date plus
(y) the Letter of Credit Obligations on such date shall not exceed the lesser of
(A) the Revolving Credit Aggregate Commitment and (B) the then applicable
Borrowing Base;

(iv) (A) in the case of a Swing Line Advance that is a Base Rate Advance, the
principal amount of the initial funding of such Advance, as opposed to any
refunding or conversion thereof, shall be at least One Hundred Thousand Dollars
($100,000) or such lesser amount as may be agreed to by the Swing Line Lender,
and (B) in the case of a Swing Line Advance that is a Quoted Rate Advance, the
principal amount of such Advance, plus any other outstanding Swing Line Advances
to be then combined therewith having the same Interest Period, if any, shall be
at least One Hundred Thousand Dollars ($100,000) or such lesser amount as may be
agreed to by the Swing Line Lender, and at any time there shall not be in effect
more than four (4) Interest Rates and Interest Periods;

(v) each such Request for Swing Line Advance shall be delivered to the Swing
Line Lender by 3:00 p.m. (Detroit time) on the proposed date of the Swing Line
Advance;

(vi) each Request for Swing Line Advance, once delivered to Swing Line Lender,
shall not be revocable by the Borrower, and shall constitute and include a
certification by the Borrower as of the date thereof that:

 

  (A) all conditions to the making of Swing Line Advances set forth in this
Agreement shall have been satisfied and shall remain satisfied to the date of
such Swing Line Advance (both before and immediately after giving effect to such
Swing Line Advance);

 

  (B) there is no Default or Event of Default in existence, and none will exist
upon the making of such Swing Line Advance (both before and immediately after
giving effect to such Swing Line Advance); and

 

  (C) the representations and warranties of the Credit Parties contained in this
Agreement and the other Loan Documents are true and correct in all material
respects and shall be true and correct in all material respect as of the date of
the making of such Swing Line Advance (both before and immediately after giving
effect to such Swing Line Advance), other than any representation or warranty
that expressly speaks only as of a different date;

 

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(vii) At the option of the Agent, subject to revocation by the Agent at any time
and from time to time and so long as the Agent is the Swing Line Lender, the
Borrower may utilize the Agent’s “Sweep to Loan” automated system for obtaining
Swing Line Advances and making periodic repayments. At any time during which the
“Sweep to Loan” system is in effect, Swing Line Advances shall be advanced to
fund borrowing needs pursuant to the terms of the Sweep Agreement. Each time a
Swing Line Advance is made using the “Sweep to Loan” system, the Borrower shall
be deemed to have certified to the Agent and the Lenders each of the matters set
forth in clause (vi) of this Section 2.5(b). Principal and interest on Swing
Line Advances requested, or deemed requested, pursuant to this Section shall be
paid pursuant to the terms and conditions of the Sweep Agreement without any
deduction, setoff or counterclaim whatsoever. Unless sooner paid pursuant to the
provisions hereof or the provisions of the Sweep Agreement, the principal amount
of the Swing Loans shall be paid in full, together with accrued interest
thereon, on the Revolving Credit Maturity Date. The Agent may suspend or revoke
the Borrower’s privilege to use the “Sweep to Loan” system at any time and from
time to time for any reason and, immediately upon any such revocation, the
“Sweep to Loan” system shall no longer be available to the Borrower for the
funding of Swing Line Advances hereunder (or otherwise), and the regular
procedures set forth in this Section 2.5 for the making of Swing Line Advances
shall be deemed immediately to apply. The Agent may, at its option, also elect
to make Swing Line Advances upon the Borrower’s telephone requests on the basis
set forth in the last paragraph of Section 2.3, provided that the Borrower
complies with the provisions set forth in this Section 2.5.

(d) Disbursement of Swing Line Advances. Upon receiving any executed Request for
Swing Line Advance from the Borrower and the satisfaction of the conditions set
forth in Section 2.5(c) hereof, Swing Line Lender shall, at its option, make
available to the Borrower the amount so requested in Dollars not later than 4:00
p.m. (Detroit time) on the date of such Advance, by credit to an account of the
Borrower maintained with the Agent or to such other account or third party as
the Borrower may reasonably direct in writing, subject to applicable law,
provided such direction is timely given. Swing Line Lender shall promptly notify
the Agent of any Swing Line Advance by telephone, telex or telecopier.

(e) Refunding of or Participation Interest in Swing Line Advances.

(i) The Agent, at any time in its sole and absolute discretion, may, in each
case on behalf of the Borrower (which hereby irrevocably directs the Agent to
act on their behalf) request each of the Revolving Credit Lenders (including the
Swing Line Lender in its capacity as a Revolving Credit Lender) to make an
Advance of the Revolving Credit to the Borrower, in an amount equal to such
Revolving Credit Lender’s Revolving Credit Percentage of the aggregate principal
amount of the Swing Line Advances outstanding on the date such notice is given
(the “Refunded Swing Line Advances”); provided however that the Swing Line
Advances carried at the Quoted Rate which are refunded with Revolving Credit
Advances at the request of the Swing Line Lender at a time when no Default or
Event of Default has occurred and is continuing shall not be subject to
Section 11.1 and no losses, costs or expenses may be assessed by the Swing Line
Lender against the Borrower or the Revolving Credit Lenders as a consequence of
such refunding. The applicable Revolving Credit Advances used to refund any
Swing Line Advances shall be Base Rate Advances. In connection with the making
of any such Refunded Swing Line Advances or the purchase of a participation
interest in Swing Line Advances under Section 2.5(e)(ii) hereof, the Swing Line
Lender shall retain its claim against the Borrower for any unpaid interest or
fees in respect thereof accrued to the date of such refunding. Unless any of the
events described in Section 9.1(i) hereof shall have occurred (in which event
the procedures of Section 2.5(e)(ii) shall apply) and regardless of whether the
conditions precedent set forth in this Agreement to the making of a Revolving
Credit Advance are then satisfied (but subject to Section 2.5(e)(iii)), each
Revolving Credit Lender shall make the proceeds of its Revolving Credit Advance
available to the Agent for the benefit of the Swing Line Lender at the office of
the Agent specified in Section 2.4(a) hereof prior to 11:00 a.m. Detroit time on
the Business Day next succeeding the date such notice is given, in immediately
available funds. The proceeds of such Revolving Credit Advances shall be
immediately applied to repay the Refunded Swing Line Advances, subject to
Section 11.1 hereof.

 

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(ii) If, prior to the making of an Advance of the Revolving Credit pursuant to
Section 2.5(e)(i) hereof, one of the events described in Section 9.1(i) hereof
shall have occurred, each Revolving Credit Lender will, on the date such Advance
of the Revolving Credit was to have been made, purchase from the Swing Line
Lender an undivided participating interest in each Swing Line Advance that was
to have been refunded in an amount equal to its Revolving Credit Percentage of
such Swing Line Advance. Each Revolving Credit Lender within the time periods
specified in Section 2.5(e)(i) hereof, as applicable, shall immediately transfer
to the Agent, for the benefit of the Swing Line Lender, in immediately available
funds, an amount equal to its Revolving Credit Percentage of the aggregate
principal amount of all Swing Line Advances outstanding as of such date. Upon
receipt thereof, the Agent will deliver to such Revolving Credit Lender a Swing
Line Participation Certificate evidencing such participation.

(iii) Each Revolving Credit Lender’s obligation to make Revolving Credit
Advances to refund Swing Line Advances, and to purchase participation interests,
in accordance with Section 2.5(e)(i) and (ii), respectively, shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, (A) any set-off, counterclaim, recoupment, defense or other
right which such Revolving Credit Lender may have against Swing Line Lender, the
Borrower or any other Person for any reason whatsoever; (B) the occurrence or
continuance of any Default or Event of Default; (C) any adverse change in the
condition (financial or otherwise) of the Borrower or any other Person; (D) any
breach of this Agreement or any other Loan Document by the Borrower or any other
Person; (E) any inability of the Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement on the date upon which such Revolving
Credit Advance is to be made or such participating interest is to be purchased;
(F) the termination of the Revolving Credit Aggregate Commitment hereunder; or
(G) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. If any Revolving Credit Lender does not make
available to the Agent the amount required pursuant to Section 2.5(e)(i) or
(ii) hereof, as the case may be, the Agent on behalf of the Swing Line Lender,
shall be entitled to recover such amount on demand from such Revolving Credit
Lender, together with interest thereon for each day from the date of non-payment
until such amount is paid in full (x) for the first two (2) Business Days such
amount remains unpaid, at the Federal Funds Effective Rate and (y) thereafter,
at the rate of interest then applicable to such Swing Line Advances. The
obligation of any Revolving Credit Lender to make available its pro rata portion
of the amounts required pursuant to Section 2.5(e)(i) or (ii) hereof shall not
be affected by the failure of any other Revolving Credit Lender to make such
amounts available, and no Revolving Credit Lender shall have any liability to
any Credit Party, the Agent, the Swing Line Lender, or any other Revolving
Credit Lender or any other party for another Revolving Credit Lender’s failure
to make available the amounts required under Section 2.5(e)(i) or (ii) hereof.

(iv) Notwithstanding the foregoing, no Revolving Credit Lender shall be required
to make any Revolving Credit Advance to refund a Swing Line Advance or to
purchase a participation in a Swing Line Advance if at least two (2) Business
Days prior to the making of such Swing Line Advance by the Swing Line Lender,
the officers of the Swing Line Lender immediately responsible for matters
concerning this Agreement shall have received written notice from the Agent or
any Lender that Swing Line Advances should be suspended based on the occurrence
and continuance of a Default or Event of Default and stating that such notice is
a “notice of default”; provided, however that the obligation of the Revolving
Credit Lenders to make or refund such Swing Line Advance or purchase a
participation in such Swing Line Advance) shall be reinstated upon the date on
which such Default or Event of Default has been waived by the requisite Lenders.

 

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2.6 Interest Payments; Default Interest.

(a) Interest on the unpaid balance of all Base Rate Advances of the Revolving
Credit and the Swing Line from time to time outstanding shall accrue from the
date of such Advance to the date repaid, at a per annum interest rate equal to
the Base Rate, and shall be payable in immediately available funds quarterly in
arrears commencing on July 1, 2013, and on the first day of each April, July,
October and January thereafter. Whenever any payment under this Section 2.6(a)
shall become due on a day which is not a Business Day, the date for payment
thereof shall be extended to the next Business Day. Interest accruing at the
Base Rate shall be computed on the basis of a 360 day year and assessed for the
actual number of days elapsed, and in such computation effect shall be given to
any change in the interest rate resulting from a change in the Base Rate on the
date of such change in the Base Rate.

(b) Interest on each Eurodollar-based Advance of the Revolving Credit shall
accrue at its Eurodollar-based Rate and shall be payable in immediately
available funds on the last day of the Eurodollar-Interest Period applicable
thereto (and, if any Eurodollar-Interest Period shall exceed three months, then
on the last Business Day of the third month of such Eurodollar-Interest Period,
and at three month intervals thereafter). Interest accruing at the
Eurodollar-based Rate shall be computed on the basis of a 360 day year and
assessed for the actual number of days elapsed from the first day of the
Eurodollar-Interest Period applicable thereto to but not including the last day
thereof.

(c) Interest on each Quoted Rate Advance of the Swing Line shall accrue at its
Quoted Rate and shall be payable in immediately available funds on the last day
of the Interest Period applicable thereto. Interest accruing at the Quoted Rate
shall be computed on the basis of a 360-day year and assessed for the actual
number of days elapsed from the first day of the Interest Period applicable
thereto to, but not including, the last day thereof.

(d) Notwithstanding anything to the contrary in the preceding sections, all
accrued and unpaid interest on any Revolving Credit Advance refunded or
converted pursuant to Section 2.3 hereof and any Swing Line Advance refunded
pursuant to Section 2.5(e) hereof, shall be due and payable in full on the date
such Advance is refunded or converted.

(e) In the case of any Event of Default under Section 9.1(i), immediately upon
the occurrence thereof, and in the case of any other Event of Default,
immediately upon receipt by the Agent of notice from the Majority Revolving
Credit Lenders, interest shall be payable on demand on all Revolving Credit
Advances and Swing Line Advances from time to time outstanding at a per annum
rate equal to the Applicable Interest Rate in respect of each such Advance plus,
in the case of Eurodollar-based Advances and Quoted Rate Advances, three percent
(3%) for the remainder of the then existing Interest Period, if any, and at all
other such times, and for all Base Rate Advances from time to time outstanding,
at a per annum rate equal to the Base Rate plus three percent (3%).

2.7 Optional Prepayments.

(a) (i) The Borrower may prepay all or part of the outstanding principal of any
Base Rate Advance(s) of the Revolving Credit at any time, provided that, unless
the “Sweep to Loan” system shall be in effect in respect of the Revolving
Credit, after giving effect to any partial prepayment, the aggregate balance of
Base Rate Advance(s) of the Revolving Credit remaining outstanding shall be at
least Five Hundred Thousand Dollars ($500,000), and (ii) subject to
Section 2.10(c) hereof, the Borrower may prepay all or part of the outstanding
principal of any Eurodollar-based Advance of the Revolving Credit at any time
(subject to not less than five (5) Business Day’s notice to the Agent) provided
that, after giving effect to any partial prepayment, the unpaid portion of such
Advance which is to be refunded or converted under Section 2.3 hereof shall be
at least Five Hundred Thousand Dollars ($500,000).

(b) (i) The Borrower may prepay all or part of the outstanding principal of any
Swing Line Advance carried at the Base Rate at any time, provided that after
giving effect to any partial prepayment, the aggregate balance of such Base Rate
Advances remaining outstanding shall be at least One Hundred Thousand Dollars
($100,000) and (ii) subject to Section 2.10(c) hereof, the Borrower may prepay
all or part of the outstanding principal of any Swing Line Advance carried at
the Quoted Rate at any time (subject to not less than one (1) day’s notice to
the Swing Line Lender) provided that after giving effect to any partial
prepayment, the aggregate balance of such Quoted Rate Swing Line Advances
remaining outstanding shall be at least One Hundred Thousand Dollars ($100,000).

 

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(c) Any prepayment of a Base Rate Advance made in accordance with this Section
shall be without premium or penalty and any prepayment of any other type of
Advance shall be subject to the provisions of Section 11.1 hereof, but otherwise
without premium or penalty.

2.8 Base Rate Advance in Absence of Election or Upon Default. If, (a) as to any
outstanding Eurodollar-based Advance of the Revolving Credit or any outstanding
Quoted Rate Advance of the Swing Line, the Agent has not received payment of all
outstanding principal and accrued interest on the last day of the Interest
Period applicable thereto, or does not receive a timely Request for Advance
meeting the requirements of Section 2.3 or 2.5 hereof with respect to the
refunding or conversion of such Advance, or (b) if on the last day of the
applicable Interest Period a Default or an Event of Default shall have occurred
and be continuing, then, on the last day of the applicable Interest Period the
principal amount of any Eurodollar-based Advance or Quoted Rate Advance, as the
case may be, which has not been prepaid shall, absent a contrary election of the
Majority Revolving Credit Lenders, be converted automatically to a Base Rate
Advance and the Agent shall thereafter promptly notify the Borrower of said
action. All accrued and unpaid interest on any Advance converted to a Base Rate
Advance under this Section 2.8 shall be due and payable in full on the date such
Advance is converted.

2.9 Revolving Credit Facility Fee. From the Effective Date to the Revolving
Credit Maturity Date, the Borrower shall pay to the Agent for distribution to
the Revolving Credit Lenders pro-rata in accordance with their respective
Revolving Credit Percentages, a Revolving Credit Facility Fee quarterly in
arrears commencing April 1, 2013, and on the first day of each January, April,
July and October thereafter (in respect of the prior three months or any portion
thereof). The Revolving Credit Facility Fee payable to each Revolving Credit
Lender shall be determined by multiplying the Applicable Fee Percentage times
the Revolving Credit Aggregate Commitment then in effect (whether used or
unused). The Revolving Credit Facility Fee shall be computed on the basis of a
year of three hundred sixty (360) days and assessed for the actual number of
days elapsed. Whenever any payment of the Revolving Credit Facility Fee shall be
due on a day which is not a Business Day, the date for payment thereof shall be
extended to the next Business Day. Upon receipt of such payment, the Agent shall
make prompt payment to each Revolving Credit Lender of its share of the
Revolving Credit Facility Fee based upon its respective Revolving Credit
Percentage. It is expressly understood that the Revolving Credit Facility Fees
described in this Section are not refundable.

2.10 Mandatory Repayment of Revolving Credit Advances.

(a) If at any time and for any reason the aggregate outstanding principal amount
of Revolving Credit Advances plus Swing Line Advances, plus the outstanding
Letter of Credit Obligations shall exceed the lesser of (i) the Revolving Credit
Aggregate Commitment and (ii) the then applicable Borrowing Base, the Borrower
shall immediately reduce any pending request for a Revolving Credit Advance on
such day by the amount of such excess and, to the extent any excess remains
thereafter, repay any Revolving Credit Advances and Swing Line Advances in an
amount equal to the lesser of the outstanding amount of such Advances and the
amount of such remaining excess, with such amounts to be applied between the
Revolving Credit Advances and Swing Line Advances as determined by the Agent and
then, to the extent that any excess remains after payment in full of all
Revolving Credit Advances and Swing Line Advances, to provide cash collateral in
support of any Letter of Credit Obligations in an amount equal to the lesser of
(x) 105% of the amount of such Letter of Credit Obligations and (y) the amount
of such remaining excess, with such cash collateral to be provided on terms
satisfactory to the Agent. The Borrower acknowledges that, in connection with
any repayment required hereunder, it shall also be responsible for the
reimbursement of any prepayment or other costs required under Section 11.1
hereof. Any payments made pursuant to this Section shall be applied first to
outstanding Base Rate Advances under the Revolving Credit, next to Swing Line
Advances carried at the Base Rate and then to Eurodollar-based Advances of the
Revolving Credit, and then to Swing Line Advances carried at the Quoted Rate.

(b) Upon the payment in full of the Term Loan, any prepayments required to be
made on the Term Loan pursuant to Sections 4.8(a), (b) and (c) of this Agreement
shall instead be applied to prepay any amounts outstanding under the Revolving
Credit, without resulting in a permanent reduction in the Revolving Credit
Agreement Commitment. Subject to Section 10.2 hereof, any payments made pursuant
to this Section shall be applied first to outstanding Base Rate Advances under
the Revolving Credit, next to Swing Line Advances carried at the Base Rate, next
to Eurodollar-based Advances under the Revolving Credit, and then to Swing Line
Advances carried at the Quoted Rate. If any amounts remain thereafter, a portion
of such prepayment equivalent to the undrawn amount of any outstanding Letters
of Credit shall be held by Lender as cash collateral for the Reimbursement
Obligations, with any additional prepayment monies being applied to any Fees,
costs or expenses due and outstanding under this Agreement, and with the
remainder of such prepayment thereafter being returned to the Borrower.

 

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(c) To the extent that, on the date any mandatory repayment of the Revolving
Credit Advances under this Section 2.10 or payment pursuant to the terms of any
of the Loan Documents is due, the Indebtedness under the Revolving Credit or any
other Indebtedness to be prepaid is being carried, in whole or in part, at the
Eurodollar-based Rate and no Default or Event of Default has occurred and is
continuing, the Borrower may deposit the amount of such mandatory prepayment in
a cash collateral account to be held by the Agent, for and on behalf of the
Revolving Credit Lenders, on such terms and conditions as are reasonably
acceptable to the Agent and upon such deposit the obligation of the Borrower to
make such mandatory prepayment shall be deemed satisfied. Subject to the terms
and conditions of said cash collateral account, sums on deposit in said cash
collateral account shall be applied (until exhausted) to reduce the principal
balance of the Revolving Credit on the last day of each Eurodollar-Interest
Period attributable to the Eurodollar-based Advances of such Revolving Advance,
thereby avoiding breakage costs under Section 11.1 hereof; provided, however,
that if a Default or Event of Default shall have occurred at any time while sums
are on deposit in the cash collateral account, the Agent may, in its sole
discretion, elect to apply such sums to reduce the principal balance of such
Eurodollar-based Advances prior to the last day of the applicable
Eurodollar-Interest Period, and the Borrower will be obligated to pay any
resulting breakage costs under Section 11.1.

2.11 Optional Reduction or Termination of Revolving Credit Aggregate Commitment.
The Borrower may, upon at least five (5) Business Days’ prior written notice to
the Agent, permanently reduce the Revolving Credit Aggregate Commitment in whole
at any time, or in part from time to time, without premium or penalty, provided
that: (i) each partial reduction of the Revolving Credit Aggregate Commitment
shall be in an aggregate amount equal to Three Million Dollars ($3,000,000) or a
larger integral multiple of One Hundred Thousand Dollars ($100,000); (ii) each
reduction shall be accompanied by the payment of the Revolving Credit Facility
Fee, if any, accrued and unpaid to the date of such reduction; (iii) the
Borrower shall prepay in accordance with the terms hereof the amount, if any, by
which the aggregate unpaid principal amount of Revolving Credit Advances and
Swing Line Advances (including, without duplication, any deemed Advances made
under Section 3.6 hereof) outstanding hereunder, plus the Letter of Credit
Obligations, exceeds the amount of the then applicable Revolving Credit
Aggregate Commitment as so reduced, together with interest thereon to the date
of prepayment; (iv) no reduction shall reduce the Revolving Credit Aggregate
Commitment to an amount which is less than the aggregate undrawn amount of any
Letters of Credit outstanding at such time; and (v) no such reduction shall
reduce the Swing Line Maximum Amount unless the Borrower so elects, provided
that the Swing Line Maximum Amount shall at no time be greater than the
Revolving Credit Aggregate Commitment; provided, however that if the termination
or reduction of the Revolving Credit Aggregate Commitment requires the
prepayment of a Eurodollar-based Advance or a Quoted Rate Advance and such
termination or reduction is made on a day other than the last Business Day of
the then current Interest Period applicable to such Eurodollar-based Advance or
such Quoted Rate Advance, then, pursuant to Section 11.1, the Borrower shall
compensate the Revolving Credit Lenders and/or the Swing Line Lender for any
losses or, so long as no Default or Event of Default has occurred and is
continuing, the Borrower may deposit the amount of such prepayment in a
collateral account as provided in Section 2.10(c). Reductions of the Revolving
Credit Aggregate Commitment and any accompanying prepayments of Advances of the
Revolving Credit shall be distributed by the Agent to each Revolving Credit
Lender in accordance with such Revolving Credit Lender’s Revolving Percentage
thereof, and will not be available for reinstatement by or readvance to the
Borrower, and any accompanying prepayments of Advances of the Swing Line shall
be distributed by the Agent to the Swing Line Lender and will not be available
for reinstatement by or readvance to the Borrower. Any reductions of the
Revolving Credit Aggregate Commitment hereunder shall reduce each Revolving
Credit Lender’s portion thereof proportionately (based on the applicable
Percentages), and shall be permanent and irrevocable. Any payments made pursuant
to this Section shall be applied first to outstanding Base Rate Advances under
the Revolving Credit, next to Swing Line Advances carried at the Base Rate and
then to Eurodollar-based Advances of the Revolving Credit, and then to Swing
Line Advances carried at the Quoted Rate.

2.12 Use of Proceeds of Advances. Advances of the Revolving Credit shall be used
to finance working capital and other lawful corporate purposes.

 

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3. LETTERS OF CREDIT.

3.1 Letters of Credit. Subject to the terms and conditions of this Agreement,
Issuing Lender may, but shall not be required to, through the Issuing Office, at
any time and from time to time from and after the date hereof until thirty
(30) days prior to the Revolving Credit Maturity Date, upon the written request
of the Borrower accompanied by a duly executed Letter of Credit Agreement and
such other documentation related to the requested Letter of Credit as the
Issuing Lender may require, issue Letters of Credit in Dollars for the account
of the Borrower, in an aggregate amount for all Letters of Credit issued
hereunder at any one time outstanding not to exceed the Letter of Credit Maximum
Amount. Each Letter of Credit shall be in a minimum face amount of Five Thousand
Dollars ($5,000) (or such lesser amount as may be agreed to by Issuing Lender)
and each Letter of Credit (including any renewal thereof) shall expire not later
than the first to occur of (i) twelve (12) months after the date of issuance
thereof and (ii) ten (10) Business Days prior to the Revolving Credit Maturity
Date in effect on the date of issuance thereof. The submission of all
applications in respect of and the issuance of each Letter of Credit hereunder
shall be subject in all respects to such industry rules and governing law as are
acceptable to the Issuing Lender. In the event of any conflict between this
Agreement and any Letter of Credit Document other than any Letter of Credit,
this Agreement shall control.

3.2 Conditions to Issuance. No Letter of Credit shall be issued (including the
renewal or extension of any Letter of Credit previously issued) at the request
and for the account of the Borrower unless, as of the date of issuance (or
renewal or extension) of such Letter of Credit:

(a) (i) after giving effect to the Letter of Credit requested, the Letter of
Credit Obligations do not exceed the Letter of Credit Maximum Amount; and
(ii) after giving effect to the Letter of Credit requested, the Letter of Credit
Obligations on such date plus the aggregate amount of all Revolving Credit
Advances and Swing Line Advances (including all Advances deemed disbursed by the
Agent under Section 3.6(c) hereof in respect of the Reimbursement Obligations)
hereunder requested or outstanding on such date, do not exceed the lesser of
(A) the Revolving Credit Aggregate Commitment and (B) the then applicable
Borrowing Base;

(b) the representations and warranties of the Credit Parties contained in this
Agreement and the other Loan Documents are true and correct in all material
respects and shall be true and correct in all material respects as of date of
the issuance of such Letter of Credit (both before and immediately after the
issuance of such Letter of Credit), other than any representation or warranty
that expressly speaks only as of a different date;

(c) there is no Default or Event of Default in existence, and none will exist
upon the issuance of such Letter of Credit;

(d) the Borrower shall have delivered to Issuing Lender at its Issuing Office,
not less than three (3) Business Days prior to the requested date for issuance
(or such shorter time as the Issuing Lender, in its sole discretion, may
permit), the Letter of Credit Agreement related thereto, together with such
other documents and materials as may be required pursuant to the terms thereof,
and the terms of the proposed Letter of Credit shall be reasonably satisfactory
to Issuing Lender;

(e) no order, judgment or decree of any court, arbitrator or Governmental
Authority shall purport by its terms to enjoin or restrain Issuing Lender from
issuing the Letter of Credit requested, or any Revolving Credit Lender from
taking an assignment of its Revolving Credit Percentage thereof pursuant to
Section 3.6 hereof, and no law, rule, regulation, request or directive (whether
or not having the force of law) shall prohibit the Issuing Lender from issuing,
or any Revolving Credit Lender from taking an assignment of its Revolving Credit
Percentage of, the Letter of Credit requested or letters of credit generally;

(f) there shall have been (i) no introduction of or change in the interpretation
of any law or regulation, (ii) no declaration of a general banking moratorium by
banking authorities in the United States, California or the respective
jurisdictions in which the Revolving Credit Lenders, the Borrower and the
beneficiary of the requested Letter of Credit are located, and (iii) no
establishment of any new restrictions by any central bank or other governmental
agency or authority on transactions involving letters of credit or on banks
generally that, in any case described in this clause (e), would make it unlawful
or unduly burdensome for the Issuing Lender to issue or any Revolving Credit
Lender to take an assignment of its Revolving Credit Percentage of the requested
Letter of Credit or letters of credit generally;

 

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(g) if any Revolving Credit Lender is a Defaulting Lender, the Issuing Lender
has entered into arrangements satisfactory to it to eliminate the Fronting
Exposure with respect to the participation in the Letter of Credit Obligations
by such Defaulting Lender, including creation of a cash collateral account on
terms satisfactory to the Agent or delivery of other security to assure payment
of such Defaulting Lender’s Percentage of all outstanding Letter of Credit
Obligations; and

(h) Issuing Lender shall have received the issuance fees required in connection
with the issuance of such Letter of Credit pursuant to Section 3.4 hereof.

Each Letter of Credit Agreement submitted to Issuing Lender pursuant hereto
shall constitute the certification by the Borrower of the matters set forth in
Sections 5.2 hereof. The Agent shall be entitled to rely on such certification
without any duty of inquiry.

3.3 Notice. The Issuing Lender shall deliver to the Agent, concurrently with or
promptly following its issuance of any Letter of Credit, a true and complete
copy of each Letter of Credit. Promptly upon its receipt thereof, the Agent
shall give notice, substantially in the form attached as Exhibit E, to each
Revolving Credit Lender of the issuance of each Letter of Credit, specifying the
amount thereof and the amount of such Revolving Credit Lender’s Percentage
thereof.

3.4 Letter of Credit Fees; Increased Costs.

(a) The Borrower shall pay letter of credit fees as follows:

(i) A per annum letter of credit fee with respect to the undrawn amount of each
Letter of Credit issued pursuant hereto (based on the amount of each Letter of
Credit) in the amount of the Applicable Fee Percentage (determined with
reference to Schedule 1.1 to this Agreement) shall be paid to the Agent for
distribution to the Revolving Credit Lenders in accordance with their Revolving
Credit Percentages.

(ii) A letter of credit facing fee on the face amount of each Letter of Credit
shall be paid to the Agent for distribution to the Issuing Lender for its own
account, in accordance with the terms of the applicable Fee Letter.

(b) All payments by the Borrower to the Agent for distribution to the Issuing
Lender or the Revolving Credit Lenders under this Section 3.4 shall be made in
Dollars in immediately available funds at the Issuing Office or such other
office of the Agent as may be designated from time to time by written notice to
the Borrower by the Agent. The fees described in clauses (a)(i) and (ii) above
(i) shall be nonrefundable under all circumstances, (ii) in the case of fees due
under clause (a)(i) above, shall be payable quarterly in advance on the first
day of each April, July, October and January, and (iii) in the case of fees due
under clause (a)(ii) above, shall be payable upon the issuance of such Letter of
Credit and quarterly in advance thereafter. The fees due under clause (a)(i)
above shall be determined by multiplying the Applicable Fee Percentage times the
undrawn amount of the face amount of each such Letter of Credit on the date of
determination, and shall be calculated on the basis of a 360 day year and
assessed for the actual number of days from the date of the issuance thereof to
the stated expiration thereof. The parties hereto acknowledge that, unless the
Issuing Lender otherwise agrees, any material amendment and any extension to a
Letter of Credit issued hereunder shall be treated as a new Letter of Credit for
the purposes of the letter of credit facing fee.

(c) If any Change in Law shall either (i) impose, modify or cause to be deemed
applicable any reserve, special deposit, limitation or similar requirement
against letters of credit issued or participated in by, or assets held by, or
deposits in or for the account of, Issuing Lender or any Revolving Credit Lender
or (ii) impose on Issuing Lender or any Revolving Credit Lender any other
condition regarding this Agreement, the Letters of Credit or any participations
in such Letters of Credit, and the result of any event referred to in clause
(i) or (ii) above shall

 

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be to increase the cost or expense to Issuing Lender or such Revolving Credit
Lender of issuing or maintaining or participating in any of the Letters of
Credit (which increase in cost or expense shall be determined by the Issuing
Lender’s or such Revolving Credit Lender’s reasonable allocation of the
aggregate of such cost increases and expenses resulting from such events), then,
upon demand by the Issuing Lender or such Revolving Credit Lender, as the case
may be, the Borrower shall, within thirty (30) days following demand for
payment, pay to Issuing Lender or such Revolving Credit Lender, as the case may
be, from time to time as specified by the Issuing Lender or such Revolving
Credit Lender, additional amounts which shall be sufficient to compensate the
Issuing Lender or such Revolving Credit Lender for such increased cost and
expense (together with interest on each such amount from ten days after the date
such payment is due until payment in full thereof at the Base Rate), provided
that if the Issuing Lender or such Revolving Credit Lender could take any
reasonable action, without cost or administrative or other burden or restriction
to such Lender, to mitigate or eliminate such cost or expense, it agrees to do
so within a reasonable time after becoming aware of the foregoing matters. Each
demand for payment under this Section 3.4(c) shall be accompanied by a
certificate of Issuing Lender or the applicable Revolving Credit Lender setting
forth the amount of such increased cost or expense incurred by the Issuing
Lender or such Revolving Credit Lender, as the case may be, as a result of any
event mentioned in clause (i) or (ii) above, and in reasonable detail, the
methodology for calculating and the calculation of such amount, which
certificate shall be prepared in good faith and shall be conclusive evidence,
absent manifest error, as to the amount thereof.

3.5 Other Fees. In connection with the Letters of Credit, and in addition to the
Letter of Credit Fees, the Borrower shall pay, for the sole account of the
Issuing Lender, standard documentation, administration, payment and cancellation
charges assessed by Issuing Lender or the Issuing Office, at the times, in the
amounts and on the terms set forth or to be set forth from time to time in the
standard fee schedule of the Issuing Office in effect from time to time.

3.6 Participation Interests in and Drawings and Demands for Payment Under
Letters of Credit.

(a) Upon issuance by the Issuing Lender of each Letter of Credit hereunder (and
on the Effective Date with respect to each Letter of Credit existing on the date
of this Agreement), each Revolving Credit Lender shall automatically acquire a
pro rata participation interest in such Letter of Credit and each related Letter
of Credit Payment based on its respective Revolving Credit Percentage.

(b) If the Issuing Lender shall honor a draft or other demand for payment
presented or made under any Letter of Credit, the Borrower agrees to pay to the
Issuing Lender an amount equal to the amount paid by the Issuing Lender in
respect of such draft or other demand under such Letter of Credit and all
reasonable expenses paid or incurred by the Agent relative thereto not later
than 1:00 p.m. (Detroit time), in Dollars, on (i) the Business Day that the
Borrower received notice of such presentment and honor, if such notice is
received prior to 11:00 a.m. (Detroit time) or (ii) the Business Day immediately
following the day that the Borrower received such notice, if such notice is
received after 11:00 a.m. (Detroit time).

(c) If the Issuing Lender shall honor a draft or other demand for payment
presented or made under any Letter of Credit, but the Borrower does not
reimburse the Issuing Lender as required under clause (b) above and the
Revolving Credit Aggregate Commitment has not been terminated (whether by
maturity, acceleration or otherwise), the Borrower shall be deemed to have
immediately requested that the Revolving Credit Lenders make a Base Rate Advance
of the Revolving Credit (which Advance may be subsequently converted at any time
into a Eurodollar-based Advance pursuant to Section 2.3 hereof) in the principal
amount equal to the amount paid by the Issuing Lender in respect of such draft
or other demand under such Letter of Credit and all reasonable expenses paid or
incurred by the Agent relative thereto. The Agent will promptly notify the
Revolving Credit Lenders of such deemed request, and each such Lender shall make
available to the Agent an amount equal to its pro rata share (based on its
Revolving Credit Percentage) of the amount of such Advance.

(d) If the Issuing Lender shall honor a draft or other demand for payment
presented or made under any Letter of Credit, but the Borrower does not
reimburse the Issuing Lender as required under clause (b) above, and (i) the
Revolving Credit Aggregate Commitment has been terminated (whether by maturity,
acceleration or otherwise), or (ii) any reimbursement received by the Issuing
Lender from the Borrower is or must be returned or rescinded upon or during any
bankruptcy or reorganization of any Credit Party or otherwise, then the Agent
shall notify each Revolving Credit Lender, and each Revolving Credit Lender will
be obligated to pay the Agent for the

 

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account of the Issuing Lender its pro rata share (based on its Revolving Credit
Percentage) of the amount paid by the Issuing Lender in respect of such draft or
other demand under such Letter of Credit and all reasonable expenses paid or
incurred by the Agent relative thereto (but no such payment shall diminish the
obligations of the Borrower hereunder). Upon receipt thereof, the Agent will
deliver to such Revolving Credit Lender a participation certificate evidencing
its participation interest in respect of such payment and expenses. To the
extent that a Revolving Credit Lender fails to make such amount available to the
Agent by 11:00 am Detroit time on the Business Day next succeeding the date such
notice is given, such Revolving Credit Lender shall pay interest on such amount
in respect of each day from the date such amount was required to be paid, to the
date paid to the Agent, at a rate per annum equal to the Federal Funds Effective
Rate. The failure of any Revolving Credit Lender to make its pro rata portion of
any such amount available under to the Agent shall not relieve any other
Revolving Credit Lender of its obligation to make available its pro rata portion
of such amount, but no Revolving Credit Lender shall be responsible for failure
of any other Revolving Credit Lender to make such pro rata portion available to
the Agent.

(e) In the case of any Advance made under this Section 3.6, each such Advance
shall be disbursed notwithstanding any failure to satisfy any conditions for
disbursement of any Advance set forth in Article 2 hereof or Article 5 hereof,
and, to the extent of the Advance so disbursed, the Reimbursement Obligation of
the Borrower to the Agent under this Section 3.6 shall be deemed satisfied
(unless, in each case, taking into account any such deemed Advances, the
aggregate outstanding principal amount of Advances of the Revolving Credit and
the Swing Line, plus the Letter of Credit Obligations (other than the
Reimbursement Obligations to be reimbursed by this Advance) on such date exceed
the lesser of the then applicable Borrowing Base or Revolving Credit Aggregate
Commitment).

(f) If the Issuing Lender shall honor a draft or other demand for payment
presented or made under any Letter of Credit, the Issuing Lender shall provide
notice thereof to the Borrower on the date such draft or demand is honored, and
to each Revolving Credit Lender on such date unless the Borrower shall have
satisfied its reimbursement obligations by payment to the Agent (for the benefit
of the Issuing Lender) as required under this Section 3.6. The Issuing Lender
shall further use reasonable efforts to provide notice to the Borrower prior to
honoring any such draft or other demand for payment, but such notice, or the
failure to provide such notice, shall not affect the rights or obligations of
the Issuing Lender with respect to any Letter of Credit or the rights and
obligations of the parties hereto, including without limitation the obligations
of the Borrower under this Section 3.6.

(g) Notwithstanding the foregoing however no Revolving Credit Lender shall be
deemed to have acquired a participation in a Letter of Credit if the officers of
the Issuing Lender immediately responsible for matters concerning this Agreement
shall have received written notice from the Agent or any Lender at least two
(2) Business Days prior to the date of the issuance or extension of such Letter
of Credit or, with respect to any Letter of Credit subject to automatic
extension, at least five (5) Business Days prior to the date that the
beneficiary under such Letter of Credit must be notified that such Letter of
Credit will not be renewed, that the issuance or extension of Letters of Credit
should be suspended based on the occurrence and continuance of a Default or
Event of Default and stating that such notice is a “notice of default”;
provided, however that the Revolving Credit Lenders shall be deemed to have
acquired such a participation upon the date on which such Default or Event of
Default has been waived by the requisite Revolving Credit Lenders, as
applicable. In the event that the Issuing Lender receives such a notice, the
Issuing Lender shall have no obligation to issue any Letter of Credit until such
notice is withdrawn by the Agent or such Lender or until the requisite Lenders
have waived such Default or Event of Default in accordance with the terms of
this Agreement.

(h) Nothing in this Agreement shall be construed to require or authorize any
Revolving Credit Lender to issue any Letter of Credit, it being recognized that
the Issuing Lender shall be the sole issuer of Letters of Credit under this
Agreement.

(i) In the event that any Revolving Credit Lender becomes a Defaulting Lender,
the Issuing Lender may, at its option, require that the Borrower enter into
arrangements satisfactory to Issuing Lender to eliminate the Fronting Exposure
with respect to the participation in the Letter of Credit Obligations by such
Defaulting Lender, including creation of a cash collateral account on terms
satisfactory to the Agent or delivery of other security to assure payment of
such Defaulting Lender’s Percentage of all outstanding Letter of Credit
Obligations.

 

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3.7 Obligations Irrevocable. The obligations of the Borrower to make payments to
the Agent for the account of Issuing Lender or the Revolving Credit Lenders with
respect to Letter of Credit Obligations under Section 3.6 hereof, shall be
unconditional and irrevocable and not subject to any qualification or exception
whatsoever, including, without limitation:

(a) Any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement, any other documentation relating to any Letter of Credit,
this Agreement or any of the other Loan Documents (the “Letter of Credit
Documents”);

(b) Any amendment, modification, waiver, consent, or any substitution, exchange
or release of or failure to perfect any interest in collateral or security, with
respect to or under any Letter of Credit Document;

(c) The existence of any claim, setoff, defense or other right which the
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such beneficiary or
any such transferee may be acting), the Agent, the Issuing Lender or any
Revolving Credit Lender or any other Person, whether in connection with this
Agreement, any of the Letter of Credit Documents, the transactions contemplated
herein or therein or any unrelated transactions;

(d) Any draft or other statement or document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;

(e) Payment by the Issuing Lender to the beneficiary under any Letter of Credit
against presentation of documents which do not comply with the terms of such
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to such Letter of Credit;

(f) Any failure, omission, delay or lack on the part of the Agent, Issuing
Lender or any Revolving Credit Lender or any party to any of the Letter of
Credit Documents or any other Loan Document to enforce, assert or exercise any
right, power or remedy conferred upon the Agent, Issuing Lender, any Revolving
Credit Lender or any such party under this Agreement, any of the other Loan
Documents or any of the Letter of Credit Documents, or any other acts or
omissions on the part of the Agent, Issuing Lender, any Revolving Credit Lender
or any such party; or

(g) Any other event or circumstance that would, in the absence of this
Section 3.7, result in the release or discharge by operation of law or otherwise
of the Borrower from the performance or observance of any obligation, covenant
or agreement contained in Section 3.6 hereof.

No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Borrower has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the Borrower
against the Agent, Issuing Lender or any Revolving Credit Lender. With respect
to any Letter of Credit, nothing contained in this Section 3.7 shall be deemed
to prevent the Borrower, after satisfaction in full of the absolute and
unconditional obligations of the Borrower hereunder with respect to such Letter
of Credit, from asserting in a separate action any claim, defense, set off or
other right which they (or any of them) may have against the Agent, Issuing
Lender or any Revolving Credit Lender in connection with such Letter of Credit.

3.8 Risk Under Letters of Credit.

(a) In the administration and handling of Letters of Credit and any security
therefor, or any documents or instruments given in connection therewith, Issuing
Lender shall have the sole right to take or refrain from taking any and all
actions under or upon the Letters of Credit.

(b) Subject to other terms and conditions of this Agreement, Issuing Lender
shall issue the Letters of Credit and shall hold the documents related thereto
in its own name and shall make all collections thereunder and otherwise
administer the Letters of Credit in accordance with Issuing Lender’s regularly
established practices and procedures and will have no further obligation (in the
absence of gross negligence or willful misconduct) with

 

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respect thereto. In the administration of Letters of Credit, Issuing Lender
shall not be liable for any action taken or omitted on the advice of counsel,
accountants, appraisers or other experts selected by Issuing Lender with due
care and Issuing Lender may rely upon any notice, communication, certificate or
other statement from the Borrower, beneficiaries of Letters of Credit, or any
other Person which Issuing Lender believes to be authentic. Issuing Lender will,
upon request, furnish the Revolving Credit Lenders with copies of Letter of
Credit Documents related thereto.

(c) In connection with the issuance and administration of Letters of Credit and
the assignments hereunder, Issuing Lender makes no representation and shall have
no responsibility with respect to (i) the obligations of the Borrower or the
validity, sufficiency or enforceability of any document or instrument given in
connection therewith, or the taking of any action with respect to same, (ii) the
financial condition of, any representations made by, or any act or omission of
the Borrower or any other Person, or (iii) any failure or delay in exercising
any rights or powers possessed by Issuing Lender in its capacity as issuer of
Letters of Credit in the absence of its gross negligence or willful misconduct.
Each of the Revolving Credit Lenders expressly acknowledges that it has made and
will continue to make its own evaluations of the Borrower’s creditworthiness
without reliance on any representation of Issuing Lender or Issuing Lender’s
officers, agents and employees.

(d) If at any time Issuing Lender shall recover any part of any unreimbursed
amount for any draw or other demand for payment under a Letter of Credit, or any
interest thereon, the Agent or Issuing Lender, as the case may be, shall receive
same for the pro rata benefit of the Revolving Credit Lenders in accordance with
their respective Percentages and shall promptly deliver to each Revolving Credit
Lender its share thereof, less such Revolving Credit Lender’s pro rata share of
the costs of such recovery, including court costs and attorney’s fees. If at any
time any Revolving Credit Lender shall receive from any source whatsoever any
payment on any such unreimbursed amount or interest thereon in excess of such
Revolving Credit Lender’s Percentage of such payment, such Revolving Credit
Lender will promptly pay over such excess to the Agent, for redistribution in
accordance with this Agreement.

3.9 Indemnification. The Borrower hereby indemnifies and agrees to hold harmless
the Revolving Credit Lenders, the Issuing Lender and the Agent and their
respective Affiliates, and the respective officers, directors, employees and
agents of such Persons (each an “L/C Indemnified Person”), from and against any
and all claims, damages, losses, liabilities, costs or expenses of any kind or
nature whatsoever which the Revolving Credit Lenders, the Issuing Lender or the
Agent or any such Person may incur or which may be claimed against any of them
by reason of or in connection with any Letter of Credit (collectively, the “L/C
Indemnified Amounts”), and none of the Issuing Lender, any Revolving Credit
Lender or the Agent or any of their respective officers, directors, employees or
agents shall be liable or responsible for:

(a) the use which may be made of any Letter of Credit or for any acts or
omissions of any beneficiary in connection therewith;

(b) the validity, sufficiency or genuineness of documents or of any endorsement
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged;

(c) payment by the Issuing Lender to the beneficiary under any Letter of Credit
against presentation of documents which do not strictly comply with the terms of
any Letter of Credit (unless such payment resulted from the gross negligence or
willful misconduct of the Issuing Lender), including failure of any documents to
bear any reference or adequate reference to such Letter of Credit;

(d) any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit; or

(e) any other event or circumstance whatsoever arising in connection with any
Letter of Credit.

It is understood that in making any payment under a Letter of Credit the Issuing
Lender will rely on documents presented to it under such Letter of Credit as to
any and all matters set forth therein without further investigation and
regardless of any notice or information to the contrary.

 

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With respect to subparagraphs (a) through (e) hereof, (i) no Borrower shall be
required to indemnify any L/C Indemnified Person for any L/C Indemnified Amounts
to the extent such amounts result from the gross negligence or willful
misconduct of such L/C Indemnified Person or any officer, director, employee or
agent of such L/C Indemnified Person and (ii) the Agent and the Issuing Lender
shall be liable to the Borrower to the extent, but only to the extent, of any
direct, as opposed to consequential or incidental, damages suffered by the
Borrower which were caused by the gross negligence or willful misconduct of the
Issuing Lender or any officer, director, employee or agent of the Issuing Lender
or by the Issuing Lender’s wrongful dishonor of any Letter of Credit after the
presentation to it by the beneficiary thereunder of a draft or other demand for
payment and other documentation strictly complying with the terms and conditions
of such Letter of Credit.

3.10 Right of Reimbursement. Each Revolving Credit Lender agrees to reimburse
the Issuing Lender on demand, pro rata in accordance with its respective
Revolving Credit Percentage, for (i) the reasonable out-of-pocket costs and
expenses of the Issuing Lender to be reimbursed by the Borrower pursuant to any
Letter of Credit Agreement or any Letter of Credit, to the extent not reimbursed
by the Borrower or any other Credit Party and (ii) any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, fees,
reasonable out-of-pocket expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against Issuing
Lender in any way relating to or arising out of this Agreement (including
Section 3.6(c) hereof), any Letter of Credit, any documentation or any
transaction relating thereto, or any Letter of Credit Agreement, to the extent
not reimbursed by the Borrower, except to the extent that such liabilities,
losses, costs or expenses were incurred by Issuing Lender as a result of Issuing
Lender’s gross negligence or willful misconduct or by the Issuing Lender’s
wrongful dishonor of any Letter of Credit after the presentation to it by the
beneficiary thereunder of a draft or other demand for payment and other
documentation strictly complying with the terms and conditions of such Letter of
Credit.

4. TERM LOAN.

4.1 Term Loan.

(a) Subject to the terms and conditions hereof, each Term Loan Lender, severally
and for itself alone, agrees to lend to the Borrower on the Effective Date, in a
single Advance in Dollars, an aggregate amount equal to such Lender’s Term Loan
Commitment Amount.

(b) The Term Loan shall be used by Borrower to refinance existing term
indebtedness of Borrower to Comerica Bank under the Prior Loan Agreement
referred to in Section 13.18 hereof, and to finance a portion of the Rohm
Acquisition. Borrower shall not have any right to reborrow any portion of the
Term Loan which is repaid or prepaid from time to time.

(c) Request for Term Loan Advance. The Borrower may request the Advance of the
Term Loan, only after delivery to the Agent of a Request for Term Loan Advance
executed by an Authorized Signer for the Borrower, subject to the following:

(i) The Request for Term Loan Advance shall set forth the information required
on the Request for Term Loan Advance, including without limitation the proposed
date of the Term Loan Advance, which must be a Business Day;

(ii) such Request for Term Loan Advance shall be delivered to the Agent by 9:00
a.m. (California time) two (2) Business Days prior to the proposed date of the
Term Loan Advance;

(iii) the Request for Term Loan Advance, once delivered to the Agent, shall not
be revocable by the Borrower and shall constitute a certification of the
Borrower as of the date thereof that:

 

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(A) all conditions to Advances of the Term Loan have been satisfied, and shall
remain satisfied to the date of such Term Loan Advance (both before and after
giving effect to such Term Loan Advance);

(B) there is no Default or Event of Default in existence, and none will exist
upon the making of such Term Loan Advance (both before and after giving effect
to such Advance); and

(C) except as permitted by this Agreement or the other Loan Documents, the
representations and warranties contained in this Agreement and the other Loan
Documents are true and correct in all material respects and shall be true and
correct in all material respects as of the making of such Term Loan Advance
(both before and after giving effect to such Term Loan Advance), other than any
representation or warranty that expressly speaks only as of a different date.

(iv) Upon receiving the Request for Term Loan Advance from the Borrower and the
related documentation required under Section 5.2 hereof, the Agent shall
promptly notify each Term Loan Lender by wire or telephone (confirmed by wire or
telecopy) of the amount of such Term Loan Advance to be made and the date such
Term Loan Advance is to be made by said Term Loan Lender pursuant to its Term
Loan Percentage of such Term Loan Advance. Unless such Term Loan Lender’s
commitment to make Advances of the Term Loan hereunder shall have been suspended
or terminated in accordance with this Agreement, each such Term Loan Lender
shall make available the amount of its Term Percentage of the Term Loan Advance
in immediately available funds to the Agent, at the office of the Agent located
at 411 West Lafayette, 7th Floor, MC 3289, Detroit, Michigan 48226, not later
than 10:00 a.m. (California time) on the date of such Advance.

(v) Subject to submission of an executed Request for Term Loan Advance by the
Borrower without exceptions noted in the compliance certification therein, the
Agent shall make available to the Borrower, the aggregate of the amounts so
received by it from the Term Loan Lenders as a Base Rate Advance, not later than
1:00 p.m. (California time) on the date of such Term Loan Advance, by credit to
an account of a Borrower maintained with the Agent or to such other account or
third party as the Borrower may reasonably direct in writing, provided such
direction is timely given.

(vi) The Agent shall deliver the documents and papers received by it for the
account of each Term Loan Lender. Unless the Agent shall have been notified by
any Term Loan Lender prior to the date of any proposed Term Loan Advance that
such Term Loan Lender does not intend to make available to the Agent such Term
Loan Lender’s Term Loan Percentage of the Term Loan Advance, the Agent may
assume that such Term Loan Lender has made such amount available to the Agent on
such date, as aforesaid. The Agent may, but shall not be obligated to, make
available to the Borrower the amount of such payment in reliance on such
assumption. If such amount is not in fact made available to the Agent by such
Term Loan Lender, as aforesaid, the Agent shall be entitled to recover such
amount on demand from such Term Loan Lender. If such Term Loan Lender does not
pay such amount forthwith upon the Agent’s demand therefor and the Agent has in
fact made a corresponding amount available to the Borrower, the Agent shall
promptly notify the Borrower and the Borrower shall pay such amount to the
Agent, if such notice is delivered to the Borrower prior to 10:00 a.m.
(California time) on a Business Day, on the day such notice is received, and
otherwise on the next Business Day and such amount paid by the Borrower shall be
applied as a prepayment of the Term Loan reimbursing the Agent for having funded
such amounts on behalf of the Term Loan Lenders. The Borrower shall retain its
claim against such Term Loan Lender with respect to the amounts repaid by
Borrower to the Agent, and if such Term Loan Lender subsequently makes such
amount available to the Agent prior to the last day of the Term Loan Draw
Period, the Agent shall promptly make such amount available to Borrower as a
Term Loan Advance. The Agent shall also be entitled to recover from such Term
Loan Lender or the Borrower, as the case may be, but without duplication,
interest on such amount in respect of each day from the date such amount was
made available by the Agent to the Borrower, to the date such amount is
recovered by the Agent, at a rate per annum equal to:

 

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(A) in the case of such Term Loan Lender, for the first two (2) Business Days
such amount remains unpaid, the Federal Funds Effective Rate, and thereafter, at
the rate of interest then applicable to such Term Loan Advance; and

(B) in the case of the Borrower, the rate of interest then applicable to such
Term Loan Advance.

Until such Term Loan Lender has paid the Agent such amount, such Term Loan
Lender shall have no interest in or rights with respect to such Advance for any
purpose whatsoever. The obligation of any Term Loan Lender to make any Term Loan
Advance hereunder shall not be affected by the failure of any other Term Loan
Lender to make any Advance hereunder, and no Term Loan Lender shall have any
liability to Borrower or any of its Subsidiaries, the Agent, any other Term Loan
Lender, or any other party for another Term Loan Lender’s failure to make any
loan or Term Loan Advance hereunder.

4.2 Accrual of Interest and Maturity; Evidence of Indebtedness.

(a) (i) The Borrower hereby unconditionally promises to pay to the Agent for the
account of each Term Loan Lender such Lender’s Percentage of the then unpaid
aggregate principal amount of the Term Loan outstanding on the Term Loan
Maturity Date and on such other dates and in such other amounts as may be
required from time to time pursuant to this Agreement. Subject to the terms and
conditions hereof, the unpaid principal Indebtedness outstanding under the Term
Loan shall, from the Effective Date (until paid), bear interest at the
Applicable Interest Rate. There shall be no readvance or reborrowings of any
principal reductions of the Term Loan.

(b) Each Term Loan Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to the
appropriate lending office of such Term Loan Lender resulting from each Advance
of the Term Loan made by such lending office of such Lender from time to time,
including the amounts of principal and interest payable thereon and paid to such
Term Loan Lender from time to time under this Agreement.

(c) The Agent shall maintain the Register pursuant to Section 13.8(h), and a
subaccount therein for each Term Loan Lender, in which Register and subaccounts
(taken together) shall be recorded (i) the amount of each Advance of the Term
Loan made hereunder, the type thereof and each Eurodollar-Interest Period
applicable to any Eurodollar-based Advance, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Term Loan Lender hereunder in respect of the Advances of the Term Loan and
(iii) both the amount of any sum received by the Agent hereunder from the
Borrower in respect of the Advances of the Term Loan and each Term Loan Lender’s
share thereof.

(d) The entries made in the Register pursuant to paragraph (c) of this
Section 4.2 and Section 13.8(h) shall, absent manifest error, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Term Loan Lender or the Agent to maintain the Register
or any such account, as applicable, or any error therein, shall not in any
manner affect the obligation of the Borrower to repay the Advances of the Term
Loan (and all other amounts owing with respect thereto) made to the Borrower by
the Term Loan Lenders in accordance with the terms of this Agreement.

(e) The Borrower agrees that, upon written request to the Agent by any Term Loan
Lender, the Borrower will execute and deliver to such Term Loan Lender, at the
Borrower’s expense, a Term Loan Note evidencing the outstanding Advances under
the Term Loan owing to such Term Loan Lender.

 

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4.3 Repayment of Principal

(a) The Borrower shall repay the principal amount Term Loan on the first day of
each April, July, October and January, commencing July 1, 2013 in quarterly
installments each equal to $1,750,000, until the Term Loan Maturity Date, when
all remaining outstanding principal, plus accrued interest thereon, shall be due
and payable in full.

(b) Whenever any payment under this Section 4.3 shall become due on a day that
is not a Business Day, the date for payment thereunder shall be extended to the
next Business Day.

4.4 Term Loan Rate Requests; Refunding and Conversions of Advances of Term Loan.
Borrower may refund all or any portion of any Advance of the Term Loan as a Term
Loan Advance with a like Eurodollar-Interest Period or convert each such Advance
of the Term Loan to an Advance with a different Eurodollar-Interest Period, but
only after delivery to the Agent of a Term Loan Rate Request executed in
connection with such Term Loan by an Authorized Signer and subject to the terms
hereof and to the following:

(a) each Term Loan Rate Request shall set forth the information required on the
Term Loan Rate Request form with respect to such Term Loan, including without
limitation:

(i) whether the Term Loan Advance is a refunding or conversion of an outstanding
Term Loan Advance;

(ii) the proposed date of such refunding or conversion, which must be a Business
Day; and

(iii) whether such Term Loan Advance (or any portion thereof) is to be a Base
Rate Advance or a Eurodollar-based Advance, and, in the case of a
Eurodollar-based Advance, the Eurodollar-Interest Period(s) applicable thereto.

(b) each such Term Loan Rate Request shall be delivered to the Agent (i) by 1:00
p.m. (Detroit time) three (3) Business Days prior to the proposed date of the
refunding or conversion of a Eurodollar-based Advance or (ii) by 1:00 p.m. on
the proposed date of the refunding or conversion of a Base Rate Advance;

(c) the principal amount of such Advance of Term Loan plus the amount of any
other Advance of the Term Loan to be then combined therewith having the same
Applicable Interest Rate and Eurodollar-Interest Period, if any, shall be (i) in
the case of a Base Rate Advance, at least $500,000, or the remaining principal
balance outstanding under the Term Loan, whichever is less, and (ii) in the case
of a Eurodollar-based Advance, at least $100,000 or the remaining principal
balance outstanding under the Term Loan, whichever is less, or in each case a
larger integral multiple of $100,000;

(d) no Term Loan Advance shall have a Eurodollar-Interest Period ending after
the Term Loan Maturity Date and, notwithstanding any provision hereof to the
contrary, the Borrower shall select Eurodollar-Interest Periods (or the Base
Rate) for sufficient portions of the Term Loan such that the Borrower may make
the required principal payments hereunder on a timely basis and otherwise in
accordance with Section 4.5 below;

(e) at no time shall there be more than four (4) Eurodollar-Interest Periods in
effect for Advances of the Term Loan; and

(f) a Term Loan Rate Request, once delivered to the Agent, shall not be
revocable by the Borrower.

4.5 Base Rate Advance in Absence of Election or Upon Default. In the event the
Borrower shall fail with respect to any Eurodollar-based Advance of the Term
Loan to timely exercise its option to refund or convert such Advance in
accordance with Section 4.4 hereof (and such Advance has not been paid in full
on the last day of the Eurodollar-Interest Period applicable thereto according
to the terms hereof), or, if on the last day of the applicable
Eurodollar-Interest Period, a Default or Event of Default shall exist, then, on
the last day of the applicable Eurodollar-Interest Period, the principal amount
of such Advance which has not been prepaid shall be automatically converted to a
Base Rate Advance and the Agent shall thereafter promptly notify the Borrower
thereof. All accrued and unpaid interest on any Advance converted to a Base Rate
Advance under this Section 4.5 shall be due and payable in full on the date such
Advance is converted.

 

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4.6 Interest Payments; Default Interest. (a) Interest on the unpaid principal of
all Base Rate Advances of the Term Loan from time to time outstanding shall
accrue until paid at a per annum interest rate equal to the Base Rate, and shall
be payable in immediately available funds quarterly in arrears commencing on
July 1, 2013 and on the first day of each April, July, October and January
thereafter. Whenever any payment under this Section 4.6 shall become due on a
day that is not a Business Day, the date for payment shall be extended to the
next Business Day. Interest accruing at the Base Rate shall be computed on the
basis of a 360 day year and assessed for the actual number of days elapsed, and
in such computation effect shall be given to any change in the interest rate
resulting from a change in the Base Rate on the date of such change in the Base
Rate.

(b) Interest on the unpaid principal of each Eurodollar-based Advance of the
Term Loan having a related Eurodollar-Interest Period of three (3) months or
less shall accrue at its applicable Eurodollar-based Rate and shall be payable
in immediately available funds on the last day of the Eurodollar-Interest Period
applicable thereto. Interest shall be payable in immediately available funds on
each Eurodollar-based Advance of the Term Loan outstanding from time to time
having a Eurodollar-Interest Period of six (6) months or longer, at intervals of
three (3) months after the first day of the applicable Eurodollar-Interest
Period, and shall also be payable on the last day of the Eurodollar-Interest
Period applicable thereto. Interest accruing at the Eurodollar-based Rate shall
be computed on the basis of a 360-day year and assessed for the actual number of
days elapsed from the first day of the Eurodollar-Interest Period applicable
thereto to, but not including, the last day thereof.

(c) Notwithstanding anything to the contrary in Section 4.6(a) or (b) hereof,
all accrued and unpaid interest on any Term Loan Advance refunded or converted
pursuant to Section 4.4 hereof shall be due and payable in full on the date such
Term Loan Advance is refunded or converted.

(d) In the case of any Event of Default under Section 9.1(i), immediately upon
the occurrence thereof, and in the case of any other Event of Default that is
continuing, upon notice from the Majority Term Loan Lenders in regards to the
Term Loan, interest shall be payable on demand on the principal amount of all
Advances of the Term Loan from time to time outstanding, as applicable, at a per
annum rate equal to the Applicable Interest Rate in respect of each such
Advance, plus, in the case of Eurodollar-based Advances, three percent (3%) for
the remainder of the then existing Eurodollar-Interest Period, if any, and at
all other such times and for all Base Rate Advances, at a per annum rate equal
to the Base Rate plus three percent (3%).

4.7 Optional Prepayment of Term Loan.

(a) Subject to clause (b) hereof, the Borrower (at its option), may prepay all
or any portion of the outstanding principal of any Term Loan Advance bearing
interest at the Base Rate at any time, and may prepay all or any portion of the
outstanding principal of the Term Loan bearing interest at the Eurodollar-based
Rate upon one (1) Business Day’s notice to the Agent by wire, telecopy or by
telephone (confirmed by wire or telecopy), with accrued interest on the
principal being prepaid to the date of such prepayment. Any prepayment of a
portion of the Term Loan as to which the Applicable Interest Rate is the Base
Rate shall be without premium or penalty and any prepayment of a portion of the
Term Loan as to which the Applicable Interest Rate is the Eurodollar-based Rate
shall be without premium or penalty, except to the extent set forth in
Section 11.1.

(b) Each partial prepayment of the Term Loan shall be applied to all
installments of the Term Loan due thereunder in the inverse order of their
maturities to all such principal payments as follows: first to that portion of
the Term Loan outstanding as a Base Rate Advance, second to that portion of the
Term Loan outstanding as Eurodollar-based Advances which have
Eurodollar-Interest Periods ending on the date of payment, and last to any
remaining Advances of the Term Loan being carried at the Eurodollar-based Rate.

(c) All prepayments of the Term Loan shall be made to the Agent for distribution
ratably to the applicable Term Loan Lenders in accordance with their respective
Term Loan Percentages.

 

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4.8 Mandatory Prepayment of Term Loan.

(a) Subject to clauses (e) and (f) hereof, immediately upon receipt by any
Credit Party of any Net Cash Proceeds from any Asset Sales which are not
Reinvested as described in the following sentence, the Borrower shall prepay the
Term Loan by an amount equal to one hundred percent (100%) of such Net Cash
Proceeds; provided, however that the Borrower shall not be obligated to prepay
the Term Loan with such Net Cash Proceeds if the following conditions are
satisfied: (i) promptly following the sale, the Borrower provides to the Agent a
certificate executed by a Responsible Officer of the Borrower (“Reinvestment
Certificate”) stating (x) that the sale has occurred, (y) that no Default or
Event of Default has occurred and is continuing either as of the date of the
sale or as of the date of the Reinvestment Certificate, and (z) a description of
the planned Reinvestment of the proceeds thereof, (ii) the Reinvestment of such
Net Cash Proceeds is completed within the Reinvestment Period, and (iii) no
Default or Event of Default has occurred and is continuing at the time of the
sale and at the time of the application of such proceeds to Reinvestment; and
provided, further, Borrower shall be permitted to retain Five Million Dollars
($5,000,000) in the aggregate during the term of this Agreement of Net Cash
Proceeds without the requirement to prepay the Term Loan under this
Section 4.8(a). If any such proceeds have not been Reinvested at the end of the
Reinvestment Period, the Borrower shall promptly pay such proceeds to the Agent,
to be applied to repay the Term Loan in accordance with clauses (d) and
(e) hereof.

(b) Subject to clauses (e) and (f) hereof, immediately upon receipt by any
domestic Credit Party of Net Cash Proceeds from the issuance of any Subordinated
Debt after the Effective Date, the Borrower shall prepay the Term Loan by an
amount equal to one hundred percent (100%) of such Net Cash Proceeds; provided,
however, that Borrower may retain up to the first Five Million Dollars
($5,000,000) in the aggregate of such Net Cash Proceeds without the obligation
to prepay the Term Loan under this Section 4.8(b).

(c) Subject to clauses (e) and (f) hereof, with respect to any real property
covered by a mortgage or deed of trust made in favor of Agent or with respect to
any personal property having a value greater than One Hundred Thousand Dollars
($100,000), immediately upon receipt by any Credit Party of any Insurance
Proceeds or Condemnation Proceeds in excess of One Million Dollars ($1,000,000),
the Borrower shall be obligated to prepay the Term Loan by an amount equal to
one hundred percent (100%) of such Insurance Proceeds or Condemnation Proceeds,
as the case may be; provided, however, that any Insurance Proceeds or
Condemnation Proceeds, as the case may be, may be Reinvested by the applicable
Credit Party if the following conditions are satisfied: (i) promptly following
the receipt of such Insurance Proceeds or Condemnation Proceeds, as the case may
be, the Borrower provide to the Agent a Reinvestment Certificate stating
(x) that no Default or Event of Default has occurred and is continuing either as
of the date of the receipt of such proceeds or as of the date of the
Reinvestment Certificate, (y) that such Insurance Proceeds or Condemnation
Proceeds have been received, and (z) a description of the planned Reinvestment
of such Insurance Proceeds or Condemnation Proceeds, as the case may be),
(ii) the Reinvestment of such proceeds is commenced within the Initial
Reinvestment Period and completed within the Reinvestment Period, and (iii) no
Default or Event of Default shall have occurred and be continuing at the time of
the receipt of such proceeds and at the time of the application of such proceeds
to Reinvestment. If any such proceeds have not been Reinvested at the end of the
Reinvestment Period, the Borrower shall promptly pay such proceeds to the Agent,
to be applied to repay the Term Loan in accordance with clauses (d) and
(e) hereof.

(d) Subject to clauses (e) and (f) hereof, if the Rohm Acquisition has not been
consummated on or before April 5, 2013, the Borrower shall be obligated to
prepay the Term Loan by an amount of at least Twenty Million Dollars
($20,000,000), such prepayment to be made on or before April 8, 2013.

(e) Subject to clause (f) hereof, each mandatory prepayment under this
Section 4.8 or any other mandatory or optional prepayment under this Agreement
shall be in addition to any scheduled installments or optional prepayments made
prior thereto and shall be subject to Section 11.1. Each mandatory prepayment of
the Term Loan shall be applied to installments of principal on the Term Loan in
the inverse order of their maturities; provided, however, that in the case of
any prepayment under clause (d) hereof, such prepayment shall be applied pro
rata to the remaining installments of the Term Loan.

(f) To the extent that, on the date any mandatory prepayment of the Term Loan
under this Section 4.8 is due, the Indebtedness under the Term Loan or any other
Indebtedness to be prepaid is being carried, in whole or in part, at the
Eurodollar-based Rate and no Default or Event of Default has occurred and is
continuing, the Borrower may deposit the amount of such mandatory prepayment in
a cash collateral account to be held by the Agent, for and on behalf of the
Lenders (which shall be an interest-bearing account), on such terms and
conditions as are

 

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reasonably acceptable to the Agent and upon such deposit, the obligation of the
Borrower to make such mandatory prepayment shall be deemed satisfied. Subject to
the terms and conditions of said cash collateral account, sums on deposit in
said cash collateral account shall be applied (until exhausted) to reduce the
principal balance of the Term Loan on the last day of each Eurodollar-Interest
Period attributable to the Eurodollar-based Advances of the Term Loan, thereby
avoiding breakage costs under Section 11.1.

4.9 Use of Proceeds. Proceeds of the Term Loan shall be used by the Borrower to
refinance certain indebtedness of the Borrower existing on the Effective Date
and to finance the Rohm Acquisition.

5. CONDITIONS.

The obligations of the Lenders to make Advances or loans pursuant to this
Agreement and the discretionary issuance by the Issuing Lender of Letters of
Credit are subject to the following conditions:

5.1 Conditions to Initial Advances. The obligations of the Lenders to make
initial Advances or loans pursuant to this Agreement, including without
limitation the Term Loan Advance, and the discretionary issuance by the Issuing
Lender of the initial Letter of Credit, in each case, on the Effective Date
only, are subject to the following conditions:

(a) Notes, this Agreement and the other Loan Documents. The Borrower shall have
executed and delivered to the Agent for the account of each Lender requesting
Notes, the Swing Line Note, the Revolving Credit Notes and the Term Notes, as
applicable; the Borrower shall have executed and delivered this Agreement; and
each Loan Party shall have executed and delivered the other Loan Documents to
which such Loan Party is required to be a party (including all schedules and
other documents to be delivered pursuant hereto); and such Notes (if any), this
Agreement and the other Loan Documents shall be in full force and effect.

(b) Corporate Authority. The Agent shall have received, with a counterpart
thereof for each Lender, from each Loan Party, a certificate of its Secretary or
Assistant Secretary dated as of the Effective Date as to:

(i) corporate resolutions (or the equivalent) of each authorizing the
transactions contemplated by this Agreement and the other Loan Documents
approval of this Agreement and the other Loan Documents, in each case to which
such Loan Party is party, and authorizing the execution and delivery of this
Agreement and the other Loan Documents, and in the case of the Borrower,
authorizing the execution and delivery of requests for Advances and the issuance
of Letters of Credit hereunder,

(ii) the incumbency and signature of the officers or other authorized persons of
such Credit Party executing any Loan Document and in the case of the Borrower,
the officers who are authorized to execute any Requests for Advance, or requests
for the issuance of Letters of Credit,

(iii) a certificate of good standing or continued existence (or the equivalent
thereof) from the state of its incorporation or formation; and

(iv) copies of such Loan Party’s articles of incorporation and bylaws or other
constitutional documents, as in effect on the Effective Date.

(c) Collateral Documents, Guaranties and other Loan Documents. The Agent shall
have received the following documents, each in form and substance satisfactory
to the Agent and fully executed by each party thereto:

(i) The Guaranty and following Collateral Documents, each in form and substance
acceptable to the Agent and fully executed by each party thereto and dated as of
the Effective Date:

(A) the Security Agreement, executed and delivered by the Borrower and the
Significant Domestic Subsidiaries;

 

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(B) the Pledge Agreement, executed and delivered by the Borrower and the
Significant Domestic Subsidiaries; and

(C) the Guaranty, executed and delivered by the Significant Domestic
Subsidiaries of Borrower.

(ii) (A) Certified copies of uniform commercial code requests for information,
or a similar search report certified by a party acceptable to the Agent, dated a
date reasonably prior to the Effective Date, listing all effective financing
statements in the jurisdiction noted on Schedule 5.1(c) to the Disclosure Letter
which name any Credit Party (under their present names or under any previous
names used within five (5) years prior to the date hereof) as debtors, together
with (x) copies of such financing statements, and (y) authorized Uniform
Commercial Code (Form UCC-3) Termination Statements, if any, necessary to
release all Liens and other rights of any Person in any Collateral described in
the Collateral Documents previously granted by any Person (other than Liens
permitted by Section 8.2 of this Agreement) and (B) intellectual property search
reports results from the United States Patent and Trademark Office and the
United States Copyright Office for the Credit Parties dated a date reasonably
prior to the Effective Date.

(iii) Any documents (including, without limitation, financing statements,
amendments to financing statements and assignments of financing statements,
stock powers executed in blank and any endorsements) requested by the Agent and
reasonably required to be provided in connection with the Collateral Documents
to create, in favor of the Agent (for and on behalf of the Lenders), a first
priority perfected security interest in the Collateral thereunder shall have
been filed, registered or recorded, or shall have been delivered to the Agent in
proper form for filing, registration or recordation.

(d) Insurance. The Agent shall have received evidence reasonably satisfactory to
it that the Credit Parties have obtained the insurance policies required by
Section 7.5 hereof and that such insurance policies are in full force and
effect.

(e) Compliance with Certain Documents and Agreements. Each Credit Party shall
have each performed and complied in all material respects with all agreements
and conditions contained in this Agreement and the other Loan Documents, to the
extent required to be performed or complied with by such Credit Party. No Person
(other than the Agent, Lenders and Issuing Lender) party to this Agreement or
any other Loan Document shall be in material default in the performance or
compliance with any of the terms or provisions of this Agreement or the other
Loan Documents or shall be in material default in the performance or compliance
with any of the material terms or material provisions of, in each case to which
such Person is a party.

(f) Opinions of Counsel. The Loan Parties shall furnish the Agent prior to the
initial Advance under this Agreement, with signed copies for each Lender,
opinions of counsel to the Loan Parties, including opinions of local counsel to
the extent deemed necessary by the Agent, in each case dated the Effective Date
and covering such matters as reasonably required by and otherwise reasonably
satisfactory in form and substance to the Agent and each of the Lenders.

(g) Payment of Fees. The Borrower shall have paid to Comerica Bank any fees due
under the terms of the Fee Letter, along with any other fees, costs or expenses
due and outstanding to the Agent or the Lenders as of the Effective Date
(including reasonable fees, disbursements and other charges of counsel to the
Agent).

(h) Financial Statements. The Borrower shall have delivered to the Lenders and
the Agent, in form and substance satisfactory to the Agent, the quarterly
financial statements prepared by the Borrower for December 31, 2012.

 

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(i) Rohm Acquisition. The Agent shall have received, in form and substance
satisfactory to the Agent and, where applicable, fully executed by each party
thereto:

(i) Pro Forma Projected Financial Information with respect to the Rohm
Acquisition demonstrating, after giving effect to the Rohm Acquisition, (x) pro
forma compliance with the financial covenants set forth in Sections 7.9 hereof
for the succeeding four (4) fiscal quarters and (y) financial condition of the
Borrower reasonably satisfactory to Agent and the Majority Lenders, supported by
a certification thereto contained in the Closing Certificate delivered under
clause (k) of this Section 5.1;

(ii) Borrower’s quarterly projections for fiscal years 2013, 2014 and 2015; and

(iii) The Rohm Purchase Agreement and the related Rohm Acquisition documents.

(j) Governmental and Other Approvals. The Agent shall have received copies of
all authorizations, consents, approvals, licenses, qualifications or formal
exemptions, filings, declarations and registrations with, any court,
governmental agency or regulatory authority or any securities exchange or any
other person or party (whether or not governmental) received by any Credit Party
in connection with the transactions contemplated by the Loan Documents to occur
on the Effective Date.

(k) Closing Certificate. The Agent shall have received, with a signed
counterpart for each Lender, a certificate of a Responsible Officer of the
Borrower dated the Effective Date (or, if different, the date of the initial
Advance hereunder), stating that to the best of his or her respective knowledge
after due inquiry, (a) the conditions set forth in this Section 5 have been
satisfied to the extent required to be satisfied by any Loan Party; (b) the
representations and warranties made by the Loan Parties in this Agreement or any
of the other Loan Documents, as applicable, are true and correct in all material
respects; (c) no Default or Event of Default shall have occurred and be
continuing; (d) since December 31, 2012, nothing shall have occurred which has
had, or could reasonably be expected to have, a material adverse change on the
business, results of operations, conditions, property or prospects (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a whole; and (e) no
Rohm Material Adverse Effect shall have occurred and be continuing since the
date of the most recent financial statements and other financial information
delivered by Borrower to Agent prior to the Effective Date with respect to
Seller and Seller’s parent.

(l) Customer Identification Forms. The Agent shall have received completed
customer identification forms (forms to be provided by the Agent to the
Borrower) from the Borrower and each Guarantor.

5.2 Continuing Conditions. The obligations of each Lender to make Advances
(including the initial Advance of the Revolving Credit and the Term Loan Advance
under this Agreement and discretionary issuance by the Issuing Lender of any
Letters of Credit shall be subject to the continuing conditions that:

(a) No Default or Event of Default shall exist as of the date of the Advance or
the request for the Letter of Credit, as the case may be; and

(b) Each of the representations and warranties contained in this Agreement and
in each of the other Loan Documents shall be true and correct in all material
respects as of the date of the Advance or Letter of Credit (as the case may be)
as if made on and as of such date (other than any representation or warranty
that expressly speaks only as of a different date).

6. REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Agent, the Lenders, the Swing Line
Lender and the Issuing Lender as follows:

6.1 Corporate Authority. Each Loan Party is a corporation (or other business
entity) duly organized and existing in good standing under the laws of the state
or jurisdiction of its incorporation or formation, as applicable, and each Loan
Party is duly qualified and authorized to do business as a foreign corporation
in each jurisdiction where the character of its assets or the nature of its
activities makes such qualification and authorization necessary except where
failure to be so qualified or be in good standing could not reasonably be
expected to have a Material Adverse Effect. Each Loan Party has all requisite
corporate, limited liability or partnership power and authority to own all its
property (whether real, personal, tangible or intangible or of any kind
whatsoever) and to carry on its business.

 

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6.2 Due Authorization. Execution, delivery and performance of this Agreement,
and the other Loan Documents, to which each Loan Party is party, and the
issuance of the Notes by the Borrower (if requested) are within such Person’s
corporate, limited liability or partnership power, have been duly authorized,
are not in contravention of any law applicable to such Loan Party or the terms
of such Loan Party’s organizational documents and, except as have been
previously obtained or as referred to in Section 6.10, below, do not require the
consent or approval of any governmental body, agency or authority or any other
third party except to the extent that such consent or approval is not material
to the transactions contemplated by the Loan Documents.

6.3 Good Title; Leases; Assets; No Liens.

(a) Each Credit Party, to the extent applicable, has good and valid title (or,
in the case of real property, good and marketable title) to all assets owned by
it that are material to the conduct of its business, subject only to the Liens
permitted under section 8.2 hereof, and each Credit Party has a valid leasehold
or interest as a lessee or a licensee in all of its leased real property;

(b) Schedule 6.3(b) to the Disclosure Letter identifies all of the real property
owned or leased, as lessee thereunder, by the Loan Parties on the Effective
Date, including all warehouse or bailee locations;

(c) The Credit Parties will collectively own or collectively have a valid
leasehold interest in all assets that were owned or leased (as lessee) by the
Credit Parties immediately prior to the Effective Date to the extent that such
assets are necessary for the continued operation of the Credit Parties’
businesses in substantially the manner as such businesses were operated
immediately prior to the Effective Date;

(d) Each Credit Party owns or has a valid leasehold interest in all real
property necessary for its continued operations and, to the best knowledge of
the Borrower, no material condemnation, eminent domain or expropriation action
has been commenced or threatened against any such owned or leased real property;
and

(e) There are no Liens on and no financing statements on file with respect to
any of the assets owned by the Credit Parties, except for the Liens permitted
pursuant to Section 8.2 of this Agreement.

6.4 Taxes. Except as set forth on Schedule 6.4 to the Disclosure Letter, each
Credit Party has filed on or before their respective due dates or within the
applicable grace periods, all United States federal, state, local and other tax
returns which are required to be filed or has obtained extensions for filing
such tax returns and is not delinquent in filing such returns in accordance with
such extensions and has paid all material taxes which have become due pursuant
to those returns or pursuant to any assessments received by any such Credit
Party, as the case may be, to the extent such taxes have become due, except to
the extent such taxes are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate provision
has been made on the books of such Credit Party as may be required by GAAP.

6.5 No Defaults. No Credit Party is in default under or with respect to any
agreement, instrument or undertaking to which is a party or by which it or any
of its property is bound which could reasonably be expected to cause a Material
Adverse Effect.

6.6 Enforceability of Agreement and Loan Documents. This Agreement and each of
the other Loan Documents to which any Loan Party is a party (including without
limitation, each Request for Advance), have each been duly executed and
delivered by its duly authorized officers and constitute the valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms, except as enforcement thereof may be
limited by applicable bankruptcy, reorganization, insolvency, fraudulent
conveyance, moratorium or similar laws affecting the enforcement of creditor’s
rights, generally and by general principles of equity (regardless of whether
enforcement is considered in a proceeding in law or equity).

 

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6.7 Compliance with Laws. (a) Except as disclosed on Schedule 6.7 to the
Disclosure Letter and the knowledge of each Credit Party, each Credit Party has
complied with all applicable federal, state and local laws, ordinances, codes,
rules, regulations and guidelines (including consent decrees and administrative
orders) including but not limited to applicable Hazardous Material Laws, and is
in compliance with any applicable Requirement of Law in each case, except to the
extent that failure to comply therewith could not reasonably be expected to have
a Material Adverse Effect; and (b) neither the extension of credit made pursuant
to this Agreement or the use of the proceeds thereof by the Credit Parties will
violate, to the extent applicable to any such Credit Party in each case, the
Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto, or The United and Strengthening America by providing appropriate Tools
Required to Intercept and Obstruct Terrorism (“USA Patriot Act”) Act of 2001,
Public Law 10756, October 26, 2001 or Executive Order 13224 of September 23,
2001 issued by the President of the United States (66 Fed. Reg. 49049 (2001)).

6.8 Non-contravention. The execution, delivery and performance of this Agreement
and the other Loan Documents (including each Request for Advance) to which each
Loan Party is a party are not in contravention of the terms of any indenture,
agreement or undertaking to which such Loan Party is a party or by which it or
its properties are bound where such violation could reasonably be expected to
have a Material Adverse Effect.

6.9 Litigation. Except as set forth on Schedule 6.9 to the Disclosure Letter,
there is no suit, action, proceeding, including, without limitation, any
bankruptcy proceeding or governmental investigation pending against or to the
knowledge of the Borrower, threatened against any Credit Party (other than any
suit, action or proceeding in which a Credit Party is the plaintiff and in which
no counterclaim or cross-claim against such Credit Party has been filed), or any
judgment, decree, injunction, rule, or order of any court, government,
department, commission, agency, instrumentality or arbitrator outstanding
against any Credit Party, nor is any Credit Party in violation of any applicable
law, regulation, ordinance, order, injunction, decree or requirement of any
governmental body or court which could in any of the foregoing events reasonably
be expected to have a Material Adverse Effect.

6.10 Consents, Approvals and Filings, Etc. Except as set forth on Schedule 6.10
to the Disclosure Letter, no material authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority or any
securities exchange or any other Person (whether or not governmental) (each a
“Filing”) is required in connection with the execution, delivery and
performance: (i) by any Loan Party of this Agreement and any of the other Loan
Documents to which such Loan Party is a party or (ii) by the Loan Parties of the
grant of Liens granted, conveyed or otherwise established (or to be granted,
conveyed or otherwise established) by or under this Agreement or the other Loan
Documents, as applicable, except in each case for (i) such matters which have
been previously obtained, and (ii) Filings required to be obtain and maintain
existence, good standing and similar matters, (iii) routine Filings necessary in
the ordinary course of business, (iv) Filings required in connection with the
performance of the Loan Documents, and (v) Filings required in connection with
the exercise of remedies under the Loan Documents, such filings to be made
concurrently herewith or promptly following the Effective Date as are required
by the Collateral Documents to perfect Liens in favor of the Agent. All such
material authorizations, consents, approvals, licenses, qualifications,
exemptions, filings, declarations and registrations which have previously been
obtained or made, as the case may be, are in full force and effect and, to the
best knowledge of the Borrower, are not the subject of any attack or threatened
attack (in each case in any material respect) by appeal or direct proceeding or
otherwise.

6.11 Agreements Affecting Financial Condition. No Credit Party is party to any
agreement or instrument or subject to any charter or other corporate restriction
which could reasonably be expected to have a Material Adverse Effect.

6.12 No Investment Company or Margin Stock. No Credit Party is an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
No Credit Party is engaged principally, or as one of its important activities,
directly or indirectly, in the business of extending credit for the purpose of
purchasing or carrying margin stock. None of the proceeds of any of the Advances
will be used by any Credit Party to purchase or carry margin stock. Terms for
which meanings are provided in Regulation U of the Board of Governors of the
Federal Reserve System or any regulations substituted therefore, as from time to
time in effect, are used in this paragraph with such meanings.

 

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6.13 ERISA. No Credit Party organized in the United States maintains or
contributes to any Pension Plan subject to Title IV of ERISA, except as set
forth on Schedule 6.13 to the Disclosure Letter or otherwise disclosed to the
Agent in writing. There is no accumulated funding deficiency within the meaning
of Section 412 of the Internal Revenue Code or Section 302 of ERISA, or any
outstanding liability with respect to any Pension Plans owed to the PBGC other
than future premiums due and owing pursuant to Section 4007 of ERISA, and no
“reportable event” as defined in Section 4043(c) of ERISA has occurred with
respect to any Pension Plan other than an event for which the notice requirement
has been waived by the PBGC. None of the Credit Parties organized in the United
States has engaged in a prohibited transaction with respect to any Pension Plan,
other than a prohibited transaction for which an exemption is available and has
been obtained, which could subject such Credit Parties to a material tax or
penalty imposed by Section 4975 of the Internal Revenue Code or Section 502(i)
of ERISA. Each Pension Plan is being maintained and funded in accordance with
its terms and is in material compliance with the requirements of the Internal
Revenue Code and ERISA. No Credit Party organized in the United States has had a
complete or partial withdrawal from any Multiemployer Plan that has resulted or
could reasonably be expected to have resulted in any Withdrawal Liability and,
except as notified to the Agent in writing following the Effective Date, no such
Multiemployer Plan is in reorganization (within the meaning of Section 4241 of
ERISA) or insolvent (within the meaning of Section 4245 of ERISA). If any Credit
Party maintains or contributes to any pension plan organized outside of the
United States, such plan shall be in compliance with all applicable Requirements
of Law, except to the extent any such non-compliance could reasonably be
expected to have a Material Adverse Effect.

6.14 Conditions Affecting Business or Properties. Neither the respective
businesses nor the properties of any Credit Party is affected by any fire,
explosion, accident, strike, lockout or other dispute, drought, storm, hail,
earthquake, embargo, Act of God, or other casualty (except to the extent such
event is covered by insurance sufficient to ensure that upon application of the
proceeds thereof, no Material Adverse Effect could reasonably be expected to
occur) which could reasonably be expected to have a Material Adverse Effect.

6.15 Environmental and Safety Matters. Except as set forth in Schedules 6.9,
6.10 and 6.15 to the Disclosure Letter or as could not reasonably be expected to
have a Material Adverse Effect:

 

  (a) all facilities and property owned or leased by the Credit Parties are in
compliance with all applicable Hazardous Material Laws;

 

  (b) to the best knowledge of the Borrower, there have been no unresolved and
outstanding past, and there are no pending or threatened:

 

  (i) claims, complaints, notices or requests for information received by any
Credit Party with respect to any alleged violation of any applicable Hazardous
Material Law, or

 

  (ii) written complaints, notices or inquiries to any Credit Party regarding
potential liability of any Credit Parties under any applicable Hazardous
Material Law; and

 

  (c) to the best knowledge of the Borrower, no conditions exist at, on or under
any property now or previously owned or leased by any Credit Party which, with
the passage of time, or the giving of notice or both, are reasonably likely to
give rise to liability under any applicable Hazardous Material Law or create a
significant adverse effect on the value of the property.

6.16 Subsidiaries. Except as disclosed on Schedule 6.16 hereto as of the
Effective Date, and thereafter, except as disclosed to the Agent in writing from
time to time, no Credit Party has any Subsidiaries.

6.17 Franchises, Patents, Copyrights, Tradenames, etc. The Credit Parties
possess all franchises, Patents, Copyrights, Trademarks, trade names, licenses
and permits, and rights in respect of the foregoing, adequate for the conduct of
their business substantially as now conducted without known conflict with any
rights of others. Schedule 6.19 contains a true and accurate list of all trade
names and any and all other names used by any Credit Party during the five-year
period ending as of the Effective Date.

 

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6.18 Capital Structure. Schedule 6.20 to the Disclosure Letter sets forth all
issued and outstanding Equity Interests of each Credit Party other than the
Borrower, including the holder of such Equity Interests, all on and as of the
Effective Date. All issued and outstanding Equity Interests of each such Credit
Party are duly authorized and validly issued, fully paid, nonassessable, free
and clear of all Liens (except for the benefit of the Agent) and such Equity
Interests were issued in compliance with all applicable state, federal and
foreign laws concerning the issuance of securities.

6.19 Accuracy of Information.

(a) The Borrower-prepared, unaudited financial statements for the fiscal quarter
ended December 31, 2012, furnished to the Agent and the Lenders prior to the
Effective Date fairly present in all material respects the financial condition
of the Borrower and its respective Subsidiaries and the results of their
operations for the periods covered thereby, and have been prepared in accordance
with GAAP. The projections, the Pro Forma Balance Sheet and the other pro forma
financial information delivered to the Agent prior to the Effective Date are
based upon good faith estimates and assumptions believed by management of the
Borrower to be accurate and reasonable at the time made, it being recognized by
the Lenders that such financial information as it relates to future events is
not to be viewed as fact and that actual results during the period or periods
covered by such financial information may differ from the projected results set
forth therein.

(b) Since December 31, 2012, there has been no material adverse change in the
business, operations, condition, property or prospects (financial or otherwise)
of the Credit Parties, taken as a whole.

(c) To the best knowledge of the Credit Parties, as of the Effective Date,
(i) the Credit Parties do not have any material contingent obligations
(including any liability for taxes) not disclosed by or reserved against in the
opening balance sheet to be delivered hereunder and (ii) there are no unrealized
or anticipated losses from any present commitment of the Credit Parties which
contingent obligations and losses in the aggregate could reasonably be expected
to have a Material Adverse Effect.

6.20 Solvency. After giving effect to the consummation of the transactions
contemplated by this Agreement and other Loan Documents, each Loan Party will be
solvent, able to pay its indebtedness as it matures and will have capital
sufficient to carry on its businesses and all business in which it is about to
engage. This Agreement is being executed and delivered by the Borrower to the
Agent and the Lenders in good faith and in exchange for fair, equivalent
consideration. The Loan Parties do not intend to nor does management of the Loan
Parties believe the Loan Parties will incur debts beyond their ability to pay as
they mature. The Loan Parties do not contemplate filing a petition in bankruptcy
or for an arrangement or reorganization under the Bankruptcy Code or any similar
law of any jurisdiction now or hereafter in effect relating to any Loan Party,
nor does any Loan Party have any knowledge of any threatened bankruptcy or
insolvency proceedings against a Loan Party.

6.21 Employee Matters. There are no strikes, slowdowns, work stoppages, unfair
labor practice complaints, grievances, arbitration proceedings or controversies
pending or, to the best knowledge of the Borrower, threatened against any Loan
Party by any employees of any Loan Party, other than non-material employee
grievances or controversies arising in the ordinary course of business. Set
forth on Schedule 6.23 to the Disclosure Letter are all union contracts or
agreements to which any Loan Party is party as of the Effective Date and the
related expiration dates of each such contract.

6.22 No Misrepresentation. Neither this Agreement nor any other Loan Document,
certificate, information or report furnished or to be furnished by or on behalf
of a Loan Party to the Agent or any Lender in connection with any of the
transactions contemplated hereby or thereby, contains a misstatement of material
fact, or omits to state a material fact required to be stated in order to make
the statements contained herein or therein, taken as a whole, not misleading in
the light of the circumstances under which such statements were made. There is
no fact, other than information known to the public generally, known to any Loan
Party after diligent inquiry, that could reasonably be expect to have a Material
Adverse Effect that has not expressly been disclosed to the Agent in writing.

6.23 Corporate Documents and Corporate Existence. As to each Credit Party,
(a) it is an organization as described on Schedule 1.3 to the Disclosure Letter
and has provided the Agent and the Lenders with complete and correct copies of
its articles of incorporation, by-laws and all other applicable charter and
other organizational documents, and, if applicable, a good standing certificate
and (b) its correct legal name, business address, type of organization and
jurisdiction of organization, tax identification number and other relevant
identification numbers are set forth on Schedule 1.3 hereto.

 

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6.24 Intellectual Property. Except as disclosed on Schedule 6.26 to the
Disclosure Letter, Borrower or the applicable Credit Party is the sole owner of
the Intellectual Property, except for licenses granted by Borrower to its
customers in the ordinary course of business. To the best of Borrower’s
knowledge, each of the Copyrights, Trademarks and Patents is valid and
enforceable, and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made to Borrower or
the applicable Credit Party that any part of the Intellectual Property violates
the rights of any third party except to the extent such claim could not
reasonably be expected to cause a Material Adverse Effect.

6.25 Inbound Licenses. Except as disclosed on Schedule 6.27 to the Disclosure
Letter, none of the Loan Parties is a party to, nor is bound by, any inbound
license or other agreement, the failure, breach, or termination of which could
reasonably be expected to cause a Material Adverse Effect, or that prohibits or
otherwise restricts such Loan Party from granting a security interest in
Borrower’s interest in such license or agreement or any other property.

7. AFFIRMATIVE COVENANTS.

The Borrower covenants and agrees, so long as any Lender has any commitment to
extend credit hereunder, or any of the Indebtedness remains outstanding and
unpaid, that it will, and, as applicable, it will cause each of its Subsidiaries
to:

7.1 Financial Statements. Furnish to the Agent, in form and detail satisfactory
to the Agent, with sufficient copies for each Lender, the following documents:

(a) as soon as available, but in any event within ninety (90) days after the end
of each Fiscal Year, a copy of the audited Consolidated and Consolidating
financial statements of the Borrower and its Consolidated Subsidiaries as at the
end of such Fiscal Year and the related audited Consolidated and unaudited
Consolidating statements of income, stockholders equity, and cash flows of the
Borrower and its Consolidated Subsidiaries for such Fiscal Year and underlying
assumptions, setting forth in each case in comparative form the figures for the
previous Fiscal Year, certified as being fairly stated in all material respects
by an independent, nationally recognized certified public accounting firm
reasonably satisfactory to the Agent;

(b) as soon as available, but in any event within forty five (45) days after the
end of each fiscal quarter of the Borrower (including the last quarter of each
Fiscal Year, which, for such quarter, shall be a Borrower-prepared draft subject
to standard audit adjustments), the Borrower prepared unaudited Consolidated and
Consolidating balance sheets of the Borrower and its Consolidated Subsidiaries
as at the end of such quarter and the related unaudited statements of income,
stockholders equity and cash flows of the Borrower and its Consolidated
Subsidiaries for the portion of the Fiscal Year through the end of such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous Fiscal Year, and certified by a Responsible Officer of
the Borrower as being fairly stated in all material respects; and

(c) (i) as soon as available, but in any event within ninety (90) after the last
day of each Fiscal Year of Borrower, a copy of all reports on Form 10-K filed by
Borrower or on Borrower’s behalf with the Securities and Exchange Commission for
such Fiscal Year and (ii) as soon as available, but in any event within 45 days
after the last day of each of Borrower’s fiscal quarters all reports on Form
10-Q filed by Borrower or on Borrower’s behalf with the Securities and Exchange
Commission for such quarter;

all such financial statements to fairly present in all material respects the
financial condition of the Borrower and its Consolidated Subsidiaries to be
prepared in reasonable detail and in accordance with GAAP throughout the periods
reflected therein and with prior periods (except as approved by a Responsible
Officer and disclosed therein), provided however that the financial statements
delivered pursuant to clause (b) hereof will not be required to include
footnotes and will be subject to change from audit and year-end adjustments.

 

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7.2 Certificates; Other Information. Furnish to the Agent, in form and detail
acceptable to the Agent, with sufficient copies for each Lender, the following
documents:

(a) Concurrently with the delivery of the financial statements described in
Sections 7.1(a) for each fiscal year end and 7.1(b) for each quarter end, a
Covenant Compliance Report (or, in the case of the Borrower prepared financial
statements for the last fiscal quarter of each fiscal year, a draft Covenant
Compliance Certificate), together with aged listings by invoice date of Accounts
and accounts payable, duly executed by a Responsible Officer of the Borrower;

(b) Promptly upon receipt thereof, copies of the final versions of all
significant reports submitted by the Credit Parties’ firm(s) of certified public
accountants in connection with each annual, interim or special audit or review
of any type of the financial statements or related internal control systems of
the Credit Parties made by such accountants, including any final comment letter
submitted by such accountants to management in connection with their services;

(c) Any financial reports, statements, press releases, other material
information or written notices delivered to the holders of Equity Interests in
the Borrower or the holders of the Subordinated Debt pursuant to any applicable
Subordinated Debt Documents (to the extent not otherwise required hereunder), as
and when delivered to such Persons;

(d) As soon as available but in any event within sixty (60) days after the end
of each Fiscal Year, projections for the Borrower for the next succeeding Fiscal
Year, on a quarterly basis including a balance sheet, as at the end of each
relevant period and for the period commencing at the beginning of the Fiscal
Year and ending on the last day of such relevant period, such projections
certified by a Responsible Officer of the Borrower as being based on reasonable
estimates and assumptions taking into account all facts and information known
(or reasonably available to the Borrower) by a Responsible Officer of the
Borrower;

(e) As soon as available but in any event within forty five (45) days after and
as of the last day of each fiscal quarter, including the last quarter of each
Fiscal Year, (or at any time during which Indebtedness (including Letters of
Credit) is outstanding, thirty (30) days) after and as of the last day of each
month, including the last month of each Fiscal Year), or in either case more
frequently as requested by the Agent, the aging of the accounts receivable and
accounts payable, an inventory report and a Borrowing Base Certificate of the
Borrowing Base Obligors;

(f) Within ninety (90) days after and as of the end of each Fiscal Year, a
report signed by Borrower, in form reasonably acceptable to Agent, listing any
applications or registrations that Borrower has made or filed in respect of any
Patents, Copyrights or Trademarks and a current list of Borrower’s Intellectual
Property;

(g) Any additional information as required by any Loan Document, and such
additional schedules, certificates and reports respecting all or any of the
Collateral, the items or amounts received by the Credit Parties in full or
partial payment thereof, and any goods (the sale or lease of which shall have
given rise to any of the Collateral) possession of which has been obtained by
the Credit Parties, all to such extent as the Agent may reasonably request from
time to time, any such schedule, certificate or report to be certified as true
and correct in all material respects by a Responsible Officer of the applicable
Credit Party and shall be in such form and detail as the Agent may reasonably
specify;

(h) As soon as available but in any event by within thirty (30) days after and
as of the last day of each calendar month or more frequently if requested by
Agent, documentation evidencing Borrower’s compliance with Section 6.9(c)
hereof; and

(i) Such additional financial and/or other information as the Agent or any
Lender may from time to time reasonably request, promptly following such
request.

 

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7.3 Payment of Obligations. Pay, discharge or otherwise satisfy, at or before
maturity or before they become delinquent, as the case may be, all of its
material obligations of whatever nature, including without limitation all
assessments, governmental charges, claims for labor, supplies, rent or other
obligations, except where the amount or validity thereof is currently being
appropriately contested in good faith and reserves in conformity with GAAP with
respect thereto have been provided on the books of the Credit Parties or where
such failure could not reasonably be expected to have a Material Adverse Effect.

7.4 Conduct of Business and Maintenance of Existence; Compliance with Laws.

(a) Continue to engage in their respective business and operations substantially
as conducted immediately prior to the Effective Date;

(b) Preserve, renew and keep in full force and effect its existence and maintain
its qualifications to do business in each jurisdiction where such qualifications
are necessary for its operations, except as otherwise permitted pursuant to
Section 8.4 and (ii) except where failure to do so could not reasonably be
expected to have a Material Adverse Effect;

(c) Take all action it deems necessary in its reasonable business judgment to
maintain all rights, privileges, licenses and franchises necessary for the
normal conduct of its business except where the failure to so maintain such
rights, privileges or franchises could not, either singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect;

(d) Comply with all applicable Requirements of Law, except to the extent that
failure to comply therewith could not, either singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and

(e) (i) Continue to be a Person whose property or interests in property is not
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079
(2001)) (the “Order”), (ii) not engage in the transactions prohibited by
Section 2 of that Order or become associated with Persons such that a violation
of Section 2 of the Order would arise, and (iii) not become a Person on the list
of Specially Designated National and Blocked Persons, or (iv) otherwise not
become subject to the limitation of any OFAC regulation or executive order.

7.5 Maintenance of Property; Insurance. (a) Keep all material property it deems,
in its reasonable business judgment, useful and necessary in its business in
working order (ordinary wear and tear excepted); (b) maintain insurance coverage
with financially sound and reputable insurance companies on physical assets and
against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature (including without
limitation casualty and public liability and property damage insurance), and in
the event of acquisition of additional property, real or personal, or of the
incurrence of additional risks of any nature, increase such insurance coverage
in such manner and to such extent as prudent business judgment and present
practice or any applicable Requirements of Law would dictate; (c) in the case of
all insurance policies covering any Collateral, such insurance policies shall
provide that the loss payable thereunder shall be payable to the applicable
Credit Party, and to the Agent (as mortgagee, or, in the case of personal
property interests, lender loss payee) as their respective interests may appear;
(d) in the case of all public liability insurance policies, such policies shall
list the Agent as an additional insured, as the Agent may reasonably request;
and (e) if requested by the Agent, certificates evidencing such policies,
including all endorsements thereto, to be deposited with the Agent, such
certificates being in form and substance reasonably acceptable to the Agent.

7.6 Inspection of Property; Books and Records, Discussions. Permit the Agent and
each Lender, through their authorized attorneys, accountants and representatives
(a) at all reasonable times during normal business hours, upon the request of
the Agent or such Lender, to examine each Credit Party’s books, accounts,
records, ledgers and assets and properties; (b) from time to time, during normal
business hours, upon the request of the Agent, to conduct full or partial
collateral audits of the Accounts of the Borrowing Base Obligors and appraisals
of all or a portion of the fixed assets (including real property) of the Loan
Parties, such audits and appraisals to be completed by an appraiser as may be
selected by the Agent and consented to by the Borrower (such consent not to be
unreasonably withheld), with all reasonable costs and expenses of such audits to
be reimbursed by the Borrower; provided that so long as no Event of Default
exists, the Borrower shall not be required to reimburse the Agent for such
audits or appraisals more frequently than once in any 12-month period,
(c) during normal business hours and at

 

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their own risk, to enter onto the real property owned or leased by any Loan
Party to conduct inspections, investigations or other reviews of such real
property; and (d) at reasonable times during normal business hours and at
reasonable intervals, to visit all of the Loan Parties’ offices, discuss each
Loan Party’s respective financial matters with their respective officers, as
applicable, and, by this provision, the Borrower authorizes its independent
certified or chartered public accountants to discuss the finances and affairs of
any Credit Party and examine any of such Credit Party’s books, reports or
records held by such accountants.

7.7 Notices. Promptly give written notice to the Agent of:

(a) the occurrence of any Default or Event of Default of which any Credit Party
has knowledge;

(b) any (i) litigation or proceeding existing at any time between any Credit
Party and any Governmental Authority or other third party, or any investigation
of any Credit Party conducted by any Governmental Authority, which in any case
if adversely determined would have a Material Adverse Effect or (ii) any
material adverse change in the financial condition of any Credit Party since the
date of the last audited financial statements delivered pursuant to
Section 7.1(a) hereof;

(c) the occurrence of any event which any Credit Party believes could reasonably
be expected to have a Material Adverse Effect, promptly after concluding that
such event could reasonably be expected to have such a Material Adverse Effect;

(d) promptly after becoming aware thereof, the taking by the Internal Revenue
Service or any foreign taxing jurisdiction of a written tax position (or any
such tax position taken by any Credit Party in a filing with the Internal
Revenue Service or any foreign taxing jurisdiction) which could reasonably be
expected to have a Material Adverse Effect, setting forth the details of such
position and the financial impact thereof;

(e) (i) all jurisdictions in which any Loan Party proposes to become qualified
after the Effective Date to transact business, (ii) the acquisition or creation
of any new Subsidiaries, (iii) any material change after the Effective Date in
the authorized and issued Equity Interests of any Credit Party or any other
material amendment to any Credit Party’s charter, by-laws or other
organizational documents, such notice, in each case, to identify the applicable
jurisdictions, capital structures or amendments as applicable, provided that
such notice shall be given not less than ten (10) Business Days prior to the
proposed effectiveness of such changes, acquisition or creation, as the case may
be (or such shorter period to which the Agent may consent);

(f) not less than fifteen (15) Business Days (or such other shorter period to
which the Agent may agree) prior to the proposed effective date thereof, any
proposed material amendments, restatements or other modifications to any
Subordinated Debt Documents;

(g) any default or event of default by any Person under any Subordinated Debt
Document, concurrently with delivery or promptly after receipt (as the case may
be) of any notice of default or event of default under the applicable document,
as the case may be; and

(h) any change in Borrower’s Chief Executive Officer or Chief Financial Officer.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and, in the case of notices referred to in clauses (a), (b),
(c), (d) and (g) hereof stating what action the applicable Credit Party has
taken or proposes to take with respect thereto.

7.8 Hazardous Material Laws.

(a) Use and operate all of its facilities and properties in material compliance
with all applicable Hazardous Material Laws, keep all material required permits,
approvals, certificates, licenses and other authorizations required under such
applicable Hazardous Material Laws in effect and remain in compliance therewith,
and handle all Hazardous Materials in material compliance with all applicable
Hazardous Material Laws;

 

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(b) (i) Promptly notify the Agent and provide copies upon receipt of all written
claims, complaints, notices or inquiries received by any Credit Party relating
to its facilities and properties or compliance with applicable Hazardous
Material Laws which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect and (ii) promptly cure and have dismissed with
prejudice to the reasonable satisfaction of the Agent and the Majority Lenders
any material actions and proceedings relating to compliance with applicable
Hazardous Material Laws to which any Credit Party is named a party, other than
such actions or proceedings being contested in good faith and with the
establishment of reasonable reserves;

(c) To the extent necessary to comply in all material respects with applicable
Hazardous Material Laws, remediate or monitor contamination arising from a
release or disposal of applicable Hazardous Material, which solely, or together
with other releases or disposals of Hazardous Materials could reasonably be
expected to have a Material Adverse Effect; provided, that, with respect to the
Japanese Real Property, this clause (c) shall be deemed satisfied if such
remediation is conducted in accordance with the Rohm Purchase Agreement, and any
recommendations contained in the “phase two” environmental assessment obtained
by Borrower with respect to such property prior to the date hereof and any
subsequent environmental assessments obtained by Borrower, except to the extent
any such recommendations are not commercially reasonable; and

(d) Provide such information and certifications which the Agent or any Lender
may reasonably request from time to time to evidence compliance with this
Section 7.8.

7.9 Financial Covenants.

(a) Commencing June 30, 2013, not permit the Funded Debt to Adjusted EBITDA
Ratio, calculated as of the last day of each fiscal quarter during the periods
set forth below, to be greater than:

 

June 30, 2013

     3.75 to 1.00   

September 30, 2013

     3.75 to 1.00   

December 31, 2013

     3.25 to 1.00   

March 31, 2014 and the last day of each fiscal quarter thereafter

     3.00 to 1.00   

(b) Not permit at any time: (1) the sum of (a) 80% of Eligible Accounts,
determined on the basis of the most current Borrowing Base Certificate required
or permitted to be submitted hereunder, plus (b) the aggregate Cash maintained
with Agent or a Lender at one of Agent’s or such Lender’s branches (including,
without limitation, the custodial accounts maintained with Comerica Bank, to
which assets have been custodied for investment management by Comerica
Securities, Deutsche Bank and other financial institutions), as applicable,
located in the United States as of such date, to be less than the sum of (i) the
then applicable Revolving Credit Aggregate Commitment plus (ii) the then
applicable Term Loan Aggregate Commitment (minus any amortization, prepayments
(whether mandatory or voluntary) or other permanent reductions in the amount
thereof); and (2) the ratio of such Cash to the sum of (i) the then applicable
Revolving Credit Aggregate Commitment plus (ii) the then applicable Term Loan
Aggregate Commitment (minus any amortization, prepayments (whether mandatory or
voluntary) or other permanent reductions in the amount thereof) to be less than
0.60 to 1.00.

(c) Not permit at any time the aggregate balance of Borrower’s aggregate Cash
maintained with any financial institution, whether foreign or domestic (provided
that Cash maintained at any financial institutions in the United States other
than Agent shall be covered by an executed account control agreement
satisfactory to Agent), plus the then applicable Unused Revolving Credit
Availability to be less than Sixty Million Dollars ($60,000,000).

7.10 Governmental and Other Approvals. Apply for, obtain and/or maintain in
effect, as applicable, all authorizations, consents, approvals, licenses,
qualifications, exemptions, filings, declarations and registrations (whether
with any court, governmental agency, regulatory authority, securities exchange
or otherwise) which are necessary or reasonably requested by the Agent in
connection with the execution, delivery and performance by any Credit Party of,
as applicable, this Agreement, the other Loan Documents, the Subordinated Debt
Documents, or any other documents or instruments to be executed and/or delivered
by any Credit Party, as applicable in connection therewith or herewith, except
where the failure to so apply for, obtain or maintain could not reasonably be
expected to have a Material Adverse Effect.

 

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7.11 Compliance with ERISA; ERISA Notices.

(a) Comply in all material respects with all material applicable requirements
imposed by ERISA and the Internal Revenue Code, including, but not limited to,
the minimum funding requirements for any Pension Plan, except to the extent that
any noncompliance could not reasonably be expected to have a Material Adverse
Effect.

(b) Promptly notify the Agent upon the occurrence of any of the following events
in writing: (i) the termination, other than a standard termination, as defined
in ERISA, of any Pension Plan subject to Subtitle C of Title IV of ERISA by any
Credit Party; (ii) the appointment of a trustee by a United States District
Court to administer any Pension Plan subject to Title IV of ERISA; (iii) the
commencement by the PBGC, of any proceeding to terminate any Pension Plan
subject to Title IV of ERISA; (iv) the failure of any Credit Party to make any
payment in respect of any Pension Plan required under Section 412 of the
Internal Revenue Code or Section 302 of ERISA; (v) the withdrawal of any Credit
Party from any Multiemployer Plan if any Credit Party reasonably believes that
such withdrawal would give rise to the imposition of Withdrawal Liability with
respect thereto; or (vi) the occurrence of (x) a “reportable event” which is
required to be reported by a Credit Party under Section 4043 of ERISA other than
any event for which the reporting requirement has been waived by the PBGC or
(y) a “prohibited transaction” as defined in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code other than a transaction for which a
statutory exemption is available or an administrative exemption has been
obtained.

7.12 Defense of Collateral. Defend the Collateral from any Liens other than
Liens permitted by Section 8.2.

7.13 Future Subsidiaries; Additional Collateral.

(a) With respect to each Person which becomes a Significant Domestic Subsidiary
of the Borrower (directly or indirectly) subsequent to the Effective Date,
whether by Permitted Acquisition or otherwise, cause such new Domestic
Subsidiary to execute and deliver to the Agent, for and on behalf of each of the
Lenders (unless waived by the Agent):

 

  (i) within thirty (30) days after the date such Person becomes a Significant
Domestic Subsidiary (or such longer time period as the Agent may determine), a
Guaranty, or in the event that a Guaranty already exists, a joinder agreement to
the Guaranty whereby such Domestic Subsidiary becomes obligated as a Guarantor
under the Guaranty;

 

  (ii) within thirty (30) days after the date such Person becomes a Significant
Domestic Subsidiary (or such longer time period as the Agent may determine), a
joinder agreement to the Security Agreement whereby such Domestic Subsidiary
grants a Lien over its assets (other than Equity Interests which should be
governed by (b) of this Section 7.13) as set forth in the Security Agreement,
and such Domestic Subsidiary shall take such additional actions as may be
necessary to ensure a valid first priority perfected Lien over such assets of
such Domestic Subsidiary, subject only to the other Liens permitted pursuant to
Section 8.2 of this Agreement;

 

  (iii)

if, within six (6) months following the Effective Date (or such longer period as
determined by Agent), the wind down of Santur has not been finalized (in
accordance with the Delaware General Corporation Law) or substantially all of
the assets of Santur have not been transferred to Borrower or otherwise in
accordance with this Agreement, then, promptly following such 6-month period
(but in any event within thirty (30) days thereafter, or such longer period as
Agent shall determine), (A) a Guaranty executed by Santur, whereby Santur

 

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becomes obligated as a Guarantor under such Guaranty, and (B) a Security
Agreement and a Pledge Agreement, each executed by Santur, whereby Santur grants
a Lien over its assets as set forth in such Security Agreement and Pledge
Agreement, and Borrower shall take (or cause to be taken) such additional
actions as may be necessary to ensure a valid first priority perfected Lien over
such assets of Santur, subject only to the other Liens permitted pursuant to
Section 8.2 of this Agreement; and

 

  (iv) within the time period specified in and to the extent required under
clause (c) of this Section 7.13, Collateral Access Agreements and/or other
documents required to be delivered in connection therewith;

(b) With respect to the Equity Interests of each Person which becomes (whether
by Permitted Acquisition or otherwise) (i) a Domestic Subsidiary subsequent to
the Effective Date, cause the Credit Party that holds such Equity Interests to
execute and deliver such Pledge Agreements, and take such actions as may be
necessary to ensure a valid first priority perfected Lien over one hundred
percent (100%) of the Equity Interests of such Domestic Subsidiary held by each
domestic Credit Party, such Pledge Agreements to be executed and delivered
(unless waived by the Agent) within thirty (30) days after the date such Person
becomes a Domestic Subsidiary (or such longer time period as the Agent may
determine); and (ii) a Significant Foreign Subsidiary subsequent to the
Effective Date, the Equity Interests of which is held directly by the Borrower
or one of its Domestic Subsidiaries, cause the Credit Party that holds such
Equity Interests to execute and deliver such Pledge Agreements and take such
actions as may be necessary to ensure a valid first priority perfected Lien over
sixty-five percent (65%) of the Equity Interests of such Significant Foreign
Subsidiary (or such lesser amount, if applicable, owed by the pledgor), such
Pledge Agreements to be executed and delivered (unless waived by the Agent)
within thirty (30) days after the date such Person becomes a Foreign Subsidiary
(or such longer time period as the Agent may determine); and

(c) (i) With respect to the acquisition of a fee interest in real property by
any domestic Credit Party after the Effective Date, whether by Permitted
Acquisition or otherwise, (provided that the value of such fee property, as
reasonably determined by Agent, exceeds $2,000,000) not later than thirty
(30) days after the acquisition is consummated or the owner of such property
becomes a Domestic Subsidiary (or such longer time period as the Agent may
determine), such Credit Party shall execute or cause to be executed (unless
waived by the Agent), a Mortgage (or an amendment to an existing mortgage, where
appropriate) covering such real property, together with such additional real
estate documentation, environmental reports, title policies and surveys as may
be reasonably required by the Agent; and (ii) with respect to the acquisition of
any leasehold interest in real property by any Loan Party after the Effective
Date (whether by Permitted Acquisition or otherwise), but only to the extent
such leasehold constitutes a location where material business records are kept,
not later than thirty (30) days after the acquisition is consummated or the
owner of the applicable leasehold interest becomes a Domestic Loan Party shall
deliver to the Agent a copy of the applicable lease agreement and shall exercise
reasonable commercial efforts to execute or cause to be executed, at the Agent’s
option, unless otherwise waived by the Agent, a Collateral Access Agreement in
form and substance reasonably acceptable to the Agent together with such other
documentation as may be reasonably required by the Agent;

in each case in form reasonably satisfactory to the Agent, in its reasonable
discretion, together with such supporting documentation, including without
limitation corporate authority items, certificates and opinions of counsel, as
reasonably required by the Agent. Upon the Agent’s request, Loan Parties shall
take, or cause to be taken, such additional steps as are necessary or advisable
under applicable law to perfect and ensure the validity and priority of the
Liens granted under this Section 7.13.

7.14 Accounts. To the extent required to satisfy the requirements of
Section 7.9(b) hereof, maintain all primary U.S. depository and operating
accounts, treasury management services related to Lender Products, and primary
investment accounts of any Credit Party with Agent and the Lenders, provided
that, with respect to any accounts maintained with any financial institution
other than the Agent, such Credit Party (i) shall cause to be executed and
delivered an account control agreement in form and substance satisfactory to the
Agent and (ii) has taken all other steps necessary, or in the opinion of the
Agent, desirable to ensure that the Agent has a perfected security interest in
such account.

 

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7.15 Use of Proceeds. Use all Advances of the Revolving Credit as set forth in
Section 2.12 hereof and the proceeds of Advances of the Term Loan as set forth
in Article 4 hereof. The Borrower shall not use any portion of the proceeds of
any such advances for the purpose of purchasing or carrying any “margin stock”
(as defined in Regulation U of the Board of Governors of the Federal Reserve
System) in any manner which violates the provisions of Regulation T, U or X of
said Board of Governors or for any other purpose in violation of any applicable
statute or regulation.

7.16 Further Assurances and Information.

(a) Take such actions as the Agent or Majority Lenders may from time to time
reasonably request to establish and maintain first priority perfected security
interests in and Liens on all of the Collateral, subject only to those Liens
permitted under Section 8.2 hereof, including executing and delivering such
additional pledges, assignments, mortgages, lien instruments or other security
instruments covering any or all of the Credit Parties’ assets as the Agent may
reasonably require, such documentation to be in form and substance reasonably
acceptable to the Agent, and prepared at the expense of the Borrower.

(b) Execute and deliver or cause to be executed and delivered to the Agent
within a reasonable time following the Agent’s request, and at the expense of
the Borrower, such other documents or instruments as the Agent may reasonably
require to effectuate more fully the purposes of this Agreement or the other
Loan Documents.

(c) Provide the Agent and the Lenders with any other information required by
Section 326 of the USA Patriot Act or necessary for the Agent and the Lenders to
verify the identity of any Credit Party as required by Section 326 of the USA
Patriot Act.

7.17 Registration of Intellectual Property Rights.

(a) Register or cause to be registered on an expedited basis (to the extent not
already registered) with the United States Patent and Trademark Office or the
United States Copyright Office, as the case may be, those registrable
intellectual property rights now owned or hereafter developed or acquired by the
Borrower, to the extent that the Borrower, in its reasonable business judgment,
deems it appropriate to so protect such intellectual property rights.

(b) Give the Agent written notice, on an annual basis, within ninety (90) days
after and as of the end of each Fiscal Year, of any applications or
registrations of intellectual property rights filed with the United States
Patent and Trademark Office and United States Copyright Office during the
preceding fiscal year, including the date of such filing and the registration or
application numbers, if any.

(c) Give the Agent written notice, on an annual basis, within ninety (90) days
after and as of the end of each Fiscal Year, of the filing of any applications
or registrations with the United States Copyright Office during the preceding
fiscal year, including the title of such intellectual property rights to be
registered, as such title will appear on such applications or registrations, and
the date such applications or registrations will be filed.

(d) (i) Protect, defend and maintain the validity and enforceability of the
Trademarks, Patents, Copyrights, and trade secrets, (ii) use commercially
reasonable efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise the Agent in writing of material infringements
detected and (iii) not allow any material Trademarks, Patents or Copyrights to
be abandoned, forfeited or dedicated to the public without the written consent
of the Agent, which shall not be unreasonably withheld.

7.18 Consent of Inbound Licensors. Within 60 days after the end of each fiscal
quarter of Borrower, Borrower shall deliver to Agent an executed copy of each
material (currently material or reasonably expected to become material to
Borrower’s business) inbound license agreement entered into by Borrower during
such fiscal quarter.

 

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7.19 Post-Closing Requirements. Satisfy the following requirements within the
time periods indicated (or such longer periods as determined by Agent):

(a) Deliver to Agent, within thirty (30) days following the Effective Date (or
such longer period as determined by Agent), (i) good standing certificates from
every state or other jurisdiction where each Loan Party is qualified to do
business, which jurisdictions are listed on Schedule 7.19 to the Disclosure
Letter and (ii) (x) securities account control agreements with Comerica
Securities and Deutsche Bank covering any separate securities, investment or
other accounts maintained by them with respect to the custodial accounts
maintained by the Borrower with Comerica Bank under that certain Custodial
Account Agreement dated as of April 15, 2011 (as amended) or (y) an
acknowledgment by them that they maintain no securities accounts and custody no
assets, and act solely as investment manager, for the Borrower with respect to
the aforesaid Comerica custodial accounts, in each case in form reasonably
satisfactory to Agent;

(b) Exercise reasonable commercial efforts to execute, or cause to be executed,
a Collateral Access Agreement covering Borrower’s headquarters in San Jose,
California within thirty days following the Effective Date (or such longer
period as determined by Agent); and

(c) Within ninety (90) days after the Effective Date (or such longer period as
determined by Agent), deliver to Agent one or more stock pledges encumbering 65%
of each Significant Foreign Subsidiary, satisfying the requirements of
Section 7.13(b)(ii) hereof.

8. NEGATIVE COVENANTS.

The Borrower covenants and agrees that, so long as any Lender has any commitment
to extend credit hereunder, or any of the Indebtedness (other than contingent
reimbursement or indemnification obligations as to which no claim has been
asserted) remains outstanding and unpaid, it will not, and, as applicable, it
will not permit any of its Subsidiaries to:

8.1 Limitation on Debt. Create, incur, assume or suffer to exist any Debt,
except:

(a) Indebtedness of any Credit Party to the Agent and the Lenders under this
Agreement and/or the other Loan Documents;

(b) any Debt existing on the Effective Date and set forth in Schedule 8.1 to the
Disclosure Letter and any renewals or refinancing of such Debt (provided that
(i) the aggregate principal amount of such renewed or refinanced Debt shall not
exceed the aggregate principal amount of the original Debt of the Commitment
outstanding on the Effective Date, (ii) the renewal or refinancing of such Debt
shall be on substantially the same or better terms as in effect with respect to
such Debt on the Effective Date, and shall otherwise be in compliance with this
Agreement, and (iii) at the time of such renewal or refinancing no Default or
Event of Default has occurred and is continuing or would result from the renewal
or refinancing of such Debt;

(c) any Debt of the Borrower or any of its Subsidiaries incurred to finance the
acquisition of fixed or capital assets, whether pursuant to a loan or a
Capitalized Lease provided that both at the time of and immediately after giving
effect to the incurrence thereof (i) no Default or Event of Default shall have
occurred and be continuing, and (ii) the aggregate amount of all such Debt at
any one time outstanding (including, without limitation, any Debt of the type
described in this clause (c) which is set forth on Schedule 8.1 to the
Disclosure Letter) shall not exceed $5,000,000, and any renewals or refinancings
of such Debt on terms substantially the same or better than those in effect at
the time of the original incurrence of such Debt;

(d) Subordinated Debt;

(e) Debt under any Hedging Transactions, provided that such transaction is
entered into for risk management purposes and not for speculative purposes;

(f) Debt arising from judgments or decrees not deemed to be a Default or Event
of Default under subsection (g) of Section 9.1;

 

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(g) Debt owing to a Person that is a Credit Party, but only to the extent
permitted under Section 8.7 hereof;

(h) Debt to trade creditors incurred in the ordinary course of business;

(i) Debt incurred in favor of East West Bank by NeoPhotonics Dongguan Co., Ltd.
and NeoPhotonics (China) Co., Ltd. (which Debt may be guaranteed on an unsecured
basis by Borrower) in an aggregate amount not to exceed $5,000,000 at any time
outstanding; and

(j) Debt relating to premium financing arrangements for directors and officer’s
insurance, property and casualty insurance plans and health and welfare benefit
plans (including health and workers compensation insurance, employment practices
liability insurance and directors and officers insurance);

(k) Debt relating to tenant improvement loans and real estate commissions, if
incurred in the ordinary course of business;

(l) Debt in respect of performance bonds securing obligations not constituting
Debt for borrowed money (including worker’s compensation claims, unemployment
insurance, health benefits and other social security legislation and local,
state and federal payroll taxes) and obligations in connection with
self-insurance or similar requirements, in each case provided in the ordinary
course of business;

(m) Debt of a Person existing at the time such Person became a Subsidiary of any
Credit Party (such Person, an “Acquired Person”), together with all Debt assumed
by such Credit Party in connection with a Permitted Acquisition, but only to the
extent that such Debt was not created or incurred in contemplation of such
Person becoming a Subsidiary or such Permitted Acquisition;

(n) Debt to employees constituting deferred compensation incurred in the
ordinary course of business;

(o) Debt arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations in connection with acquisitions or
dispositions of any business, assets or Subsidiary of a Borrower otherwise
permitted hereunder, other than Debt incurred for the purpose of financing any
such acquisition; and

(p) Debt of any Foreign Subsidiary, incurred at any time when no Default or
Event of Default has occurred and is continuing, both before and after giving
effect thereto (provided, however, that such Debt shall not be guaranteed or
otherwise secured by the Borrower or any Domestic Subsidiary), and for each
incurrence of Debt under this clause (p) in excess of $2,500,000, Borrower
certifies in writing to Agent prior to the incurrence of such Debt (accompanied
by reasonable supporting information) that it will be in pro forma compliance
with the financial covenants under Section 6.9 hereof for the succeeding four
fiscal quarters, after giving effect to the incurrence of such Debt.

(q) (i) Guarantee Obligations incurred in the ordinary course of business in
support of the Debt of any Credit Party otherwise permitted under this
Section 8.1, except to the extent otherwise restricted hereunder and (ii) so
long as no Default or Event of Default shall have occurred and be continuing or
result therefrom, Guarantee Obligations incurred in the ordinary course of
business to support obligations not constituting Debt for borrowed money of any
Credit Party, including, without limitation, obligations of a Credit Party owing
to suppliers, customers, lessors and licensors; and

(r) other unsecured Debt not otherwise described above, provided that both at
the time of and immediately after giving effect to the incurrence thereof (i) no
Default or Event of Default shall have occurred and be continuing or result
therefrom and (ii) the aggregate amount of all such Debt shall not exceed
$5,000,000 at any one time outstanding.

 

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8.2 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:

(a) Permitted Liens;

(b) Liens securing Debt permitted by Section 8.1(c), provided that (i) such
Liens are created upon fixed or capital assets acquired by the applicable Credit
Party after the date of this Agreement (including without limitation by virtue
of a loan or a Capitalized Lease), (ii) any such Lien is created solely for the
purpose of securing indebtedness representing or incurred to finance the cost of
the acquisition of the item of property subject thereto, (iii) the principal
amount of the Debt secured by any such Lien shall at no time exceed 100% of the
sum of the purchase price or cost of the applicable property, equipment or
improvements and the related costs and charges imposed by the vendors thereof
and (iv) the Lien does not cover any property other than the fixed or capital
asset acquired;

(c) Liens created pursuant to the Loan Documents;

(d) Liens on the accounts receivable of the NeoPhotonics Dongguan Co., Ltd. and
NeoPhotonics (China) Co., Ltd. securing the Debt described in Section 8.1(i)
hereof and Liens on the Japanese Real Property to refinance the Liens granted to
Seller in connection with the Rohm Acquisition, and any refinancing thereof
(provided that each such refinancing shall be by a Foreign Subsidiary, and not
guaranteed by the Borrower or any Domestic Subsidiary), in each case conducted
while no Default or Event of Default has occurred and is continuing;

(e) any Lien securing third-party indebtedness assumed pursuant to any Permitted
Acquisition conducted in compliance with this Agreement; provided that such Lien
is limited to the property so acquired, was not entered into, extended or
renewed in contemplation of such acquisition and is of a type of Lien permitted
under this Agreement;

(f) Liens on unearned premiums under insurance policies to secure the Debt
permitted under Section 8.1(i);

(g) Liens on tenant improvements solely to secure the Debt permitted under
Section 8.1; and

(h) other Liens, existing on the Effective Date, set forth on Schedule 8.2 to
the Disclosure Letter and renewals, refinancings and extensions thereof on
substantially the same or better terms as in effect on the Effective Date and
otherwise in compliance with this Agreement.

Regardless of the provisions of this Section 8.2, no Lien over the Equity
Interests of the Borrower or any Subsidiary of the Borrower (except for those
Liens for the benefit of the Agent and the Lenders) shall be permitted under the
terms of this Agreement.

8.3 Acquisitions. Except for the Rohm Acquisition (subject to satisfaction of
the Rohm Acquisition Requirements), Permitted Acquisitions and acquisitions
permitted under Section 8.7, if any, purchase or otherwise acquire or become
obligated for the purchase of all or substantially all or any material portion
of the assets or business interests or a division or other business unit of any
Person, or any Equity Interest of any Person, or any business or going concern.

8.4 Limitation on Mergers, Dissolution or Sale of Assets. Merge or consolidate
or convey, sell, lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation, Equity Interests,
receivables and leasehold interests), whether now owned or hereafter acquired or
liquidate, wind up or dissolve, except:

(a) Inventory leased or sold in the ordinary course of business;

(b) obsolete, damaged, uneconomic or worn out machinery or equipment, or
machinery parts, property or property or equipment no longer used or useful in
the conduct of the applicable Credit Party’s business;

(c) Permitted Acquisitions;

 

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(d) mergers or consolidations of any Subsidiary of the Borrower with or into the
Borrower or any Guarantor so long as the Borrower or such Guarantor shall be the
continuing or surviving entity; provided that at the time of each such merger or
consolidation, both before and after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing or result from such merger or
consolidation;

(e) any Subsidiary of the Borrower may liquidate or dissolve into the Borrower
or a Guarantor if the Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Borrower, so long as no Default or
Event of Default has occurred and is continuing or would result therefrom;

(f) sales or transfers, including without limitation upon voluntary liquidation
from any Credit Party to the Borrower or a Guarantor, provided that the Borrower
or Guarantor takes such actions as the Agent may reasonably request to ensure
the perfection and priority of the Liens in favor of the Lenders over such
transferred assets;

(g) any Subsidiary of the Borrower that is not a Guarantor or whose Equity
Interests are not pledged to Lender under the Collateral Documents may liquidate
or dissolve if the Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Borrower in order to reduce costs
and administrative burden, so long as no Default or Event of Default has
occurred and is continuing or would result therefrom;

(h) subject to Section 4.8(b) hereof, (i) Asset Sales (exclusive of asset sales
permitted pursuant to all other subsections of this Section 8.4) in which the
sales price is at least equal to the fair market value of the assets sold and
the consideration received is cash or cash equivalents or Debt of any Credit
Party being assumed by the purchaser, provided that the aggregate amount of such
Asset Sales does not exceed $5,000,000 in any Fiscal Year and no Default or
Event of Default has occurred and is continuing at the time of each such sale
(both before and after giving effect to such Asset Sale), and (ii) other Asset
Sales approved by the Majority Lenders in their sole discretion;

(i) the sale or disposition of Permitted Investments and other cash equivalents
in the ordinary course of business;

(j) dispositions of owned or leased vehicles in the ordinary course of business;

(k) any sale-leaseback transaction permitted under Section 8.9 hereof; and

(l) Sales or transfers from any Foreign Subsidiary to any other Foreign
Subsidiary and sale or transfers of assets from any Credit Party to any Foreign
Subsidiary not to exceed $5,000,000 in the aggregate during each fiscal year of
Borrower, provided that no Default or Event of Default has occurred and is
continuing at the time of such transfers, both before and after giving effect
thereto.

The Lenders hereby consent and agree to the release by the Agent of any and all
Liens on the property sold or otherwise disposed of in compliance with this
Section 8.4.

8.5 Restricted Payments. Declare or make any distributions, dividend, payment or
other distribution of assets, properties, cash, rights, obligations or
securities (collectively, “Distributions”) on account of any of its Equity
Interests, as applicable, or purchase, redeem or otherwise acquire for value any
of its Equity Interests, as applicable, or any warrants, rights or options to
acquire any of its Equity Interests, now or hereafter outstanding (collectively,
“Purchases”), except that:

(a) each Credit Party may pay cash Distributions to the Borrower;

(b) each Credit Party may declare and make Distributions payable in the Equity
Interests of such Credit Party, provided that the issuance of such Equity
Interests does not otherwise violate the terms of this Agreement and no Default
or Event of Default has occurred and is continuing at the time of making such
Distribution or would result from the making of such Distribution;

 

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(c) Borrower may (i) repurchase the Equity Interests of former or current
employees, officers, consultants or directors pursuant to stock purchase
agreements or plans as long as an Event of Default does not exist prior to such
repurchase or would not exist after giving effect to such repurchase, and
(ii) repurchase the Equity Interests of former or current employees, officers,
consultants or directors pursuant to stock purchase agreements by the
cancellation of indebtedness owed by such former employees, officers or
directors to Borrower regardless of whether an Event of Default exists,
(iii) repurchase Equity Interests from stockholders owning less than 1% of the
outstanding equity securities for aggregate consideration of less than $100,000
in any twelve month period and $20,000 in each instance; and (iv) make other
purchases of Equity Interests in an aggregate amount not greater than $1,000,000
per Fiscal Year, provided that no Default or Event of Default has occurred and
is continuing (both before and after giving effect thereto), at the time of the
repurchase;

(d) Borrower may distribute securities to employees, officers or directors upon
exercise of their options and other equity compensation awards; and

(e) So long as no Event of Default has occurred and is continuing, Borrower may
make any redemption of Equity Interests with the cash proceeds received from a
substantially concurrent issue of new Equity Interests.

8.6 Limitation on Capital Expenditures. Make or commit to make (by way of the
acquisition of securities of a Person or otherwise) any expenditure in respect
of the purchase or other acquisition of fixed or capital assets (excluding any
such asset acquired in connection with normal replacement and maintenance
programs properly charged to current operations) except for (a) Reinvestments of
Net Proceeds from Asset Sales to the extent permitted under Section 4.8 hereof
and (b) Capital Expenditures, the amount of which in any Fiscal Year shall not
exceed (i) for Fiscal Year 2013, $32,000,000, (ii) for Fiscal Year 2014,
$23,000,000, and (iii) for Fiscal Year 2015, $25,000,000.

8.7 Limitation on Investments, Loans and Advances. Make or allow to remain
outstanding any Investment (whether such investment shall be of the character of
investment in shares of stock, evidences of indebtedness or other securities or
otherwise) in, or any loans or advances to, any Person other than:

(a) Permitted Investments;

(b) Investments existing on the Effective Date and listed on Schedule 8.7 to the
Disclosure Letter;

(c) sales on open account in the ordinary course of business;

(d) intercompany loans or intercompany Investments made by any Credit Party to
or in any Guarantor or the Borrower; provided that in each case, no Default or
Event of Default shall have occurred and be continuing at the time of making
such intercompany loan or intercompany Investment or result from such
intercompany loan or intercompany Investment being made and that any
intercompany loans shall, if requested by Agent, be evidenced by and funded
under an Intercompany Note pledged to the Agent under the appropriate Collateral
Documents;

(e) Investments in respect of Hedging Transactions provided that such
transaction is entered into for risk management purposes and not for speculative
purposes;

(f) loans and advances to employees, officers and directors of any Credit Party
for moving, entertainment, travel and other similar expenses in the ordinary
course of business;

(g) the Rohm Acquisition (subject to satisfaction of the Rohm Acquisition
Requirements), Permitted Acquisitions and Investments in any Person acquired
pursuant to a Permitted Acquisition;

(h) Investments constituting deposits made in connection with the purchase of
goods or services in the ordinary course of business in an aggregate amount for
such deposits not to exceed One Million Dollars ($1,000,000) at any one time
outstanding;

 

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(i) Investments by Subsidiaries in or to other Subsidiaries or Borrower and
Investments by Borrower in Subsidiaries;

(j) Investments consisting of (i) other employee loans and advances in the
ordinary course of business, and (ii) loans to employees, officers or directors
relating to the purchase of Equity Interests of the Borrower or its Subsidiaries
pursuant to employee stock purchase plan agreements approved by the Borrower’s
Board of Directors;

(k) joint ventures or strategic alliances in the ordinary course of the
Borrower’s business consisting of the non-exclusive licensing of technology, the
development of technology or the providing of technical support;

(l) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the ordinary course of business; provided that this subparagraph shall not apply
to Investments of Borrower in any Subsidiary;

(m) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business;

(n) Investments made prior to the consummation of any Permitted Acquisition
consisting of reasonable earnest money deposits, working capital, working fees
or other similar prepaid consideration or similar amounts that would be applied
toward consideration upon consummation of such Permitted Acquisition (in each
case whether or not refundable under any circumstances); or

(o) other Investments not described above provided that both at the time of and
immediately after giving effect to any such Investment no Default or Event of
Default shall have occurred and be continuing or shall result from the making of
such Investment; provided, however, the Cash Investments loans and advances
permitted under sub-sections (d), (f), (i), (j) and (k) of this Section 8.7
shall not exceed $5,000,000 in the aggregate during any Fiscal Year.

In valuing any Investments for the purpose of applying the limitations set forth
in this Section 8.7 (except as otherwise expressly provided herein), such
Investment shall be taken at the original cost thereof, without allowance for
any subsequent write-offs or appreciation or depreciation, but less any amount
repaid or recovered on account of capital or principal.

8.8 Transactions with Affiliates. Except as set forth in Schedule 8.8 to the
Disclosure Letter, enter into any transaction, including, without limitation,
any purchase, sale, lease or exchange of property or the rendering of any
service, with any Affiliates of the Credit Parties except: (a) transactions with
Affiliates that are Credit Parties; (b) transactions otherwise permitted under
this Agreement; (c) transactions in the ordinary course of a Credit Party’s
business and upon fair and reasonable terms no less favorable to such Credit
Party than it would obtain in a comparable arms’ length transaction from
unrelated third parties; and (d) Section 8.8 shall not prohibit, to the extent
otherwise permitted under this Agreement and so long as no Event of Default has
occurred and is continuing or would occur as a result, (i) any issuance of
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options, equity
compensation awards, and other benefit plans, (ii) loans or advances to
employees, officers or other directors of the Credit Parties, (iii) the payment
of fees and indemnities to directors, officers, employees and consultants of the
Credit Parties in the ordinary course of business, (iv) any agreements with
employees, officers and directors entered into by the Credit Parties in the
ordinary course of business, (v) sales of equity interests to Affiliates,
(vii) reasonable and customary fees paid to directors of the Credit Parties,
(viii) raising of new equity for the Credit Parties with respect to the pricing
of such equity, and (ix) any payments or other transactions pursuant to any tax
sharing agreement or transfer pricing agreement.

 

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8.9 Sale-Leaseback Transactions. Enter into any arrangement with any Person
providing for the leasing by a Credit Party of real or personal property which
has been or is to be sold or transferred by such Credit Party to such Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of such Credit Party, as
the case may be, provided that if, at the time that a Credit Party acquires
fixed or capital assets, such Credit Party intends to sell to and then lease
such assets from another Person pursuant to a financing arrangement that would
be permitted under Section 8.1(c), such transaction will not constitute a
violation of this Section 8.9 so long as such transaction is consummated within
sixty (60) days following the acquisition of such assets; and provided further
that, so long as no Default or Event of Default has occurred and is continuing
hereunder at the time of such transaction (both before and after giving effect
thereto) and that such transaction is not subject to a guaranty by the Borrower
or any Domestic Subsidiary, a Foreign Subsidiary may enter into a sale leaseback
transaction related solely to the Japanese Real Property.

8.10 Limitations on Other Restrictions. Except for this Agreement or any other
Loan Document, enter into any agreement, document or instrument which would
(i) restrict the ability of any Subsidiary of the Borrower to pay or make
dividends or distributions in cash or kind to the Borrower or any Guarantor, to
make loans, advances or other payments of whatever nature to any Credit Party,
or to make transfers or distributions of all or any part of its assets to any
Credit Party; or (ii) restrict or prevent any Credit Party from granting to the
Agent on behalf of Lenders Liens upon, security interests in and pledges of
their respective assets, including without limitation Liens on any of the Credit
Parties’ Intellectual Property except to the extent such restrictions exist in
documents creating Liens permitted by Section 8.2(b) hereunder except:
(a) negative pledges incurred or provided in favor of any holder of Debt
permitted under Section 8.1(c) solely to the extent any such negative pledge
relates to the property financed by or the subject of such Debt;
(b) restrictions and conditions of general application imposed by any
Governmental Authority; (c) restrictions and conditions existing on the date
hereof identified on Schedule 8.10 to the Disclosure Letter and any extension or
renewal of, or any amendment or modification of, any such restriction or
condition; (d) customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided that (x) such
restrictions and conditions apply only to the Subsidiary that is to be sold and
(y) such sale is permitted hereunder, (e) customary provisions in leases,
licenses, subleases, sublicenses and other contracts restricting the assignment
thereof; (f) customary restrictions imposed on the transfer of copyrighted or
patented materials or other intellectual property and customary provisions in
agreements that restrict the assignment of such agreements or any rights
thereunder (provided that the imposition of such restrictions could not
reasonably be expected to have a Material Adverse Effect; (g) any restrictions
imposed by contracts or leases entered into in the ordinary course of business
by the Borrower or any of its Subsidiaries with such Person’s customers, lessors
or suppliers; (h) restrictions or conditions imposed by any agreement relating
to Debt and Liens permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Debt; and (i) any
restrictions imposed by contracts or leases entered into in the ordinary course
of business by any Person acquired by the Borrower or any of its Subsidiaries
with such Person’s customers, lessors or suppliers and not in connection with or
in contemplation of the acquisition such Person by the Borrower or such
Subsidiary, which restrictions are not applicable to any Person, or the property
or assets of any Person, other than the property or assets of the Person so
acquired.

8.11 Prepayment of Debt. Make any prepayment (whether optional or mandatory),
repurchase, redemption, defeasance or any other payment in respect of any
Subordinated Debt; provided, however, that the applicable Credit Party may make
such scheduled payments to the extent permitted under any Subordination
Agreement.

8.12 Amendment of Subordinated Debt Documents. Amend, modify or otherwise alter
(or suffer to be amended, modified or altered) the Subordinated Debt Documents
except as permitted in the applicable Subordinated Debt Documents and
Subordination Agreements, or if no such restrictions exist in the applicable
Subordinated Debt Documents or Subordination Agreements, without the prior
written consent of the Agent except to the extent such amendments would not have
a material adverse effect on the interest of Lenders.

8.13 Modification of Certain Agreements. Make, permit or consent to any
amendment or other modification to the constitutional documents of any Credit
Party, the Rohm Purchase Agreement except to the extent that any such amendment
or modification (i) does not violate the terms and conditions of this Agreement
or any of the other Loan Documents, (ii) does not materially adversely affect
the interest of the Lenders as creditors and/or secured parties under any Loan
Document, (iii) could not reasonably be expected to have a Material Adverse
Effect, and (iv) but only in the case of the Rohm Purchase Agreement, does not
increase the purchase price or other obligations of the Borrower or any Credit
Party thereunder and is not otherwise materially less favorable to the Borrower
or such Credit Party.

 

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8.14 Fiscal Year. Permit the Fiscal Year of the Borrower to end on a day other
than December 31.

9. DEFAULTS.

9.1 Events of Default. The occurrence of any of the following events shall
constitute an Event of Default hereunder:

(a) non-payment when due of (i) the principal or interest on the Indebtedness
under the Revolving Credit (including the Swing Line) or the Term Loan or
(ii) any Reimbursement Obligation or (iii) any Fees and solely in the case of
interest and Fees, the continuation thereof for a period of three (3) Business
Days;

(b) non-payment of any other amounts due and owing by the Borrower under this
Agreement or by Borrower or any Guarantor under any of the other Loan Documents
to which it is a party, other than as set forth in subsection (a) above, within
five (5) Business Days after the same is due and payable;

(c) default in the observance or performance of any of the conditions, covenants
or agreements of the Borrower set forth in Sections 7.1, 7.2, 7.4(a) and (e),
7.5, 7.6, 7.7, 7.9, 7.13, 7.14, 7.15, 7.17 or Article 8 in its entirety,
provided that an Event of Default arising from a breach of Sections 7.1 or 7.2
shall be deemed to have been cured upon delivery of the required item; and
provided further that any Event of Default arising solely due to a breach of
Section 7.7(a) shall be deemed cured upon the earlier of (x) the giving of the
notice required by Section 7.7(a) and (y) the date upon which the Default or
Event of Default giving rise to the notice obligation is cured or waived;

(d) default in the observance or performance of any of the other conditions,
covenants or agreements set forth in this Agreement or any of the other Loan
Documents by any Credit Party and continuance thereof for a period of thirty
(30) consecutive days;

(e) any representation or warranty made by any Credit Party herein or in any
certificate, instrument or other document submitted pursuant hereto proves
untrue or misleading in any material adverse respect when made;

(f) (i) default by any Credit Party in the payment of any indebtedness for
borrowed money, whether under a direct obligation or guaranty (other than
Indebtedness hereunder) of any Credit Party in excess of One Million Dollars
($1,000,000) (or the equivalent thereof in any currency other than Dollars)
individually or in the aggregate when due and continuance thereof beyond any
applicable period of cure and or (ii) failure to comply with the terms of any
other obligation of any Credit Party with respect to any indebtedness for
borrowed money (other than Indebtedness hereunder) in excess of One Million
Dollars ($1,000,000) (or the equivalent thereof in any currency other than
Dollars) individually or in the aggregate, which continues beyond any applicable
period of cure and which would permit the holder or holders thereto to
accelerate such other indebtedness for borrowed money, or require the
prepayment, repurchase, redemption or defeasance of such indebtedness;

(g) the rendering of any judgment(s) (not covered by adequate insurance from a
solvent carrier which is defending such action without reservation of rights)
for the payment of money in excess of the sum of One Million Dollars
($1,000,000) (or the equivalent thereof in any currency other than Dollars)
individually or in the aggregate against any Credit Party, and such judgments
shall remain unpaid, unvacated, unbonded or unstayed by appeal or otherwise for
a period of ten (10) consecutive days from the date of its entry;

(h) the occurrence of (i) a “reportable event”, as defined in ERISA, which is
determined by the PBGC to constitute grounds for a distress termination of any
Pension Plan subject to Title IV of ERISA maintained or contributed to by or on
behalf of any Credit Party for the benefit of any of its employees or for the
appointment by the appropriate United States District Court of a trustee to
administer such Pension Plan and such reportable event is not corrected and such
determination is not revoked within sixty (60) days after notice thereof has
been given to the plan administrator of such Pension Plan (without limiting any
of the Agent’s or any Lender’s other rights or remedies hereunder), or (ii) the
termination or the institution of proceedings by the PBGC to terminate any such
Pension Plan, or (iii) the appointment of a trustee by the appropriate United
States District Court to administer any such Pension Plan, or (iv) the
reorganization (within the meaning of Section 4241 of ERISA) or insolvency
(within the meaning of Section 4245 of ERISA) of any Multiemployer Plan, or
receipt of notice from any Multiemployer Plan that it is in reorganization or
insolvency, or the complete or partial withdrawal by any Credit Party from any
Multiemployer Plan, which in the case of any of the foregoing, could reasonably
be expected to have a Material Adverse Effect;

 

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(i) except as expressly permitted under this Agreement, any Credit Party shall
be dissolved (other than the dissolution of a Subsidiary of the Borrower which
is not a Guarantor or a Significant Subsidiary, or whose Equity Interests are
not subject to a pledge hereunder or under the other Loan Documents and which is
not otherwise material to the operations of the Borrower and its Consolidated
Subsidiaries (each such Credit Party, a “Material Credit Party”) or liquidated
(or any judgment, order or decree therefor shall be entered) except as otherwise
permitted herein; or if a creditors’ committee shall have been appointed for the
business of any Material Credit Party; or if any Material Credit Party shall
have made a general assignment for the benefit of creditors or shall have been
adjudicated bankrupt and if not an adjudication based on a filing by a Material
Credit Party, it shall not have been dismissed within thirty (30) days, or shall
have filed a voluntary petition in bankruptcy or for reorganization or to effect
a plan or arrangement with creditors or shall fail to pay its debts generally as
such debts become due in the ordinary course of business (except as contested in
good faith and for which adequate reserves are made in such party’s financial
statements); or shall file an answer to a creditor’s petition or other petition
filed against it, admitting the material allegations thereof for an adjudication
in bankruptcy or for reorganization; or shall have applied for or permitted the
appointment of a receiver or trustee or custodian for any of its property or
assets; or such receiver, trustee or custodian shall have been appointed for any
of its property or assets (otherwise than upon application or consent of a
Material Credit Party) and shall not have been removed within thirty (30) days;
or if an order shall be entered approving any petition for reorganization of any
Material Credit Party and shall not have been reversed or dismissed within
thirty (30) days;

(j) a Change of Control;

(k) the validity, binding effect or enforceability of any subordination
provisions relating to any Subordinated Debt shall be contested by any Person
party thereto (other than any Lender, the Agent, Issuing Lender or Swing Line
Lender), or such subordination provisions shall fail to be enforceable by the
Agent and the Lenders in accordance with the terms thereof, or the Indebtedness
shall for any reason not have the priority contemplated by this Agreement or
such subordination provisions;

(l) any Loan Document shall at any time for any reason cease to be in full force
and effect (other than in accordance with the terms thereof or the terms of any
other Loan Document), as applicable, or the validity, binding effect or
enforceability thereof shall be contested by any party thereto (other than any
Lender, the Agent, Issuing Lender or Swing Line Lender), or any Person shall
deny that it has any or further liability or obligation under any Loan Document,
or any such Loan Document shall be terminated (other than in accordance with the
terms thereof or the terms of any other Loan Document), invalidated, revoked or
set aside or in any way cease to give or provide to the Lenders and the Agent
the benefits purported to be created thereby, or any Loan Document purporting to
grant a Lien to secure any Indebtedness shall, at any time after the delivery of
such Loan Document, fail to create a valid and enforceable Lien on any
Collateral purported to be covered thereby or such Lien shall fail to cease to
be a perfected Lien with the priority required in the relevant Loan Document; or

(m) if there occurs any circumstance or circumstances that could reasonably be
expected, as determined by the Majority Lenders, to have a Material Adverse
Effect.

9.2 Exercise of Remedies. If an Event of Default has occurred and is continuing
hereunder: (a) the Agent may, and shall, upon being directed to do so by the
Majority Revolving Credit Lenders, declare the Revolving Credit Aggregate
Commitment and/or, if not expired, Term Loan Aggregate Commitment terminated;
(b) the Agent may, and shall, upon being directed to do so by the Majority
Lenders, declare the entire unpaid principal Indebtedness, including the Notes,
immediately due and payable, without presentment, notice or demand, all of which
are hereby expressly waived by the Borrower; (c) upon the occurrence of any
Event of Default specified in Section 9.1(i) and notwithstanding the lack of any
declaration by the Agent under preceding clauses (a) or (b), the entire unpaid
principal Indebtedness shall become automatically and immediately due and
payable, and the Revolving Credit Aggregate Commitment and, if not expired, Term
Loan Aggregate Commitment shall be automatically and immediately terminated;
(d) the Agent shall, upon being directed to do so by the Majority

 

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Revolving Credit Lenders, demand immediate delivery of cash collateral, and the
Borrower agrees to deliver such cash collateral upon demand, in an amount equal
to 105% of the maximum amount that may be available to be drawn at any time
prior to the stated expiry of all outstanding Letters of Credit, for deposit
into an account controlled by the Agent; (e) the Agent may, and shall, upon
being directed to do so by the Majority Lenders, notify the Borrower or any
Credit Party that interest shall be payable on demand on all Indebtedness (other
than Revolving Credit Advances, Swing Line Advances with respect to which
Section 2.6 hereof shall govern and Term Loan Advances with respect to which
Section 4.6 hereof shall govern) owing from time to time to the Agent or any
Lender, at a per annum rate equal to the then applicable Base Rate plus three
percent (3%); and (f) the Agent may, and shall, upon being directed to do so by
the Majority Lenders or the Lenders, as applicable (subject to the terms
hereof), exercise any remedy permitted by this Agreement, the other Loan
Documents or law.

9.3 Rights Cumulative. No delay or failure of the Agent and/or Lenders in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege, nor shall any single or partial exercise thereof preclude
any further exercise thereof, or the exercise of any other power, right or
privilege. The rights of the Agent and Lenders under this Agreement are
cumulative and not exclusive of any right or remedies which Lenders would
otherwise have.

9.4 Waiver by the Borrower of Certain Laws. To the extent permitted by
applicable law, the Borrower hereby agrees to waive, and does hereby absolutely
and irrevocably waive and relinquish the benefit and advantage of any valuation,
stay, appraisement, extension or redemption laws now existing or which may
hereafter exist, which, but for this provision, might be applicable to any sale
made under the judgment, order or decree of any court, on any claim for interest
on the Notes, or any security interest or mortgage contemplated by or granted
under or in connection with this Agreement. These waivers have been voluntarily
given, with full knowledge of the consequences thereof.

9.5 Waiver of Defaults. No Event of Default shall be waived by the Lenders
except in a writing signed by an officer of the Agent in accordance with
Section 13.10 hereof. No single or partial exercise of any right, power or
privilege hereunder, nor any delay in the exercise thereof, shall preclude other
or further exercise of their rights by the Agent or the Lenders. No waiver of
any Event of Default shall extend to any other or further Event of Default. No
forbearance on the part of the Agent or the Lenders in enforcing any of their
rights shall constitute a waiver of any of their rights. The Borrower expressly
agrees that this Section may not be waived or modified by the Lenders or the
Agent by course of performance, estoppel or otherwise.

9.6 Set Off. Upon the occurrence and during the continuance of any Event of
Default, each Lender may at any time and from time to time, without notice to
the Borrower but subject to the provisions of Section 10.3 hereof (any
requirement for such notice being expressly waived by the Borrower), setoff and
apply against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement, whether owing to such Lender, any Affiliate of
such Lender or any other Lender or the Agent, any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower and any property of the Borrower from time to time in
possession of such Lender, irrespective of whether or not such deposits held or
indebtedness owing by such Lender may be contingent and unmatured and regardless
of whether any Collateral then held by the Agent or any Lender is adequate to
cover the Indebtedness. Promptly following any such setoff, such Lender shall
give written notice to the Agent and the Borrower of the occurrence thereof. The
Borrower hereby grants to the Lenders and the Agent a lien on and security
interest in all such deposits, indebtedness and property as collateral security
for the payment and performance of all of the obligations of the Borrower under
this Agreement. The rights of each Lender under this Section 9.6 are in addition
to the other rights and remedies (including, without limitation, other rights of
setoff) which such Lender may have.

10. PAYMENTS, RECOVERIES AND COLLECTIONS.

10.1 Payment Procedure.

(a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise provided herein, all payments made by the Borrower of principal,
interest or fees hereunder shall be made without setoff or counterclaim on the
date specified

 

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for payment under this Agreement and must be received by the Agent not later
than 1:00 p.m. (Detroit time) on the date such payment is required or intended
to be made in Dollars in immediately available funds to the Agent at the Agent’s
office located at 411 West Lafayette, 7th Floor, MC 3289, Detroit, Michigan
48226-3289, for the ratable benefit of the Revolving Credit Lenders in the case
of payments in respect of the Revolving Credit and any Letter of Credit
Obligations and for the ratable benefit of the Term Loan Lenders in the case of
payments in respect of the Term Loan. Any payment received by the Agent after
1:00 p.m. (Detroit time) shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue. Upon
receipt of each such payment, the Agent shall make prompt payment to each
applicable Lender, or, in respect of Eurodollar-based Advances, such Lender’s
Eurodollar Lending Office, in like funds and currencies, of all amounts received
by it for the account of such Lender.

(b) Unless the Agent shall have been notified in writing by the Borrower at
least two (2) Business Days prior to the date on which any payment to be made by
the Borrower is due that the Borrower does not intend to remit such payment, the
Agent may, in its sole discretion and without obligation to do so, assume that
the Borrower has remitted such payment when so due and the Agent may, in
reliance upon such assumption, make available to each Revolving Credit Lender or
Term Loan Lender, as the case may be, on such payment date an amount equal to
such Lender’s share of such assumed payment. If the Borrower has not in fact
remitted such payment to the Agent, each Lender shall forthwith on demand repay
to the Agent the amount of such assumed payment made available or transferred to
such Lender, together with the interest thereon, in respect of each day from and
including the date such amount was made available by the Agent to such Lender to
the date such amount is repaid to the Agent at a rate per annum equal to the
Federal Funds Effective Rate for the first two (2) Business Days that such
amount remains unpaid, and thereafter at a rate of interest then applicable to
such Revolving Credit Advances.

(c) Subject to the definition of “Interest Period” in Section 1 of this
Agreement, whenever any payment to be made hereunder shall otherwise be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest, if any, in connection with such payment.

(d) All payments to be made by the Borrower under this Agreement or any of the
Notes (including without limitation payments under the Swing Line and/or Swing
Line Note) shall be made without setoff or counterclaim, as aforesaid, and,
subject to full compliance by each Lender (and each assignee and participant
pursuant to Section 13.8) with Section 13.13, without deduction for or on
account of any present or future withholding or other taxes of any nature
imposed by any Governmental Authority or of any political subdivision thereof or
any federation or organization of which such Governmental Authority may at the
time of payment be a member (other than any Excluded Taxes), unless the Borrower
is compelled by law to make payment subject to such tax. In such event, the
Borrower shall:

(i) pay to the Agent for the Agent’s own account and/or, as the case may be, for
the account of the Lenders such additional amounts as may be necessary to ensure
that the Agent and/or such Lender or Lenders (including the Swing Line Lender)
receive a net amount equal to the full amount which would have been receivable
had payment not been made subject to such tax; and

(ii) remit such tax to the relevant taxing authorities according to applicable
law, and send to the Agent or the applicable Lender or Lenders (including the
Swing Line Lender), as the case may be, such certificates or certified copy
receipts as the Agent or such Lender or Lenders shall reasonably require as
proof of the payment by the Borrower of any such taxes payable by the Borrower.

As used herein, the terms “tax”, “taxes” and “taxation” include all taxes,
levies, imposts, duties, fees, deductions and withholdings or similar charges
together with interest (and any taxes payable upon the amounts paid or payable
pursuant to this Section 10.1(d)) thereon.

The Borrower shall be reimbursed by the applicable Lender for any payment made
by the Borrower under this Section 10.1(d) if the applicable Lender is not in
compliance with its obligations under Section 13.13 at the time of the
Borrower’s payment.

 

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10.2 Application of Proceeds of Collateral. Notwithstanding anything to the
contrary in this Agreement, in the case of any Event of Default under
Section 9.1(i), immediately following the occurrence thereof, and in the case of
any other Event of Default: (a) upon the termination of the Revolving Credit
Aggregate Commitment and the Term Loan Aggregate Commitment, (b) the
acceleration of any Indebtedness arising under this Agreement, (c) at the
Agent’s option, or (d) upon the request of the Majority Lenders after the
commencement of any remedies hereunder, the Agent shall apply the proceeds of
any Collateral, together with any offsets, voluntary payments by any Credit
Party or others and any other sums received or collected in respect of the
Indebtedness first, to pay all incurred and unpaid fees and expenses of the
Agent under the Loan Documents and any protective advances made by the Agent
with respect to the Collateral under or pursuant to the terms of any Loan
Document, next, to pay any fees and expenses owed to the Issuing Lender
hereunder, next, to the Indebtedness under the Revolving Credit (including the
Swing Line and any Reimbursement Obligations) and the Term Loan and to any
obligations owing by any Credit Party under any Hedging Agreements and Lender
Products on a pro rata basis, next, to any other Indebtedness on a pro rata
basis, and then, if there is any excess, to the Credit Parties, as the case may
be.

10.3 Pro-rata Recovery. If any Lender shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of setoff or otherwise) on
account of principal of, or interest on, any of the Advances made by it, or the
participations in Letter of Credit Obligations or Swing Line Advances held by it
in excess of its pro rata share of payments then or thereafter obtained by all
Lenders upon principal of and interest on all such Indebtedness, such Lender
shall purchase from the other Lenders such participations in the Revolving
Credit, the Term Loan and/or the Letter of Credit Obligation held by them as
shall be necessary to cause such purchasing Lender to share the excess payment
or other recovery ratably in accordance with the applicable Percentages of the
Lenders; provided, however, that if all or any portion of the excess payment or
other recovery is thereafter recovered from such purchasing holder, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest.

10.4 Treatment of a Defaulting Lender; Reallocation of Defaulting Lender’s
Fronting Exposure.

(a) The obligation of any Lender to make any Advance hereunder shall not be
affected by the failure of any other Lender to make any Advance under this
Agreement, and no Lender shall have any liability to the Borrower or any of
their Subsidiaries, the Agent, any other Lender, or any other Person for another
Lender’s failure to make any loan or Advance hereunder.

(b) If any Lender shall become a Defaulting Lender, then such Defaulting
Lender’s right to vote in respect of any amendment, consent or waiver of the
terms of this Agreement or such other Loan Documents, or to direct or approve
any action or inaction by the Agent shall be subject to the restrictions set
forth in Section 13.10.

(c) Any payment of principal, interest, fees or other amounts received by the
Agent for the account of such Defaulting Lender (whether voluntary or mandatory,
at maturity, pursuant to Article 9 or otherwise) or received by the Agent from a
Defaulting Lender pursuant to Section 9.6 shall be applied at such time or times
as may be determined by the Agent as follows: first, to the payment of any
amounts owing by such Defaulting Lender to the Agent hereunder; second, to the
payment on a pro rata basis of any amounts owing by such Defaulting Lender to
any Issuing Lender or Swing Line Lender hereunder; third, to cash collateralize
the Issuing Lenders’ Fronting Exposure with respect to such Defaulting Lender in
accordance with clause (g) below; fourth, as the Borrower may request (so long
as no Default or Event of Default exists), to the funding of any Advance in
respect of which such Defaulting Lender has failed to fund its portion thereof
as required by this Agreement, as determined by the Agent; fifth, if so
determined by the Agent and the Borrower, to be held in a deposit account and
released pro rata in order to (x) satisfy such Defaulting Lender’s potential
future funding obligations with respect to Advances under this Agreement and
(y) cash collateralize the Issuing Lenders’ future Fronting Exposure with
respect to such Defaulting Lender with respect to future Letters of Credit
issued under this Agreement, in accordance with clause (g) below; sixth, to the
payment of any amounts owing to the Lenders, the Issuing Lenders or Swing Line
Lenders as a result of any judgment of a court of competent jurisdiction
obtained by any Lender, the Issuing Lenders or Swing Line Lenders against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; seventh, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrower as a result
of any judgment of a court of competent jurisdiction obtained by the Borrower
against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement; and eighth,

 

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to such Defaulting Lender or as otherwise directed by a court of competent
jurisdiction; provided that if (x) such payment is a payment of the principal
amount of any Advances or Letter of Credit Obligations in respect of which such
Defaulting Lender has not fully funded its appropriate share, and (y) such
Advances were made or the related Letters of Credit were issued at a time when
the conditions set forth in Section 4.2 were satisfied or waived, such payment
shall be applied solely to pay the Advances of, and Letter of Credit Obligations
to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the
payment of any Advances of, or Letter of Credit Obligations owed to, such
Defaulting Lender until such time as all Advances and funded and unfunded
participations in Letter of Credit Obligations and Swing Line Advances are held
by the Lenders pro rata in accordance with their respective Revolving Credit
Percentages without giving effect to Section clause (d) below. Any payments,
prepayments or other amounts paid or payable to a Defaulting Lender that are
applied (or held) to pay amounts owed by a Defaulting Lender or to post cash
collateral pursuant to this clause (c) shall be deemed paid to and redirected by
such Defaulting Lender, and each Lender irrevocably consents hereto.

(d) Each Defaulting Lender shall be entitled to receive a Revolving Credit
Facility Fee for any period during which that Lender is a Defaulting Lender only
to extent allocable to the sum of (1) the outstanding principal amount of the
Revolving Credit Advances funded by it, and (2) its Revolving Credit Percentage
of the stated amount of Letters of Credit for which it has provided cash
collateral pursuant to clause (g) below).]

(e) Each Defaulting Lender shall be entitled to receive the Letter of Credit
Fees described in Section 3.4(a) for any period during which that Lender is a
Defaulting Lender only to the extent allocable to its Revolving Credit
Percentage of the stated amount of Letters of Credit for which it has provided
cash collateral in accordance with clause (g) below). With respect to any
Revolving Credit Facility Fee or Letter of Credit Fee not required to be paid to
any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall
(x) pay to each Non-Defaulting Lender that portion of any such fee otherwise
payable to such Defaulting Lender with respect to such Defaulting Lender’s
participation in Letter of Credit Obligations or Swing Line Advances that has
been reallocated to such Non-Defaulting Lender pursuant to clause f below,
(y) pay to each Issuing Lender and Swing Line Lender, as applicable, the amount
of any such fee otherwise payable to such Defaulting Lender to the extent
allocable to such Issuing Lender’s and Swing Line Lender’s Fronting Exposure to
such Defaulting Lender, and (z) not be required to pay the remaining amount of
any such fee.

(f) If any Lender shall become a Defaulting Lender, then, for so long as such
Lender remains a Defaulting Lender, any Fronting Exposure shall be reallocated
by the Agent at the request of the Swing Line Lender and/or the Issuing Lender
among the Non-Defaulting Lenders in accordance with their respective Percentages
of the Revolving Credit, but only to the extent that the sum of the aggregate
principal amount of all Revolving Credit Advances made by each Non-Defaulting
Lender, plus such Non-Defaulting Lender’s Percentage of the aggregate
outstanding principal amount of Swing Line Advances and Letter of Credit
Obligations prior to giving effect to such reallocation plus such Non-Defaulting
Lender’s Percentage of the Fronting Exposure to be reallocated does not exceed
such Non-Defaulting Lender’s Percentage of the Revolving Credit Aggregate
Commitment, and only so long as no Default or Event of Default has occurred and
is continuing on the date of such reallocation.

11. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS.

11.1 Reimbursement of Prepayment Costs. If (i) the Borrower makes any payment of
principal with respect to any Eurodollar-based Advance or Quoted Rate Advance on
any day other than the last day of the Interest Period applicable thereto
(whether voluntarily, pursuant to any mandatory provisions hereof, by
acceleration, or otherwise); (ii) the Borrower converts or refunds (or attempts
to convert or refund) any such Advance on any day other than the last day of the
Interest Period applicable thereto (except as described in Section 2.5(e));
(iii) the Borrower fails to borrow, refund or convert any Eurodollar-based
Advance or Quoted Rate Advance after notice has been given by the Borrower to
the Agent in accordance with the terms hereof requesting such Advance; or
(iv) or if the Borrower fails to make any payment of principal in respect of a
Eurodollar-based Advance or Quoted Rate Advance when due, the Borrower shall
reimburse the Agent for itself and/or on behalf of any Lender, as the case may
be, within ten (10) Business Days of written demand therefor for any resulting
loss, cost or expense incurred (excluding the loss of any Applicable Margin) by
the Agent and Lenders, as the case may be, as a result thereof, including,
without limitation, any such loss, cost or expense incurred in obtaining,
liquidating, employing or redeploying deposits from third parties, whether or
not the Agent and Lenders, as the case may be, shall have funded or committed to
fund such Advance. The amount payable hereunder by the Borrower to the Agent for
itself and/or

 

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on behalf of any Lender, as the case may be, shall be deemed to equal an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, refunded or converted, for
the period from the date of such prepayment or of such failure to borrow, refund
or convert, through the last day of the relevant Interest Period, at the
applicable rate of interest for said Advance(s) provided under this Agreement,
over (b) the amount of interest (as reasonably determined by the Agent and
Lenders, as the case may be) which would have accrued to the Agent and Lenders,
as the case may be, on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurocurrency market.
Calculation of any amounts payable to any Lender under this paragraph shall be
made as though such Lender shall have actually funded or committed to fund the
relevant Advance through the purchase of an underlying deposit in an amount
equal to the amount of such Advance and having a maturity comparable to the
relevant Interest Period; provided, however, that any Lender may fund any
Eurodollar-based Advance or Quoted Rate Advance, as the case may be, in any
manner it deems fit and the foregoing assumptions shall be utilized only for the
purpose of the calculation of amounts payable under this paragraph. Upon the
written request of the Borrower, the Agent and Lenders shall deliver to the
Borrower a certificate setting forth the basis for determining such losses,
costs and expenses, which certificate shall be conclusively presumed correct,
absent manifest error.

11.2 Eurodollar Lending Office. For any Eurodollar Advance, if the Agent or a
Lender, as applicable, shall designate a Eurodollar Lending Office which
maintains books separate from those of the rest of the Agent or such Lender, the
Agent or such Lender, as the case may be, shall have the option of maintaining
and carrying the relevant Advance on the books of such Eurodollar Lending
Office.

11.3 Circumstances Affecting LIBOR Rate Availability. If the Agent or the
Majority Lenders (after consultation with the Agent) shall determine in good
faith that, by reason of circumstances affecting the foreign exchange and
interbank markets generally, deposits in eurodollars in the applicable amounts
are not being offered to the Agent or such Lenders at the applicable LIBOR Rate,
then the Agent shall forthwith give notice thereof to the Borrower. Thereafter,
until the Agent notifies the Borrower that such circumstances no longer exist,
(i) the obligation of Lenders to make Advances which bear interest at or by
reference to the LIBOR Rate, and the right of the Borrower to convert an Advance
to or refund an Advance as an Advance which bear interest at or by reference to
the LIBOR Rate shall be suspended, (ii) effective upon the last day of each
Eurodollar-Interest Period related to any existing Eurodollar-based Advance,
each such Eurodollar-based Advance shall automatically be converted into an
Advance which bears interest at or by reference to the Base Rate (without regard
to the satisfaction of any conditions to conversion contained elsewhere herein),
and (iii) effective immediately following such notice, each Advance which bears
interest at or by reference to the Daily Adjusting LIBOR Rate shall
automatically be converted into an Advance which bears interest at or by
reference to the Base Rate (without regard to the satisfaction of any conditions
to conversion contained elsewhere herein).

11.4 Laws Affecting LIBOR Rate Availability. If any Change in Law shall make it
unlawful or impossible for any of the Lenders (or any of their respective
Eurodollar Lending Offices) to honor its obligations hereunder to make or
maintain any Advance which bears interest at or by reference to the LIBOR Rate,
such Lender shall forthwith give notice thereof to the Borrower and to the
Agent. Thereafter, (a) the obligations of the applicable Lenders to make
Advances which bear interest at or by reference to the LIBOR Rate and the right
of the Borrower to convert an Advance into or refund an Advance as an Advance
which bears interest at or by reference to the LIBOR Rate shall be suspended and
thereafter only the Base Rate shall be available, and (b) if any of the Lenders
may not lawfully continue to maintain an Advance which bears interest at or by
reference to the LIBOR Rate, the applicable Advance shall immediately be
converted to an Advance which bears interest at or by reference to the Base
Rate.

11.5 Increased Cost of Advances Carried at the LIBOR Rate. If any Change in Law
shall:

(a) subject any of the Lenders (or any of their respective Eurodollar Lending
Offices) to any tax, duty or other charge with respect to any Advance (except
for any withholding taxes which are covered by Section 10.1(d) hereof) or shall
change the basis of taxation of payments to any of the Lenders (or any of their
respective Eurodollar Lending Offices) of the principal of or interest on any
Advance or any other amounts due under this Agreement in respect thereof (except
for changes in any Excluded Taxes); or

(b) impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any of the Lenders (or any of
their respective Eurodollar Lending Offices) or shall impose on any of the
Lenders (or any of their respective Eurodollar Lending Offices) or the foreign
exchange and interbank markets any other condition affecting any Advance;

 

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and the result of any of the foregoing matters is to increase the costs to any
of the Lenders of maintaining any part of the Indebtedness hereunder as an
Advance which bears interest at or by reference to the LIBOR Rate or to reduce
the amount of any sum received or receivable by any of the Lenders under this
Agreement in respect of an Advance which bears interest at or by reference to
the LIBOR Rate, then such Lender shall promptly notify the Agent, and the Agent
shall promptly notify the Borrower of such fact and demand compensation therefor
and, within ten (10) Business Days after such notice, the Borrower agrees to pay
to such Lender or Lenders such additional amount or amounts as will compensate
such Lender or Lenders for such increased cost or reduction, provided that each
Lender agrees to take any reasonable action, to the extent such action could be
taken without cost or administrative or other burden or restriction to such
Lender, to mitigate or eliminate such cost or reduction, within a reasonable
time after becoming aware of the foregoing matters. The Agent will promptly
notify the Borrower of any event of which it has knowledge which will entitle
Lenders to compensation pursuant to this Section, or which will cause the
Borrower to incur additional liability under Section 11.1 hereof, provided that
the Agent shall incur no liability whatsoever to the Lenders or the Borrower in
the event it fails to do so. A certificate of the Agent (or such Lender, if
applicable) setting forth the basis for determining such additional amount or
amounts necessary to compensate such Lender or Lenders shall accompany such
demand and shall be conclusively presumed to be correct absent manifest error.

11.6 Capital Adequacy and Other Increased Costs.

(a) If any Change in Law affects or would affect the amount of capital required
to be maintained by such Lender or the Agent (or any corporation controlling
such Lender or the Agent) and such Lender or the Agent, as the case may be,
determines that the amount of such capital is increased by, or based upon the
existence of such Lender’s or the Agent’s obligations or Advances hereunder, the
effect of such Change in Law is to result in such an increase, and such increase
has the effect of reducing the rate of return on such Lender’s or the Agent’s
(or such controlling corporation’s) capital as a consequence of such obligations
or Advances hereunder to a level below that which such Lender or the Agent (or
such controlling corporation) could have achieved but for such circumstances
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Lender or the Agent to be material (collectively,
“Increased Costs”), then the Agent or such Lender shall notify the Borrower, and
thereafter the Borrower shall pay to such Lender or the Agent, as the case may
be, within ten (10) Business Days of written demand therefor from such Lender or
the Agent, additional amounts sufficient to compensate such Lender or the Agent
(or such controlling corporation) for any increase in the amount of capital and
reduced rate of return which such Lender or the Agent reasonably determines to
be allocable to the existence of such Lender’s or the Agent’s obligations or
Advances hereunder. A statement setting forth the amount of such compensation,
the methodology for the calculation and the calculation thereof which shall also
be prepared in good faith and in reasonable detail by such Lender or the Agent,
as the case may be, shall be submitted by such Lender or by the Agent to the
Borrower, reasonably promptly after becoming aware of any event described in
this Section 11.6(a) and shall be conclusively presumed to be correct, absent
manifest error.

(b) Failure or delay on the part of any Lender or the Issuing Lender to demand
compensation pursuant to this Section 11.6 shall not constitute a waiver of such
Lender’s right to demand such compensation, provided that the Borrower shall not
be required to compensate a Lender pursuant to this Section 11.6 for any
increased costs incurred or reductions suffered more than 180 days prior to the
date that such Lender notifies the Borrower of the Change in Law (provided that
this provision will not apply to any Change in Law of the type referred to in
clauses (x), (y) or (z) of the definition thereof) giving rise to such increased
costs or reductions and of such Lender’s intention to claim compensation
therefor (except that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 180 day period referred to above shall be
extended to include the period of retroactive effect thereof).

11.7 Right of Lenders to Fund through Branches and Affiliates. Each Lender
(including without limitation the Swing Line Lender) may, if it so elects,
fulfill its commitment as to any Advance hereunder by designating a branch or
Affiliate of such Lender to make such Advance; provided that (a) such Lender
shall remain solely responsible for the performances of its obligations
hereunder and (b) no such designation shall result in any material increased
costs to the Borrower.

 

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11.8 Margin Adjustment. Adjustments to the Applicable Margins and the Applicable
Fee Percentages, based on Schedule 1.1, shall be implemented on a quarterly
basis as follows:

(a) Such adjustments shall be given prospective effect only, effective as to all
Advances outstanding hereunder, the Applicable Fee Percentage and the Letter of
Credit Fee, upon the date of delivery of the financial statements under Sections
7.1(a) and 7.1(b) hereunder and the Covenant Compliance Report under
Section 7.2(a) hereof, in each case establishing applicability of the
appropriate adjustment and in each case with no retroactivity or claw-back. In
the event the Borrower shall fail timely to deliver such financial statements or
the Covenant Compliance Report and such failure continues for three (3) days,
then (but without affecting the Event of Default resulting therefrom) from the
date delivery of such financial statements and report was required until such
financial statements and report are delivered, the Applicable Margins and
Applicable Fee Percentages shall be at the highest level on the Pricing Matrix
attached to this Agreement as Schedule 1.1.

(b) From the Effective Date until the required date of delivery (or, if earlier,
delivery) of the financial statements under Section 7.1(a) or 7.1(b) hereof, as
applicable, and the Covenant Compliance Report under Section 7.2(a) hereof, for
the fiscal quarter ending December 31, 2013, the Applicable Margins and
Applicable Fee Percentages shall be those set forth under the Level I column of
the pricing matrix attached to this Agreement as Schedule 1.1. Thereafter,
Applicable Margins and Applicable Fee Percentages shall be based upon the
quarterly financial statements and Covenant Compliance Reports, subject to
recalculation as provided in Section 11.8(a) above.

(c) Notwithstanding the foregoing, however, if, prior to the payment and
discharge in full (in cash) of the Indebtedness and the termination of any and
all commitments hereunder, as a result of any restatement of or adjustment to
the financial statements of the Borrower and any of its Subsidiaries (relating
to the current or any prior fiscal period) or for any other reason, the Agent
determines that the Applicable Margin and/or the Applicable Fee Percentages as
calculated by the Borrower as of any applicable date of determination were
inaccurate in any respect and a proper calculation thereof would have resulted
in different pricing for any fiscal period, then (x) if the proper calculation
thereof would have resulted in higher pricing for any such period, the Borrower
shall automatically and retroactively be obligated to pay to the Agent, promptly
upon demand by the Agent or the Majority Lenders, an amount equal to the excess
of the amount of interest and fees that should have been paid for such period
over the amount of interest and fees actually paid for such period and, if the
current fiscal period is affected thereby, the Applicable Margin and/or the
Applicable Fee Percentages for the current period shall be adjusted based on
such recalculation; and (y) if the proper calculation thereof would have
resulted in lower pricing for such period, the Agent and Lenders shall have no
obligation to recalculate such interest or fees or to repay any interest or fees
to the Borrower.

12. AGENT.

12.1 Appointment of the Agent. Each Lender and the holder of each Note (if
issued) irrevocably appoints and authorizes the Agent to act on behalf of such
Lender or holder under this Agreement and the other Loan Documents and to
exercise such powers hereunder and thereunder as are specifically delegated to
the Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto, including without limitation the power to execute
or authorize the execution of financing or similar statements or notices, and
other documents. In performing its functions and duties under this Agreement,
the Agent shall act solely as agent of the Lenders and does not assume and shall
not be deemed to have assumed any obligation towards or relationship of agency
or trust with or for any Credit Party.

12.2 Deposit Account with the Agent or any Lender. The Borrower authorizes the
Agent and each Lender, in the Agent’s or such Lender’s sole discretion, upon
notice to the Borrower to charge its general deposit account(s), if any,
maintained with the Agent or such Lender for the amount of any principal,
interest, or other amounts or costs due under this Agreement when the same
become due and payable under the terms of this Agreement or the Notes. Upon
request of Borrower, Agent shall promptly provide to Borrower a statement
prepaid in good faith and in reasonable detail, setting forth the amount of such
charges, the methodology of the calculation thereof and the calculation thereof.

 

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12.3 Scope of the Agent’s Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement or otherwise, have a fiduciary relationship with any
Lender (and no implied covenants or other obligations shall be read into this
Agreement against the Agent). None of the Agent, its Affiliates nor any of their
respective directors, officers, employees or agents shall be liable to any
Lender for any action taken or omitted to be taken by it or them under this
Agreement or any document executed pursuant hereto, or in connection herewith or
therewith with the consent or at the request of the Majority Lenders (or all of
the Lenders for those acts requiring consent of all of the Lenders) (except for
its or their own willful misconduct or gross negligence), nor be responsible for
or have any duties to ascertain, inquire into or verify (a) any recitals or
warranties made by the Credit Parties or any Affiliate of the Credit Parties, or
any officer thereof contained herein or therein, (b) the effectiveness,
enforceability, validity or due execution of this Agreement or any document
executed pursuant hereto or any security thereunder, (c) the performance by the
Credit Parties of their respective obligations hereunder or thereunder, or
(d) the satisfaction of any condition hereunder or thereunder, including without
limitation in connection with the making of any Advance or the issuance of any
Letter of Credit. The Agent and its Affiliates shall be entitled to rely upon
any certificate, notice, document or other communication (including any cable,
telegraph, telex, facsimile transmission or oral communication) believed by it
to be genuine and correct and to have been sent or given by or on behalf of a
proper person. The Agent may treat the payee of any Note as the holder thereof.
The Agent may employ agents and may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable to
the Lenders (except as to money or property received by them or their authorized
agents), for the negligence or misconduct of any such agent selected by it with
reasonable care or for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.

12.4 Successor Agent. The Agent may resign as such at any time upon at least
thirty (30) days prior notice to the Borrower and each of the Lenders. If the
Agent at any time shall resign or if the office of the Agent shall become vacant
for any other reason, Majority Lenders shall, by written instrument, appoint
successor agent(s) (“Successor Agent”) satisfactory to such Majority Lenders
and, so long as no Default or Event of Default has occurred and is continuing,
to the Borrower (which approval shall not be unreasonably withheld or delayed);
provided, however that any such successor Agent shall be a bank or a trust
company or other financial institution which maintains an office in the United
States, or a commercial bank organized under the laws of the United States or
any state thereof, or any Affiliate of such bank or trust company or other
financial institution which is engaged in the banking business, and shall have a
combined capital and surplus of at least $500,000,000. Such Successor Agent
shall thereupon become the Agent hereunder, as applicable, and the Agent shall
deliver or cause to be delivered to any successor agent such documents of
transfer and assignment as such Successor Agent may reasonably request. If a
Successor Agent is not so appointed or does not accept such appointment before
the resigning Agent’s resignation becomes effective, the resigning Agent may
appoint a temporary successor to act until such appointment by the Majority
Lenders and, if applicable, the Borrower, is made and accepted, or if no such
temporary successor is appointed as provided above by the resigning Agent, the
Majority Lenders shall thereafter perform all of the duties of the resigning
Agent hereunder until such appointment by the Majority Lenders and, if
applicable, the Borrower, is made and accepted. Such Successor Agent shall
succeed to all of the rights and obligations of the resigning Agent as if
originally named. The resigning Agent shall duly assign, transfer and deliver to
such Successor Agent all moneys at the time held by the resigning Agent
hereunder after deducting therefrom its expenses for which it is entitled to be
reimbursed hereunder. Upon such succession of any such Successor Agent, the
resigning Agent shall be discharged from its duties and obligations, in its
capacity as the Agent hereunder, except for its gross negligence or willful
misconduct arising prior to its resignation hereunder, and the provisions of
this Article 12 shall continue in effect for the benefit of the resigning Agent
in respect of any actions taken or omitted to be taken by it while it was acting
as the Agent.

12.5 Credit Decisions. Each Lender acknowledges that it has, independently of
the Agent and each other Lender and based on the financial statements of the
Borrower and such other documents, information and investigations as it has
deemed appropriate, made its own credit decision to extend credit hereunder from
time to time. Each Lender also acknowledges that it will, independently of the
Agent and each other Lender and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement, any Loan Document or
any other document executed pursuant hereto.

 

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12.6 Authority of the Agent to Enforce This Agreement. Each Lender, subject to
the terms and conditions of this Agreement, grants the Agent full power and
authority as attorney-in-fact to institute and maintain actions, suits or
proceedings for the collection and enforcement of any Indebtedness outstanding
under this Agreement or any other Loan Document and to file such proofs of debt
or other documents as may be necessary to have the claims of the Lenders allowed
in any proceeding relative to any Credit Party, or their respective creditors or
affecting their respective properties, and to take such other actions which the
Agent considers to be necessary or desirable for the protection, collection and
enforcement of the Notes, this Agreement or the other Loan Documents.

12.7 Indemnification of the Agent. The Lenders agree (which agreement shall
survive the expiration or termination of this Agreement) to indemnify the Agent
and its Affiliates (to the extent not reimbursed by the Borrower, but without
limiting any obligation of the Borrower to make such reimbursement), ratably
according to their respective Weighted Percentages, from and against any and all
claims, damages, losses, liabilities, costs or expenses of any kind or nature
whatsoever (including, without limitation, reasonable fees and expenses of house
and outside counsel) which may be imposed on, incurred by, or asserted against
the Agent and its Affiliates in any way relating to or arising out of this
Agreement, any of the other Loan Documents or the transactions contemplated
hereby or any action taken or omitted by the Agent and its Affiliates under this
Agreement or any of the Loan Documents; provided, however, that no Lender shall
be liable for any portion of such claims, damages, losses, liabilities, costs or
expenses resulting from the Agent’s or its Affiliate’s gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent and its Affiliates promptly upon demand for its ratable
share of any reasonable out-of-pocket expenses (including, without limitation,
reasonable fees and expenses of house and outside counsel) incurred by the Agent
and its Affiliates in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any of the other Loan
Documents, to the extent that the Agent and its Affiliates are not reimbursed
for such expenses by the Borrower, but without limiting the obligation of the
Borrower to make such reimbursement. Each Lender agrees to reimburse the Agent
and its Affiliates promptly upon demand for its ratable share of any amounts
owing to the Agent and its Affiliates by the Lenders pursuant to this Section,
provided that, if the Agent or its Affiliates are subsequently reimbursed by the
Borrower for such amounts, they shall refund to the Lenders on a pro rata basis
the amount of any excess reimbursement. If the indemnity furnished to the Agent
and its Affiliates under this Section shall become impaired as determined in the
Agent’s reasonable judgment or the Agent shall elect in its sole discretion to
have such indemnity confirmed by the Lenders (as to specific matters or
otherwise), the Agent shall give notice thereof to each Lender and, until such
additional indemnity is provided or such existing indemnity is confirmed, the
Agent may cease, or not commence, to take any action. Any amounts paid by the
Lenders hereunder to the Agent or its Affiliates shall be deemed to constitute
part of the Indebtedness hereunder.

12.8 Knowledge of Default. It is expressly understood and agreed that the Agent
shall be entitled to assume that no Default or Event of Default has occurred and
is continuing, unless the officers of the Agent immediately responsible for
matters concerning this Agreement shall have received a written notice from a
Lender or the Borrower specifying such Default or Event of Default and stating
that such notice is a “notice of default”. Upon receiving such a notice, the
Agent shall promptly notify each Lender of such Default or Event of Default and
provide each Lender with a copy of such notice and shall endeavor to provide
such notice to the Lenders within three (3) Business Days (but without any
liability whatsoever in the event of its failure to do so). The Agent shall also
furnish the Lenders, promptly upon receipt, with copies of all other notices or
other information required to be provided by the Borrower hereunder.

12.9 The Agent’s Authorization; Action by Lenders. Except as otherwise expressly
provided herein, whenever the Agent is authorized and empowered hereunder on
behalf of the Lenders to give any approval or consent, or to make any request,
or to take any other action on behalf of the Lenders (including without
limitation the exercise of any right or remedy hereunder or under the other Loan
Documents), the Agent shall be required to give such approval or consent, or to
make such request or to take such other action only when so requested in writing
by the Majority Lenders or the Lenders, as applicable hereunder. Action that may
be taken by the Majority Lenders, any other specified Percentage of the Lenders
or all of the Lenders, as the case may be (as provided for hereunder) may be
taken (i) pursuant to a vote of the requisite percentages of the Lenders as
required hereunder at a meeting (which may be held by telephone conference
call), provided that the Agent exercises good faith, diligent efforts to give
all of the Lenders reasonable advance notice of the meeting, or (ii) pursuant to
the written consent of the requisite percentages of the Lenders as required
hereunder, provided that all of the Lenders are given reasonable advance notice
of the requests for such consent.

 

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12.10 Enforcement Actions by the Agent. Except as otherwise expressly provided
under this Agreement or in any of the other Loan Documents and subject to the
terms hereof, the Agent will take such action, assert such rights and pursue
such remedies under this Agreement and the other Loan Documents as the Majority
Lenders or all of the Lenders, as the case may be (as provided for hereunder),
shall direct; provided, however, that the Agent shall not be required to act or
omit to act if, in the reasonable judgment of the Agent, such action or omission
may expose the Agent to personal liability for which the Agent has not been
satisfactorily indemnified hereunder or is contrary to this Agreement, any of
the Loan Documents or applicable law. Except as expressly provided above or
elsewhere in this Agreement or the other Loan Documents, no Lender (other than
the Agent, acting in its capacity as agent) shall be entitled to take any
enforcement action of any kind under this Agreement or any of the other Loan
Documents.

12.11 Collateral Matters.

(a) The Agent is authorized on behalf of all the Lenders, without the necessity
of any notice to or further consent from the Lenders, from time to time to take
any action with respect to any Collateral or the Collateral Documents which may
be necessary to perfect and maintain a perfected security interest in and Liens
upon the Collateral granted pursuant to the Loan Documents.

(b) The Lenders irrevocably authorize the Agent, in its reasonable discretion,
to the full extent set forth in Section 13.10(d) hereof, (1) to release or
terminate any Lien granted to or held by the Agent upon any Collateral (a) upon
termination of the Revolving Credit Aggregate Commitment and, as applicable, the
expiration or termination of the Term Loan Aggregate Commitment and payment in
full of all Indebtedness payable under this Agreement and under any other Loan
Document; (b) constituting property (including, without limitation, Equity
Interests in any Person) sold or to be sold or disposed of as part of or in
connection with any disposition (whether by sale, by merger or by any other form
of transaction and including the property of any Subsidiary that is disposed of
as permitted hereby) permitted in accordance with the terms of this Agreement;
(c) constituting property in which a Credit Party owned no interest at the time
the Lien was granted or at any time thereafter; or (d) if approved, authorized
or ratified in writing by the Majority Lenders, or all the Lenders, as the case
may be, as provided in Section 13.10; (2) to subordinate the Lien granted to or
held by the Agent on any Collateral to any other holder of a Lien on such
Collateral which is permitted by Section 8.2(b) hereof; and (3) if all of the
Equity Interests held by the Credit Parties in any Person are sold or otherwise
transferred to any transferee other than the Borrower or a Subsidiary of the
Borrower as part of or in connection with any disposition (whether by sale, by
merger or by any other form of transaction) permitted in accordance with the
terms of this Agreement, to release such Person from all of its obligations
under the Loan Documents (including, without limitation, under any Guaranty).
Upon request by the Agent at any time, the Lenders will confirm in writing the
Agent’s authority to release particular types or items of Collateral pursuant to
this Section 12.11(b).

12.12 The Agents in their Individual Capacities. Comerica Bank and its
Affiliates, successors and assigns shall each have the same rights and powers
hereunder as any other Lender and may exercise or refrain from exercising the
same as though such Lender were not the Agent. Comerica Bank and its Affiliates
may (without having to account therefor to any Lender) accept deposits from,
lend money to, and generally engage in any kind of banking, trust, financial
advisory or other business with the Credit Parties as if such Lender were not
acting as the Agent hereunder, and may accept fees and other consideration
therefor without having to account for the same to the Lenders.

12.13 The Agent’s Fees. Until the Indebtedness has been repaid and discharged in
full and no commitment to extend any credit hereunder is outstanding, the
Borrower shall pay to the Agent, as applicable, any agency or other fee(s) set
forth (or to be set forth from time to time) in the applicable Fee Letter on the
terms set forth therein. The agency fees referred to in this Section 12.13 shall
not be refundable under any circumstances.

 

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12.14 Documentation Agent or other Titles. Any Lender identified on the facing
page or signature page of this Agreement or in any amendment hereto or as
designated with consent of the Agent in any assignment agreement as Lead
Arranger, Documentation Agent, Syndications Agent or any similar titles, shall
not have any right, power, obligation, liability, responsibility or duty under
this Agreement as a result of such title other than those applicable to all
Lenders as such. Without limiting the foregoing, the Lenders so identified shall
not have or be deemed to have any fiduciary relationship with any Lender as a
result of such title. Each Lender acknowledges that it has not relied, and will
not rely, on the Lender so identified in deciding to enter into this Agreement
or in taking or not taking action hereunder.

12.15 No Reliance on the Agent’s Customer Identification Program

(a) Each Lender acknowledges and agrees that neither such Lender, nor any of its
Affiliates, participants or assignees, may rely on the Agent to carry out such
Lender’s, Affiliate’s, participant’s or assignee’s customer identification
program, or other obligations required or imposed under or pursuant to the USA
Patriot Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or
any other Anti-Terrorism Law, including any programs involving any of the
following items relating to or in connection with the Borrower or any of its
Subsidiaries, any of their respective Affiliates or agents, the Loan Documents
or the transactions hereunder: (i) any identify verification procedures,
(ii) any record keeping, (iii) any comparisons with government lists, (iv) any
customer notices or (v) any other procedures required under the CIP Regulations
or such other laws.

(b) Each Lender or assignee or participant of a Lender that is not organized
under the laws of the United States or a state thereof (and is not excepted from
the certification requirement contained in Section 313 of the USA Patriot Act
and the applicable regulations because it is both (i) an affiliate of a
depository institution or foreign bank that maintains a physical presence in the
United States or foreign country, and (ii) subject to supervision by a banking
authority regulating such affiliated depository institution or foreign bank)
shall deliver to the Agent the certification, or, if applicable,
recertification, certifying that such Lender is not a “shell” and certifying to
other matters as required by Section 313 of the USA Patriot Act and the
applicable regulations: (x) within 10 days after the Effective Date, and (y) at
such other times as are required under the USA Patriot Act.

13. MISCELLANEOUS.

13.1 Accounting Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, it shall be done, unless otherwise specified herein,
in accordance with GAAP.

13.2 Choice of Law and Venue.

(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 INTERNAL
LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF
LAWS.

(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 FEDERAL COURTS LOCATED IN THE COUNTY OF SAN FRANCISCO, 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. BORROWER AND AGENT 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 13.2.

13.3 Intentionally Omitted.

 

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13.4 Interest. In the event the obligation of the Borrower to pay interest on
the principal balance of the Notes or on any other amounts outstanding hereunder
or under the other Loan Documents is or becomes in excess of the maximum
interest rate which the Borrower is permitted by law to contract or agree to
pay, giving due consideration to the execution date of this Agreement, then, in
that event, the rate of interest applicable thereto with respect to such
Lender’s applicable Percentages shall be deemed to be immediately reduced to
such maximum rate and all previous payments in excess of the maximum rate shall
be deemed to have been payments in reduction of principal and not of interest.

13.5 Closing Costs and Other Costs; Indemnification.

(a) The Borrower shall pay or reimburse (a) the Agent and its Affiliates for
payment of, on demand, all reasonable costs and expenses, including, by way of
description and not limitation, reasonable in-house and outside attorney fees
and advances, appraisal and accounting fees, lien search fees, and required
travel costs, incurred by the Agent and its Affiliates in connection with the
commitment, consummation and closing of the loans contemplated hereby, or in
connection with the administration or enforcement of this Agreement or the other
Loan Documents (including the obtaining of legal advice regarding the rights and
responsibilities of the parties hereto) or any refinancing or restructuring of
the loans or Advances provided under this Agreement or the other Loan Documents,
or any amendment or modification thereof requested by the Borrower, and (b) the
Agent and its Affiliates and each of the Lenders, as the case may be, for all
stamp and other taxes and duties payable or determined to be payable in
connection with the execution, delivery, filing or recording of this Agreement
and the other Loan Documents and the consummation of the transactions
contemplated hereby, and any and all liabilities with respect to or resulting
from any delay in paying or omitting to pay such taxes or duties. Furthermore,
all reasonable costs and expenses, including without limitation attorney fees,
incurred by the Agent and its Affiliates and, after the occurrence and during
the continuance of an Event of Default, by the Lenders in revising, preserving,
protecting, exercising or enforcing any of its or any of the Lenders’ rights
against the Borrower or any other Credit Party, or otherwise incurred by the
Agent and its Affiliates and the Lenders in connection with any Event of Default
or the enforcement of the loans (whether incurred through negotiations, legal
proceedings or otherwise), including by way of description and not limitation,
such charges in any court or bankruptcy proceedings or arising out of any claim
or action by any person against the Agent, its Affiliates, or any Lender which
would not have been asserted were it not for the Agent’s or such Affiliate’s or
Lender’s relationship with the Borrower hereunder or otherwise, shall also be
paid by the Borrower. All of said amounts required to be paid by the Borrower
hereunder and not paid forthwith upon demand, as aforesaid, shall bear interest,
from the date incurred to the date payment is received by the Agent, at the Base
Rate, plus three percent (3%).

(b) The Borrower agrees to indemnify and hold the Agent and each of the Lenders
(and their respective Affiliates) harmless from all loss, cost, damage,
liability or expenses, including reasonable house and outside attorneys’ fees
and disbursements (but without duplication of such fees and disbursements for
the same services), incurred by the Agent and each of the Lenders by reason of
an Event of Default, or enforcing the obligations of any Credit Party under this
Agreement or any of the other Loan Documents, as applicable, or in the
prosecution or defense of any action or proceeding concerning any matter growing
out of or connected with this Agreement or any of the Loan Documents, excluding,
however, any loss, cost, damage, liability or expenses to the extent arising as
a result of the gross negligence or willful misconduct of the party seeking to
be indemnified under this Section 13.5(b).

(c) The Borrower agrees to defend, indemnify and hold harmless the Agent and
each Lender (and their respective Affiliates), and their respective employees,
agents, officers and directors from and against any and all claims, demands,
penalties, fines, liabilities, settlements, damages, costs or expenses of
whatever kind or nature (including without limitation, reasonable attorneys and
consultants fees, investigation and laboratory fees, environmental studies
required by the Agent or any Lender in connection with the violation of
Hazardous Material Laws), court costs and litigation expenses, arising out of or
related to (i) the presence, use, disposal, release or threatened release of any
Hazardous Materials on, from or affecting any premises owned or occupied by any
Credit Party in violation of or the non-compliance with applicable Hazardous
Material Laws, (ii) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to such Hazardous Materials,
(iii) any lawsuit or other proceeding brought or threatened, settlement reached
or governmental order or decree relating to such Hazardous Materials, and/or
(iv) complying or coming into compliance with all Hazardous Material Laws
(including the cost of any remediation or monitoring required in connection
therewith) or any other

 

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Requirement of Law; provided, however, that the Borrower shall have no
obligations under this Section 13.5(c) with respect to claims, demands,
penalties, fines, liabilities, settlements, damages, costs or expenses to the
extent arising as a result of the gross negligence or willful misconduct of the
Agent or such Lender, as the case may be. The obligations of the Borrower under
this Section 13.5(c) shall be in addition to any and all other obligations and
liabilities the Borrower may have to the Agent or any of the Lenders at common
law or pursuant to any other agreement.

13.6 Notices.

(a) Except as expressly provided otherwise in this Agreement (and except as
provided in clause (b) below), all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing and shall be given by personal delivery, by mail, by reputable overnight
courier or by facsimile and addressed or delivered to it at its address set
forth on Schedule 13.6 to the Disclosure Letter or at such other address as may
be designated by such party in a notice to the other parties that complies as to
delivery with the terms of this Section 13.6 or posted to an E-System set up by
or at the direction of the Agent (as set forth below). Any notice, if personally
delivered or if mailed and properly addressed with postage prepaid and sent by
registered or certified mail, shall be deemed given when received or when
delivery is refused; any notice, if given to a reputable overnight courier and
properly addressed, shall be deemed given two (2) Business Days after the date
on which it was sent, unless it is actually received sooner by the named
addressee; and any notice, if transmitted by facsimile, shall be deemed given
when received. The Agent may, but, except as specifically provided herein, shall
not be required to, take any action on the basis of any notice given to it by
telephone, but the giver of any such notice shall promptly confirm such notice
in writing or by facsimile, and such notice will not be deemed to have been
received until such confirmation is deemed received in accordance with the
provisions of this Section set forth above. If such telephonic notice conflicts
with any such confirmation, the terms of such telephonic notice shall control.
Any notice given by the Agent or any Lender to the Borrower shall be deemed to
be a notice to all of the Credit Parties.

(b) Notices and other communications provided to the Agent and the Lenders party
hereto under this Agreement or any other Loan Document may be delivered or
furnished by electronic communication (including email and Internet or intranet
websites) pursuant to procedures approved by the Agent. The Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications (including email and
any E-System) pursuant to procedures approved by it. Unless otherwise agreed to
in a writing by and among the parties to a particular communication, (i) notices
and other communications sent to an email address shall be deemed received upon
the sender’s receipt of an acknowledgment from the intended recipient (such as
by the “return receipt requested” function, return email, or other written
acknowledgment) and (ii) notices and other communications posted to any E-System
shall be deemed received upon the deemed receipt by the intended recipient at
its email address as described in the foregoing clause (i) of notification that
such notice or other communication is available and identifying the website
address therefore.

13.7 Further Action. The Borrower, from time to time, upon written request of
the Agent will make, execute, acknowledge and deliver or cause to be made,
executed, acknowledged and delivered, all such further and additional
instruments, and take all such further action as may reasonably be required to
carry out the intent and purpose of this Agreement or the Loan Documents, and to
provide for Advances under and payment of the Notes, according to the intent and
purpose herein and therein expressed.

13.8 Successors and Assigns; Participations; Assignments.

(a) This Agreement shall be binding upon and shall inure to the benefit of the
Borrower and the Lenders and their respective successors and assigns.

(b) The foregoing shall not authorize any assignment by the Borrower of its
rights or duties hereunder, and, except as otherwise provided herein, no such
assignment shall be made (or be effective) without the prior written approval of
the Lenders.

 

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(c) No Lenders may at any time assign or grant participations in such Lender’s
rights and obligations hereunder and under the other Loan Documents except
(i) by way of assignment to any Eligible Assignee in accordance with clause
(d) of this Section, (ii) by way of a participation in accordance with the
provisions of clause (e) of this Section or (iii) by way of a pledge or
assignment of a security interest subject to the restrictions of clause (f) of
this Section (and any other attempted assignment or transfer by any Lender shall
be deemed to be null and void).

(d) Each assignment by a Lender of all or any portion of its rights and
obligations hereunder and under the other Loan Documents, shall be subject to
the following terms and conditions:

(i) each such assignment shall be made on a pro rata basis, and shall be in a
minimum amount of the lesser of (x) Five Million Dollars ($5,000,000) or such
lesser amount as the Agent shall agree and (y) the entire remaining amount of
assigning Lender’s aggregate interest in the Revolving Credit (and
participations in any outstanding Letters of Credit) and the Term Loan; provided
however that, after giving effect to such assignment, in no event shall the
entire remaining amount (if any) of assigning Lender’s aggregate interest in the
Revolving Credit (and participations in any outstanding Letters of Credit) and
the Term Loan be less than $5,000,000; and

(ii) the parties to any assignment shall execute and deliver to the Agent an
Assignment Agreement substantially (as determined by the Agent) in the form
attached hereto as Exhibit H (with appropriate insertions acceptable to the
Agent), together with a processing and recordation fee in the amount, if any,
required as set forth in the Assignment Agreement.

Until the Assignment Agreement becomes effective in accordance with its terms
and is recorded in the Register maintained by the Agent under clause (g) of this
Section 13.8, and the Agent has confirmed that the assignment satisfies the
requirements of this Section 13.8, the Borrower and the Agent shall be entitled
to continue to deal solely and directly with the assigning Lender in connection
with the interest so assigned. From and after the effective date of each
Assignment Agreement that satisfies the requirements of this Section 13.8, the
assignee thereunder shall be deemed to be a party to this Agreement, such
assignee shall have the rights and obligations of a Lender under this Agreement
and the other Loan Documents (including without limitation the right to receive
fees payable hereunder in respect of the period following such assignment) and
the assigning Lender shall relinquish its rights and be released from its
obligations under this Agreement and the other Loan Documents.

Upon request, the Borrower shall execute and deliver to the Agent, new Note(s)
payable to the order of the assignee in an amount equal to the amount assigned
to the assigning Lender pursuant to such Assignment Agreement, and with respect
to the portion of the Indebtedness retained by the assigning Lender, to the
extent applicable, new Note(s) payable to the order of the assigning Lender in
an amount equal to the amount retained by such Lender hereunder. The Agent, the
Lenders and the Borrower acknowledges and agrees that any such new Note(s) shall
be given in renewal and replacement of the Notes issued to the assigning lender
prior to such assignment and shall not effect or constitute a novation or
discharge of the Indebtedness evidenced by such prior Note, and each such new
Note may contain a provision confirming such agreement.

(e) The Borrower and the Agent acknowledge that each of the Lenders may at any
time and from time to time, subject to the terms and conditions hereof, grant
participations in such Lender’s rights and obligations hereunder (on a pro rata
basis only) and under the other Loan Documents to any Person (other than a
natural person or to the Borrower or any of the Borrower’s Affiliates or
Subsidiaries); provided that any participation permitted hereunder shall comply
with all applicable laws and shall be subject to a participation agreement that
incorporates the following restrictions:

(i) such Lender shall remain the holder of its Notes hereunder (if such Notes
are issued), notwithstanding any such participation;

(ii) a participant shall not reassign or transfer, or grant any
sub-participations in its participation interest hereunder or any part thereof;

 

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(iii) such Lender shall retain the sole right and responsibility to enforce the
obligations of the Credit Parties relating to the Notes and the other Loan
Documents, including, without limitation, the right to proceed against any
Guarantors, or cause the Agent to do so (subject to the terms and conditions
hereof), and the right to approve any amendment, modification or waiver of any
provision of this Agreement without the consent of the participant (unless such
participant is an Affiliate of such Lender), except for those matters requiring
the consent of each of the Lenders under Section 13.10(b) (provided that a
participant may exercise approval rights over such matters only on an indirect
basis, acting through such Lender and the Credit Parties, the Agent and the
other Lenders may continue to deal directly with such Lender in connection with
such Lender’s rights and duties hereunder). Notwithstanding the foregoing,
however, in the case of any participation granted by any Lender hereunder, the
participant shall not have any rights under this Agreement or any of the other
Loan Documents against the Agent, any other Lender or any Credit Party;
provided, however that the participant may have rights against such Lender in
respect of such participation as may be set forth in the applicable
participation agreement and all amounts payable by the Credit Parties hereunder
shall be determined as if such Lender had not sold such participation. Each such
participant shall be entitled to the benefits of Article 11 of this Agreement to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to clause (d) of this Section, provided that no participant
shall be entitled to receive any greater amount pursuant to such the provisions
of Article 11 than the issuing Lender would have been entitled to receive in
respect of the amount of the participation transferred by such issuing Lender to
such participant had no such transfer occurred and each such participant shall
also be entitled to the benefits of Section 9.6 hereof as though it were a
Lender, provided that such participant agrees to be subject to Section 10.3
hereof as though it were a Lender; and

(iv) each participant shall provide the relevant tax form required under
Section 13.11.

(f) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including its Notes, if any) to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledge or assignee for such Lender as a party hereto.

(g) The Borrower hereby designate the Agent, and Agent agrees to serve, as the
Borrower’s non-fiduciary agent solely for purposes of this Section 13.8(g)
maintain at its principal office in the United States a copy of each Assignment
Agreement delivered to it and a register (the “Register”) for the recordation of
the names and addresses of the Lenders, the Percentages of such Lenders and the
principal amount of each type of Advance owing to each such Lender from time to
time. The entries in the Register shall be conclusive evidence, absent manifest
error, and the Borrower, the Agent, and the Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advances recorded therein
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender (but only with respect to any entry
relating to such Lender’s Percentages and the principal amounts owing to such
Lender) upon reasonable notice to the Agent and a copy of such information shall
be provided to any such party on their prior written request. The Agent shall
give prompt written notice to the Borrower of the making of any entry in the
Register or any change in such entry.

(h) The Borrower authorizes each Lender to disclose to any prospective assignee
or participant which has satisfied the requirements hereunder, any and all
financial information in such Lender’s possession concerning the Credit Parties
which has been delivered to such Lender pursuant to this Agreement, provided
that each such prospective assignee or participant shall execute a
confidentiality agreement consistent with the terms of Section 13.11 hereof or
shall otherwise agree to be bound by the terms thereof.

(i) Nothing in this Agreement, the Notes or the other Loan Documents, expressed
or implied, is intended to or shall confer on any Person other than the
respective parties hereto and thereto and their successors and assignees and
participants permitted hereunder and thereunder any benefit or any legal or
equitable right, remedy or other claim under this Agreement, the Notes or the
other Loan Documents.

 

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13.9 Counterparts. This Agreement may be executed in several counterparts, and
each executed copy shall constitute an original instrument, but such
counterparts shall together constitute but one and the same instrument.

13.10 Amendment and Waiver.

(a) No amendment or waiver of any provision of this Agreement or any other Loan
Document, nor consent to any departure by any Credit Party therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Agent and the Majority Lenders (or by the Agent at the written request of the
Majority Lenders) or, if this Agreement expressly so requires with respect to
the subject matter thereof, by all Lenders (and, with respect to any amendments
to this Agreement or the other Loan Documents, by any Credit Party or the
Guarantors that are signatories thereto), and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. All references in this Agreement to “Lenders” or “the Lenders”
shall refer to all Lenders, unless expressly stated to refer to Majority Lenders
(or the like).

(b) Notwithstanding anything to the contrary herein,

(i) no amendment, waiver or consent shall increase the stated amount of any
Lender’s commitment hereunder without such Lender’s consent;

(ii) no amendment, waiver or consent shall, unless in writing and signed by the
Lender or Lenders holding Indebtedness directly affected thereby, do any of the
following:

(A) reduce the principal of, or interest on, any outstanding Indebtedness or any
Fees or other amounts payable hereunder,

(B) postpone any date fixed for any payment of principal of, or interest on, any
outstanding Indebtedness or any Fees or other amounts payable hereunder (except
with respect to the payments required under Section 2.10(b)),

(C) change any of the provisions of this Section 13.10 or the definitions of
“Majority Lenders”, “Majority Revolving Credit Lenders”, “Majority Term Loan
Lenders” or any other provision of any Loan Document specifying the number or
percentage of Lenders required to waive, amend or modify any rights thereunder
or make any determination or grant any consent thereunder, without the written
consent of each Lender; provided that changes to the definition of “Majority
Lenders” may be made with the consent of only the Majority Lenders to include
the Lenders holding any additional credit facilities that are added to this
Agreement with the approval of the appropriate Lenders, and

(D) any modification to the definition of “Borrowing Base”;

(iii) no amendment, waiver or consent shall, unless in writing and signed by all
Lenders, do any of the following:

(A) except as expressly permitted hereunder or under the Collateral Documents,
release all or substantially all of the Collateral (provided that neither the
Agent nor any Lender shall be prohibited thereby from proposing or participating
in a consensual or nonconsensual debtor-in-possession or similar financing), or
release any material guaranty provided by any Person in favor of the Agent and
the Lenders, provided however that the Agent shall be entitled, without notice
to or any further action or consent of the Lenders, to release any Collateral
which any Credit Party is permitted to sell, assign or otherwise transfer in
compliance with this Agreement or the other Loan Documents or release any
guaranty to the extent expressly permitted in this Agreement or any of the other
Loan Documents (whether in connection with the sale, transfer or other
disposition of the applicable Guarantor or otherwise),

 

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(B) increase the maximum duration of Interest Periods permitted hereunder; or

(C) modify Sections 10.2 or 10.3 hereof;

(iv) any amendment, waiver or consent that will (A) reduce the principal of, or
interest on, the Swing Line Note, (B) postpone any date fixed for any payment of
principal of, or interest on, the Swing Line Note or (C) otherwise affect the
rights and duties of the Swing Line Lender under this Agreement or any other
Loan Document, shall require the written concurrence of the Swing Line Lender;

(v) any amendment, waiver or consent that will affect the rights or duties of
Issuing Lender under this Agreement or any of the other Loan Documents, shall
require the written concurrence of the Issuing Lender; and

(vi) any amendment, waiver, or consent that will affect the rights or duties of
the Agent under this Agreement or any other Loan Document, shall require the
written concurrence of the Agent.

(c) Notwithstanding anything to the contrary herein, no Defaulting Lender shall
have any right to approve or disapprove of any amendment, consent, waiver or any
other modification to any Loan Document (and all amendments, consents, waivers
and other modifications may be effected without the consent of the Defaulting
Lenders), except that the foregoing shall not permit, in each case without such
Defaulting Lender’s consent, (i) an increase in such Defaulting Lender’s stated
commitment amounts, (ii) the waiver, forgiveness or reduction of the principal
amount of any Indebtedness owing to such Defaulting Lender (unless all other
Lenders affected thereby are treated similarly), (iii) the extension of the
final maturity date(s) of such Defaulting Lenders’ portion of any of the
Indebtedness or the extension of any commitment to extend credit of such
Defaulting Lender, or (iv) any other modification which requires the consent of
all Lenders or the Lender(s) affected thereby which affects such Defaulting
Lender more adversely than the other affected Lenders (other than a modification
which results in a reduction of such Defaulting Lender’s Percentage of any
Commitments or repayment of any amounts owing to such Defaulting Lender on a non
pro-rata basis).

(d) The Agent shall, upon the written request of the Borrower, execute and
deliver to the Credit Parties such documents as may be necessary to evidence
(1) the release of any Lien granted to or held by the Agent upon any Collateral:
(a) upon termination of the Revolving Credit Aggregate Commitment and, as
applicable, the Term Loan Aggregate Commitment and payment in full of all
Indebtedness payable under this Agreement and under any other Loan Document;
(b) which constitutes property (including, without limitation, Equity Interests
in any Person) sold or to be sold or disposed of as part of or in connection
with any disposition (whether by sale, by merger or by any other form of
transaction and including the property of any Subsidiary that is disposed of as
permitted hereby) permitted in accordance with the terms of this Agreement;
(c) which constitutes property in which a Credit Party owned no interest at the
time the Lien was granted or at any time thereafter; or (d) if approved,
authorized or ratified in writing by the Majority Lenders, or all the Lenders,
as the case may be, as provided in this Section 13.10; or (2) the release of any
Person from its obligations under the Loan Documents (including without
limitation the Guaranty) if all of the Equity Interests of such Person that were
held by a Credit Party are sold or otherwise transferred to any transferee other
than the Borrower or a Subsidiary of the Borrower as part of or in connection
with any disposition (whether by sale, by merger or by any other form of
transaction) permitted in accordance with the terms of this Agreement; provided
that (i) the Agent shall not be required to execute any such release or
subordination agreement under clauses (1) or (2) above on terms which, in the
Agent’s opinion, would expose the Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty or such release shall not in any manner discharge, affect or impair the
Indebtedness or any Liens upon any Collateral retained by any Credit Party,
including (without limitation) the proceeds of the sale or other disposition,
all of which shall constitute and remain part of the Collateral.

 

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(e) Notwithstanding anything to the contrary herein the Agent may, with the
consent of the Borrower only, amend, modify or supplement this Agreement or any
of the other Loan Documents to cure any ambiguity, omission, mistake, defect or
inconsistency

13.11 Confidentiality. Each Lender agrees that it will not disclose without the
prior consent of the Borrower (other than to its employees, its Subsidiaries,
another Lender, an Affiliate of a Lender or to its auditors, counsel or
representatives) any information with respect to the Credit Parties which is
furnished pursuant to this Agreement or any of the other Loan Documents;
provided that any Lender may disclose any such information (a) as has become
generally available to the public or has been lawfully obtained by such Lender
from any third party under no duty of confidentiality to any Credit Party,
(b) as may be required or appropriate in any report, statement or testimony
submitted to, or in respect to any inquiry, by, any municipal, state or federal
regulatory body having or claiming to have jurisdiction over such Lender,
including the Board of Governors of the Federal Reserve System of the United
States, the Office of the Comptroller of the Currency or the Federal Deposit
Insurance Corporation or similar organizations (whether in the United States or
elsewhere) or their successors, (c) as may be required or appropriate in respect
to any summons or subpoena or in connection with any litigation, (d) in order to
comply with any law, order, regulation, ruling or other requirement of law
applicable to such Lender, and (e) to any prospective assignee or participant in
accordance with Section 13.8(f) hereof.

13.12 Substitution or Removal of Lenders

(a) With respect to any Lender (i) whose obligation to make Eurodollar-based
Advances has been suspended pursuant to Section 11.3 or 11.4, (ii) that has
demanded compensation under Sections 3.4(c), 11.5 or 11.6, (iii) that has become
a Defaulting Lender or (iv) that has failed to consent to a requested amendment,
waiver or modification to any Loan Document as to which the Majority Lenders
have already consented (in each case, an “Affected Lender”), then the Agent or
the Borrower may, at the Borrower’s sole expense, require the Affected Lender to
sell and assign all of its interests, rights and obligations under this
Agreement, including, without limitation, its Commitments, to an assignee (which
may be one or more of the Lenders) (such assignee shall be referred to herein as
the “Purchasing Lender” or “Purchasing Lenders”) within two (2) Business Days
after receiving notice from the Borrower requiring it to do so, for an aggregate
price equal to the sum of the portion of all Advances made by it, interest and
fees accrued for its account through but excluding the date of such payment, and
all other amounts payable to it hereunder, from the Purchasing Lender(s) (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts, including without limitation, if
demanded by the Affected Lender, the amount of any compensation that due to the
Affected Lender under Sections 3.4(c), 11.1, 11.5 and 11.6 to but excluding said
date), payable (in immediately available funds) in cash. The Affected Lender, as
assignor, such Purchasing Lender, as assignee, the Borrower and the Agent, shall
enter into an Assignment Agreement pursuant to Section 13.8 hereof, whereupon
such Purchasing Lender shall be a Lender party to this Agreement, shall be
deemed to be an assignee hereunder and shall have all the rights and obligations
of a Lender with a Revolving Credit Percentage equal to its ratable share of the
then applicable Revolving Credit Aggregate Commitment of the Affected Lender and
with a Term Loan Percentage equal to its ratable share of the then applicable
Term Loan Aggregate Commitment of the Affected Lender, provided, however, that
if the Affected Lender does not execute such Assignment Agreement within
(2) Business Days of receipt thereof, the Agent may execute the Assignment
Agreement as the Affected Lender’s attorney-in-fact. Each of the Lenders hereby
irrevocably constitutes and appoints the Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full power and authority in the name of such Lender or in its own name to
execute and deliver the Assignment Agreement while such Lender is an Affected
Lender hereunder (such power of attorney to be deemed coupled with an interest
and irrevocable). In connection with any assignment pursuant to this
Section 13.12, the Borrower or the Purchasing Lender shall pay to the Agent the
administrative fee for processing such assignment referred to in Section 13.8.

(b) If any Lender is an Affected Lender of the type described in
Section 13.12(a)(iii) and (iv) (any such Lender, a “Non-Compliant Lender”), the
Borrower may, with the prior written consent of the Agent, and notwithstanding
Section 10.3 of this Agreement or any other provisions requiring pro rata
payments to the Lenders, elect to reduce any Commitments by an amount equal to
the Non-Compliant Lender’s Percentage of the Commitment of such Non-Compliant
Lender and repay such Non-Compliant Lender an amount equal the principal amount
of all Advances owing to it, all interest and fees accrued for its account
through but excluding the date of such repayment, and all other amounts payable
to it hereunder (including without limitation, if demanded by the Non-Compliant
Lender, the amount of any compensation that due to the Non-Compliant Lender
under Sections 3.4(c), 11.1, 11.5 and 11.6 to but excluding said date), payable
(in immediately available funds) in cash, so long as,

 

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after giving effect to the termination of Commitments and the repayments
described in this clause (b), any Fronting Exposure of such Non-Compliant Lender
shall be reallocated among the Lenders that are not Non-Compliant Lenders in
accordance with their respective Revolving Credit Percentages, but only to the
extent that the sum of the aggregate principal amount of all Revolving Credit
Advances made by each such Lender, plus such Lender’s Percentage of the
aggregate outstanding principal amount of Swing Line Advances and Letter of
Credit Obligations prior to giving effect to such reallocation plus such
Lender’s Percentage of the Fronting Exposure to be reallocated does not exceed
such Lender’s Percentage of the Revolving Credit Aggregate Commitment, and with
respect to any portion of the Fronting Exposure that may not be reallocated, the
Borrower shall deliver to the Agent, for the benefit of the Issuing Lender
and/or Swing Line Lender, as applicable, cash collateral or other security
satisfactory to the Agent, with respect any such remaining Fronting Exposure.

(c) If any Lender is a Non-Compliant Lender, the Borrower may, notwithstanding
Section 10.3 of this Agreement or any other provisions requiring pro rata
payments to the Lenders, elect to repay all amounts owing to such a
Non-Compliant Lender in connection with the Term Loan, so long as (i) no Default
or Event of Default exists at the time of such repayment and (ii) after giving
effect to any reduction in the Revolving Credit Aggregate Commitment, payments
on the Revolving Credit under clause (b) above and payments on the Term Loan
under this clause (c), the Borrower shall have availability, on the date of the
repayment, to borrow additional Revolving Credit Advances under the Revolving
Credit Aggregate Commitment of at least $5,000,000 (after taking into account
the sum on such date of the outstanding principal amount of all Revolving Credit
Advances, Swing Line Advances and Letter of Credit Obligations).

 

13.13 Withholding Taxes.

(a) Each Lender that is not a “United States person,” within the meaning of
Section 7701(a)(30) of the Internal Revenue Code (each, a “Non-U.S. Lender”)
that, at any of the following times, is entitled to an exemption from United
States withholding tax or, after a change in any Requirement of Law, is subject
to such withholding tax at a reduced rate under an applicable tax treaty, shall
(w) on or prior to the date such Lender becomes a Non-U.S. Lender hereunder,
(x) on or prior to the date on which any such form or certification expires or
becomes obsolete (to the extent such Lender has actual knowledge thereof, or is
so advised in writing by the Borrower), (y) after the occurrence of any event
requiring a change in the most recent form of certification previously delivered
by it pursuant to this clause (a) (to the extent such Lender has actual
knowledge thereof, or is so advised in writing by the Borrower) and (z) from
time to time if reasonably requested by the Borrower or Agent, provide Agent and
the Borrower with such properly completed and executed documentation prescribed
by applicable law as will permit payments to such Lender to be made without
withholding, or at a reduced rate of withholding, as the case may be. Without
limiting the generality of the foregoing, each Non-U.S. Lender shall deliver
originals of the following (in such number as shall be reasonably requested by
the recipient), as applicable: (A) Forms W-8ECI (claiming exemption from U.S.
withholding tax because the income is effectively connected with a U.S. trade or
business), W-8BEN (claiming exemption from, or a reduction of, U.S. withholding
tax under an income tax treaty) and/or W-8IMY or any successor forms, (B) in the
case of a Non-U.S. Lender claiming exemption under Sections 871(h) or 881(c) of
the Internal Revenue Code, Form W-8BEN (claiming exemption from U.S. withholding
tax under the portfolio interest exemption) or any successor form and a
certificate that such Non-U.S. Lender is not (1) a “bank” within the meaning of
Section 881(c)(3)(A) of the Internal Revenue Code, (2) a “10 percent
shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the
Internal Revenue Code or (3) a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Internal Revenue Code or (C) any other applicable
document prescribed by the Internal Revenue Service certifying as to the
entitlement of such Non-U.S. Lender to such exemption from United States
withholding tax or such reduced rate with respect to all payments to be made to
such Non-U.S. Lender under the Loan Documents, all as reasonably requested by
the Borrower or the Agent. Unless the Borrower and the Agent have received forms
or other documents satisfactory to them indicating that payments under any Loan
Document to or for a Non-U.S. Lender are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Agent may (and shall, if directed to do so by the Borrower)
withhold amounts required to be withheld by applicable requirements of law from
such payments at the applicable statutory rate.

 

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(b) Each Lender that is a “United States person,” within the meaning of
Section 7701(a)(30) of the Code (each a “U.S. Lender”) shall (A) on or prior to
the date such Lender becomes a “U.S. Lender” hereunder, (B) on or prior to the
date on which any such form or certification expires or becomes obsolete (to the
extent such Lender has actual knowledge thereof, or is so advised in writing by
Borrower), (C) after the occurrence of any event requiring a change in the most
recent form or certification previously delivered by it pursuant to this clause
(b) (to the extent such Lender has actual knowledge thereof, or is so advised in
writing by the Borrower) and (D) from time to time if requested by the Borrower
or Agent, provide Agent and the Borrower with two completed originals of Form
W-9 (certifying that such U.S. Lender Party is entitled to an exemption from
U.S. backup withholding tax) or any successor form.

(c) If a payment made to a Non-U.S. Lender would be subject to United States
federal withholding tax imposed by FATCA if such Non-U.S. Lender fails to comply
with the applicable reporting requirements of FATCA, such Non-U.S. Lender shall
deliver to the Agent and the Borrower any documentation under any requirement of
law or reasonably requested by any Agent or the Borrower sufficient for the
Agent or the Borrower to comply with their obligations under FATCA and to
determine that such Non-U.S. Lender has complied with such applicable reporting
requirements.

(d) Promptly upon notice from the Agent of any determination by the Internal
Revenue Service that any payments previously made to such Lender hereunder were
subject to United States income tax withholding when made (or subject to
withholding at a higher rate than that applied to such payments), such Lender
shall pay to the Agent the excess of the aggregate amount required to be
withheld from such payments over the aggregate amount (if any) actually withheld
by the Agent, provided that, following any such payment, such Lender shall
retain all of its rights and remedies against the Borrower with respect thereto.

13.14 Taxes and Fees. Should any stamp, documentary or other tax (other than any
tax resulting from a Lender’s failure to comply with Section 13.13 or any
Excluded Taxes), or recording or filing fee become payable in respect of this
Agreement or any of the other Loan Documents or any amendment, modification or
supplement hereof or thereof, the Borrower agrees to pay the same, together with
any interest or penalties thereon arising from the Borrower’s actions or
omissions, and agrees to hold the Agent and the Lenders harmless with respect
thereto provided, however, that the Borrower shall not be responsible for any
such interest or penalties which were incurred prior to the date that notice is
given to the Credit Parties of such tax, fees or other charges. Notwithstanding
the foregoing, nothing contained in this Section 13.14 shall affect or reduce
the rights of any Lender or the Agent under Section 11.5 hereof.

13.15 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY LAW, BORROWER, LENDERS
AND AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER, LENDERS AND AGENT 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.

13.16 Judicial Reference.

(a) The parties prefer that any dispute between them be resolved in litigation
subject to a Jury Trial Waiver as set forth in this Agreement, the Notes or the
other Loan Documents (“Jury Trial Waiver”), but the Jury Trial Waiver may not be
enforceable under certain circumstances. In the event the Jury Trial Waiver is
not enforceable, the parties elect to proceed under this Reference Provision.

(b) In the event that the Jury Trial Waiver provision contained in the Agreement
is not enforceable, the parties elect to proceed under this Reference Provision.

(c) With the exception of the items specified in clause (d), below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to the Agreement will be resolved by a reference proceeding in
California in accordance with the provisions of Section 638 et seq. of the
California Code of Civil Procedure (“CCP”), or their successor sections, which
shall constitute the exclusive remedy for the resolution of any Claim, including
whether the Claim is subject to the reference proceeding. Except as otherwise
provided in the Agreement, venue for the reference proceeding will be in the
state or federal court in the county or district where venue is otherwise
appropriate under applicable law (the “Court”).

 

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(d) The matters that shall not be subject to a reference are the following:
(i) foreclosure of any security interests in real or personal property,
(ii) exercise of self-help remedies (including, without limitation, set-off),
(iii) appointment of a receiver and (iv) temporary, provisional or ancillary
remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
Agreement does not limit the right of any party to exercise or oppose any of the
rights and remedies described in clauses (i) and (ii) or to seek or oppose from
a court of competent jurisdiction any of the items described in clauses
(iii) and (iv). The exercise of, or opposition to, any of those items does not
waive the right of any party to a reference pursuant to this Agreement.

(e) The referee shall be a retired judge or justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days of a
written request to do so by any party, then, upon request of any party, the
referee shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party
shall have one peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).

(f) The parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (i) set the matter
for a status and trial-setting conference within fifteen (15) days after the
date of selection of the referee, (ii) if practicable, try all issues of law or
fact within one hundred twenty (120) days after the date of the conference and
(iii) report a statement of decision within twenty (20) days after the matter
has been submitted for decision.

(g) The referee will have power to expand or limit the amount and duration of
discovery. The referee may set or extend discovery deadlines or cutoffs for good
cause, including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered, no party shall be entitled to “priority”
in conducting discovery, depositions may be taken by either party upon seven
(7) days written notice, and all other discovery shall be responded to within
fifteen (15) days after service. All disputes relating to discovery which cannot
be resolved by the parties shall be submitted to the referee whose decision
shall be final and binding.

(h) Except as expressly set forth in this Agreement, the referee shall determine
the manner in which the reference proceeding is conducted including the time and
place of hearings, the order of presentation of evidence, and all other
questions that arise with respect to the course of the reference proceeding. All
proceedings and hearings conducted before the referee, except for trial, shall
be conducted without a court reporter, except that when any party so requests, a
court reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making
such a request shall have the obligation to arrange for and pay the court
reporter. Subject to the referee’s power to award costs to the prevailing party,
the parties will equally share the cost of the referee and the court reporter at
trial.

(i) The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the State of California. The rules
of evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a trial,
including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject of
the reference. Pursuant to CCP § 644, such decision shall be entered by the
Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any such decision will be final, binding and conclusive.
The parties reserve the right to appeal from the final judgment or order or from
any appealable decision or order entered by the referee. The parties reserve the
right to findings of fact, conclusions of laws, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this provision.

 

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(j) If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or Justice, in accordance with the California Arbitration Act §1280 through
§1294.2 of the CCP as amended from time to time. The limitations with respect to
discovery set forth above shall apply to any such arbitration proceeding.

(k) THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS
REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN
CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL
PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY,
DISPUTE OR CLAIM BETWEEN OR AMONG THEM WHICH ARISES OUT OF OR IS RELATED TO THE
AGREEMENT.

13.17 USA Patriot Act Notice. Pursuant to Section 326 of the USA Patriot Act,
the Agent and the Lenders hereby notify the Credit Parties that if they or any
of their Subsidiaries open an account, including any loan, deposit account,
treasury management account, or other extension of credit with the Agent or any
Lender, the Agent or the applicable Lender will request the applicable Person’s
name, tax identification number, business address and other information
necessary to identify such Person (and may request such Person’s organizational
documents or other identifying documents) to the extent necessary for the Agent
and the applicable Lender to comply with the USA Patriot Act.

13.18 Complete Agreement; Conflicts. This Agreement, the Notes (if issued), any
Requests for Revolving Credit Advance, Requests for Swing Line Advance and Term
Loan Rate Requests, and the Loan Documents contain the entire agreement of the
parties hereto, superseding all prior agreements, discussions and understandings
relating to the subject matter hereof, and none of the parties shall be bound by
anything not expressed in writing. In the event of any conflict between the
terms of this Agreement and the other Loan Documents, this Agreement shall
govern. This Agreement, and the Security Agreement delivered hereunder,
constitute an amendment and restatement of that certain Loan and Security
Agreement dated as of December 20, 2007, by and between Comerica Bank and the
Borrower (as amended), which loan and security agreement (the “Prior Loan
Agreement”) is fully superseded and amended and restated in its entirety hereby;
provided, however, that the Indebtedness governed by the prior loan and security
agreement shall remain outstanding and in full force and effect under this
Agreement (subject to all of the terms and conditions contained herein) and
provided further that this Agreement does not constitute a novation of such
Indebtedness.

13.19 Severability. In case any one or more of the obligations of the Credit
Parties under this Agreement, the Notes or any of the other Loan Documents shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining obligations of the Credit Parties shall not
in any way be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of the Credit Parties under this Agreement,
the Notes or any of the other Loan Documents in any other jurisdiction.

13.20 Table of Contents and Headings; Section References. The table of contents
and the headings of the various subdivisions hereof are for convenience of
reference only and shall in no way modify or affect any of the terms or
provisions hereof and references herein to “sections,” “subsections,” “clauses,”
“paragraphs,” “subparagraphs,” “exhibits” and “schedules” shall be to sections,
subsections, clauses, paragraphs, subparagraphs, exhibits and schedules,
respectively, of this Agreement unless otherwise specifically provided herein or
unless the context otherwise clearly indicates.

13.21 Construction of Certain Provisions. If any provision of this Agreement or
any of the Loan Documents refers to any action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person, whether or
not expressly specified in such provision.

13.22 Independence of Covenants. Each covenant hereunder shall be given
independent effect (subject to any exceptions stated in such covenant) so that
if a particular action or condition is not permitted by any such covenant
(taking into account any such stated exception), the fact that it would be
permitted by an exception to, or would be otherwise within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default.

 

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13.23 Electronic Transmissions.

(a) Each of the Agent, the Credit Parties, the Lenders, and each of their
Affiliates is authorized (but not required) to transmit, post or otherwise make
or communicate, in its sole discretion, Electronic Transmissions in connection
with any Loan Document and the transactions contemplated therein. The Borrower
and each other Credit Party hereby acknowledges and agrees that the use of
Electronic Transmissions is not necessarily secure and that there are risks
associated with such use, including risks of interception, disclosure and abuse
and each indicates it assumes and accepts such risks by hereby authorizing the
transmission of Electronic Transmissions.

(b) All uses of an E-System shall be governed by and subject to, in addition to
Section 13.6 and this Section 13.23, separate terms and conditions posted or
referenced in such E-System and related contractual obligations executed by the
Agent, the Credit Parties and the Lenders in connection with the use of such
E-System.

(c) All E-Systems and Electronic Transmissions shall be provided “as is” and “as
available”. None of the Agent or any of its Affiliates, nor the Borrower or any
of its respective Affiliates warrants the accuracy, adequacy or completeness of
any E-Systems or Electronic Transmission, and each disclaims all liability for
errors or omissions therein. No warranty of any kind is made by the Agent or any
of its Affiliates, or the Borrower or any of its respective Affiliates in
connection with any E-Systems or Electronic Transmission, including any warranty
of merchantability, fitness for a particular purpose, non-infringement of
third-party rights or freedom from viruses or other code defects. The Agent, the
Borrower and its Subsidiaries, and the Lenders agree that the Agent has no
responsibility for maintaining or providing any equipment, software, services or
any testing required in connection with any Electronic Transmission or otherwise
required for any E-System. The Agent and the Lenders agree that the Borrower has
no responsibility for maintaining or providing any equipment, software, services
or any testing required in connection with any Electronic Transmission or
otherwise required for any E-System.

13.24 Advertisements. Provided it shall first obtain the consent of the
Borrower, such consent not to be unreasonably withheld or delayed, the Agent and
the Lenders may disclose the names of the Credit Parties and the existence of
the Indebtedness in general advertisements and trade publications.

13.25 Reliance on and Survival of Provisions. All terms, covenants, agreements,
representations and warranties of the Credit Parties to any of the Loan
Documents made herein or in any of the Loan Documents or in any certificate,
report, financial statement or other document furnished by or on behalf of any
Credit Party in connection with this Agreement or any of the Loan Documents
shall be deemed to have been relied upon by the Lenders, notwithstanding any
investigation heretofore or hereafter made by any Lender or on such Lender’s
behalf, and those covenants and agreements of the Borrower set forth in
Section 13.5 hereof (together with any other indemnities of any Credit Party
contained elsewhere in this Agreement or in any of the other Loan Documents) and
of Lenders set forth in Section 12.7 hereof shall survive the repayment in full
of the Indebtedness and the termination of any commitment to extend credit.

[Signatures Follow On Succeeding Page]

 

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WITNESS the due execution hereof as of the day and year first above written.

 

COMERICA BANK,     NEOPHOTONICS CORPORATION

as Administrative Agent

      By:   /s/ Robert Shutt     By:   /s/ James D. Fay Its:   Senior Vice
President     Its:   Senior Vice President and Chief Financial Officer

 

COMERICA BANK,

as a Lender, as Issuing Lender

and as Swing Line Lender

By:   /s/ Robert Shutt Its:   Senior Vice President

EAST WEST BANK

as a Lender

By:   /s/ Nader Maghsoudnia Its:   Senior Relationship Manager

 

94

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Schedule 1.1

Applicable Margin Grid

Revolving Credit and Term Loan Facility

(basis points per annum)

BASIS FOR PRICING

Funded Debt/EBITDA

   LEVEL I
< 1.00 : 1.00      LEVEL II
³1.00 : 1.00
<  2.00 : 1.00      LEVEL III
³2.00 : 100  

REVOLVER

        

Facility Fee

     25         25         25   

LIBOR Margin

     200         225         250   

All-In-Spread

     225         250         275   

Letter of Credit Fees

     200         225         250   

Base Rate Margin

     100         125         150   

TERM LOAN

        

LIBOR Margin

     225         250         275   

Base Rate Margin

     125         150         175   

 

1. Pricing shall be set at Level III until receipt and satisfactory review of
audited December 31, 2013 financial statements of Borrower, thereafter pricing
will be adjusted quarterly based on the quarterly Covenant Compliance
Certificate.

 

2. Definitions as set forth in the Credit Agreement.

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EXHIBIT A

FORM OF REQUEST FOR REVOLVING CREDIT ADVANCE

 

No.                     

  Dated:                     , 201        

 

To: Comerica Bank (“Agent”)

 

Re: Revolving Credit and Term Loan Agreement made as of the 21st day of March,
2013 (as amended, restated or otherwise modified from time to time, “Credit
Agreement”), by and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and NeoPhotonics Corporation, a
Delaware corporation (“Borrower”)

Pursuant to the terms and conditions of the Credit Agreement, Borrower hereby
requests an Advance from Lenders, as described herein:

 

(A) Date of Advance:                     , 201        

 

(B) ¨ (check if applicable)

This Advance is or includes a whole or partial refunding/conversion of:

Advance No(s).                                                                  

 

(C) Type of Advance (check only one):

 

  ¨ Base Rate Advance

 

  ¨ Eurodollar-based Advance

 

(D) Amount of Advance:

$                    

 

(E) Interest Period (applicable to Eurodollar-based Advances)

                     months

 

(F)                                          Disbursement Instructions

 

  ¨ Comerica Bank Account No.                     

 

  ¨ Other:                                                                  

______________________________

Borrower certifies to the matters specified in Section 2.3(f) of the Credit
Agreement.

[Signature Page Follows]

 

EXHIBIT A - 1

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

Capitalized terms used herein, except as defined to the contrary, have the
meanings given them in the Credit Agreement.

 

NEOPHOTONICS CORPORATION

By:

 

 

Its:

 

 

Agent Approval:                                         

 

 

EXHIBIT A - 2

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EXHIBIT B

FORM OF REVOLVING CREDIT NOTE

 

$                     

                      , 20        

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED,
NeoPhotonics Corporation, a Delaware corporation (“Borrower”), promises to pay
to the order of [insert name of applicable financial institution] (“Payee”) at
Detroit, Michigan, care of Agent, in lawful money of the United States of
America, so much of the sum of [Insert Amount derived from Percentages] Dollars
($                    ), as may from time to time have been advanced by Payee
and then be outstanding hereunder pursuant to the Revolving Credit and Term Loan
Agreement made as of the 21st day of March, 2013 (as amended, restated or
otherwise modified from time to time, “Credit Agreement”), by and among the
financial institutions from time to time signatory thereto (individually a
“Lender,” and any and all such financial institutions collectively the
“Lenders”), Comerica Bank, as Administrative Agent for the Lenders (in such
capacity, the “Agent”), and Borrower. Each of the Revolving Credit Advances made
hereunder shall bear interest at the Applicable Interest Rate from time to time
applicable thereto under the Credit Agreement or as otherwise determined
thereunder, and interest shall be computed, assessed and payable on the unpaid
principal amount of each Revolving Credit Advance made by the Payee from the
date of such Revolving Credit Advance until paid at the rate and at the times
set forth in the Credit Agreement.

This Note is a note under which Revolving Credit Advances (including refundings
and conversions), repayments and readvances may be made from time to time, but
only in accordance with the terms and conditions of the Credit Agreement. This
Note evidences borrowings under, is subject to, is secured in accordance with,
and may be accelerated or matured under, the terms of the Credit Agreement, to
which reference is hereby made. Capitalized terms used herein, except as defined
to the contrary, shall have the meanings given them in the Credit Agreement.

This Note shall be interpreted and the rights of the parties hereunder shall be
determined under the laws of and enforceable in, the State of Michigan.

Borrower waives presentment for payment, demand, protest and notice of dishonor
and nonpayment of this Note and agree that no obligation hereunder shall be
discharged by reason of any extension, indulgence, release, or forbearance
granted by any holder of this Note to any party now or hereafter liable hereon
or any present or subsequent owner of any property, real or personal, which is
now or hereafter security for this Note.

*     *     *

[SIGNATURES FOLLOW ON SUCCEEDING PAGES]

 

EXHIBIT B - 1

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Nothing herein shall limit any right granted Payee by any other instrument or by
law.

 

NEOPHOTONICS CORPORATION

By:

 

 

Its:

 

 

 

EXHIBIT B - 2

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EXHIBIT C

FORM OF SWING LINE NOTE

 

$1,000,000

                      , 20        

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED,
NeoPhotonics Corporation, a Delaware corporation (“Borrower”), promises to pay
to the order of Comerica Bank (“Swing Line Lender”), at Detroit, Michigan, in
lawful money of the United States of America, so much of the sum of One Million
Dollars ($1,000,000), as may from time to time have been advanced to the
Borrower by Swing Line Lender and then be outstanding hereunder pursuant to the
Revolving Credit and Term Loan Agreement made as of the 21st day of March, 2013
(as amended, restated or otherwise modified from time to time, “Credit
Agreement”), by and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and Borrower, together with interest
thereon as hereinafter set forth.

Each of the Swing Line Advances made hereunder shall bear interest at the
Applicable Interest Rate from time to time applicable thereto under the Credit
Agreement or as otherwise determined thereunder, and interest shall be computed,
assessed and payable on the unpaid principal amount of each Swing Line Advance
made by the Swing Line Lender from the date of such Swing Line Advance until
paid at the rates and at the times set forth in the Credit Agreement.

This Note is a Swing Line Note under which Swing Line Advances (including
refundings and conversions), repayments and readvances may be made from time to
time by the Swing Line Lender, but only in accordance with the terms and
conditions of the Credit Agreement (including any applicable sublimits). This
Note evidences borrowings under, is subject to, is secured in accordance with,
and may be accelerated or matured under, the terms of the Credit Agreement to
which reference is hereby made. Capitalized terms used herein, except as defined
to the contrary, shall have the meanings given them in the Credit Agreement.

This Note shall be interpreted and the rights of the parties hereunder shall be
determined under the laws of, and enforceable in, the State of Michigan.

Borrower waives presentment for payment, demand, protest and notice of dishonor
and nonpayment of this Note and agree that no obligation hereunder shall be
discharged by reason of any extension, indulgence, release, or forbearance
granted by any holder of this Note to any party now or hereafter liable hereon
or any present or subsequent owner of any property, real or personal, which is
now or hereafter security for this Note.

*     *     *

[SIGNATURES FOLLOW ON SUCCEEDING PAGE]

 

EXHIBIT C - 1

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

Nothing herein shall limit any right granted Swing Line Lender by any other
instrument or by law.

 

NEOPHOTONICS CORPORATION

By:

 

 

Its:

 

 

 

EXHIBIT C - 2

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EXHIBIT D

FORM OF REQUEST FOR SWING LINE ADVANCE

 

No.                     

  Dated:                     , 201        

 

To: Comerica Bank (“Swing Line Lender”)

 

Re: Revolving Credit and Term Loan Agreement made as of the 21st day of March,
2013 (as amended, restated or otherwise modified from time to time, “Credit
Agreement”), by and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and NeoPhotonics Corporation, a
Delaware corporation (“Borrower”)

Pursuant to the terms and conditions of the Credit Agreement, Borrower hereby
requests an Advance from the Swing Line Lender, as described herein:

 

(A) Date of Advance:                                          
                       

 

(B) ¨ (check if applicable)

This Advance is or includes a whole or partial refunding/conversion of:

Advance No(s).                                          
                           

 

(C) Type of Advance (check only one):

 

  ¨ Base Rate Advance

 

  ¨ Quoted Rate Advance

 

(D) Amount of Advance:

$                    

 

(E) Interest Period (applicable to Quoted Rate Advances)

                     days

 

(F)                                      Disbursement Instructions

 

  ¨ Comerica Bank Account No.

 

  ¨ Other:                                                                  

______________________________

Borrower certifies to the matters specified in Section 2.5(c)(vi) of the Credit
Agreement.

[Signature Page Follows]

 

EXHIBIT D - 1

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

Capitalized terms used herein, except as defined to the contrary, have the
meanings given them in the Credit Agreement.

 

NEOPHOTONICS CORPORATION

By:

 

 

Its:

 

 

Agent Approval:                                         

 

 

EXHIBIT D - 2

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

EXHIBIT E

FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT

 

To: Lenders

 

Re: Issuance of Letter of Credit pursuant to Article 3 of the Revolving Credit
and Term Loan Agreement made as of the 21st day of March, 2013 (as amended,
restated or otherwise modified from time to time, “Credit Agreement”), by and
among the financial institutions from time to time signatory thereto
(individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and NeoPhotonics Corporation, a
Delaware corporation (“Borrower”)

On                     , 201         ,1 Agent, in accordance with Article 3 of
the Credit Agreement, issued its Letter of Credit number                     ,
in favor of                     2 for the account of NeoPhotonics Corporation.
The face amount of such Letter of Credit is $                     . The amount
of each Lender’s participation in such Letter of Credit is as follows:3

 

Comerica Bank, Lender

  $                    

                    , Lender

  $                    

This notification is delivered this          day of                     ,
201        , pursuant to Section 3.3 of the Credit Agreement. Except as
otherwise defined, capitalized terms used herein have the meanings given them in
the Credit Agreement.

 

Signed:

COMERICA BANK, as Agent

By:

 

 

Its:

 

 

 

 

1  Date of Issuance

2  Beneficiary

3  Amounts based on Percentages

[This form of Letter of Credit Notice (including footnotes) is subject in all
respects to the terms and conditions of the Credit Agreement which shall govern
in the event of any inconsistencies or omissions.]

 

EXHIBIT E

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

EXHIBIT F

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”) dated as of March 21, 2013 is entered
into by and among Borrower (as defined below) and such other entities which from
time to time become parties hereto by joinder or otherwise (collectively with
the Borrower, the “Debtors” and each individually, a “Debtor”) and Comerica Bank
(“Comerica”), as Administrative Agent for and on behalf of Lenders (as defined
below) (in such capacity, the “Agent”). The addresses for Debtors and Agent, as
of the date hereof, are set forth on the signature pages attached hereto.

R E C I T A L S:

A. NeoPhotonics Corporation, a Delaware corporation (“Borrower”), has entered
into that Revolving Credit and Term Loan Agreement dated as of even date
herewith (as amended, supplemented, amended and restated or otherwise modified
from time to time, “Credit Agreement”) with each of the financial institutions
party thereto (collectively, including their respective successors and assigns,
the “Lenders”) and Agent pursuant to which Lenders have agreed, subject to the
satisfaction of certain terms and conditions, to extend or to continue to extend
financial accommodations to Borrower, as provided therein.

B. Pursuant to the Credit Agreement and the Loan Documents, Lenders have
required that each of Debtors grant (or cause to be granted) certain Liens (as
defined in the Credit Agreement) to Agent, for the benefit of Lenders, all to
secure the obligations of Borrower or any Debtor under the Credit Agreement or
any related Loan Document (including any Guaranty).

C. Debtors have directly and indirectly benefited and will directly and
indirectly benefit from the transactions evidenced by and contemplated in the
Credit Agreement and the other Loan Documents.

D. Agent is acting as Agent for Lenders pursuant to the terms and conditions of
Section 12.1 of the Credit Agreement.

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1

Definitions

Section 1.1 Definitions. As used in this Agreement, capitalized terms not
otherwise defined herein have the meanings provided for such terms in the Credit
Agreement. References to “Sections,” “subsections,” “Exhibits” and “Schedules”
shall be to Sections, subsections, Exhibits and Schedules, respectively, of this
Agreement unless otherwise specifically provided. All references to statutes and
regulations shall include any amendments of the same and any successor statutes
and regulations. References to particular sections of the UCC should be read to
refer also to parallel sections of the Uniform Commercial Code as enacted in
each state or other jurisdiction which may be applicable to the grant and
perfection of the Liens held by Agent for the benefit of Lenders pursuant to
this Agreement.

The following terms have the meanings indicated below, all such definitions to
be equally applicable to the singular and plural forms of the terms defined:

“Account” means any “account,” as such term is defined in Article or Chapter 9
of the UCC, now owned or hereafter acquired by a Debtor, and, in any event,
shall include, without limitation, each of the following, whether now owned or
hereafter acquired by such Debtor: (a) all rights of such Debtor to payment for
goods sold or leased or services rendered, whether or not earned by performance,
(b) all accounts receivable of such Debtor, (c) all rights of such Debtor to
receive any payment of money or other form of consideration, (d) all security
pledged, assigned or granted to or held by such Debtor to secure any of the
foregoing, (e) all guaranties of, or indemnifications with respect to, any of
the foregoing, and (f) all rights of such Debtor as an unpaid seller of goods or
services, including, but not limited to, all rights of stoppage in transit,
replevin, reclamation and resale.

 

EXHIBIT F - 1

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

“Chattel Paper” means any “chattel paper,” as such term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by a Debtor, and shall
include both electronic Chattel Paper and tangible Chattel Paper.

“Collateral” has the meaning specified in Section 2.1 of this Agreement.

“Computer Records” means any computer records now owned or hereafter acquired by
any Debtor.

“Deposit Account” shall mean a demand, time, savings, passbook, or similar
account maintained with a bank. The term does not include investment property,
investment accounts or accounts evidenced by an instrument.

“Document” means any “document,” as such term is defined in Article or Chapter 9
of the UCC, now owned or hereafter acquired by any Debtor, including, without
limitation, all documents of title and all receipts covering, evidencing or
representing goods now owned or hereafter acquired by a Debtor.

“Equipment” means any “equipment,” as such term is defined in Article or Chapter
9 of the UCC, now owned or hereafter acquired by a Debtor and, in any event,
shall include, without limitation, all machinery, equipment, furniture, trade
fixtures, tractors, trailers, rolling stock, vessels, aircraft and Vehicles now
owned or hereafter acquired by such Debtor and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto.

“General Intangibles” means any “general intangibles,” as such term is defined
in Article or Chapter 9 of the UCC, now owned or hereafter acquired by a Debtor
and, in any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by such Debtor: (a) all of such Debtor’s
books, records, data, plans, manuals, computer software, computer tapes,
computer disks, computer programs, source codes, object codes and all rights of
such Debtor to retrieve data and other information from third parties; (b) all
of such Debtor’s contract rights, commercial tort claims, partnership interests,
membership interests, joint venture interests, securities, deposit accounts,
investment accounts and certificates of deposit; (c) all rights of such Debtor
to payment under chattel paper, documents, instruments and similar agreements;
(d) letters of credit, letters of credit rights supporting obligations and
rights to payment for money or funds advanced or sold of such Debtor; (e) all
tax refunds and tax refund claims of such Debtor; (f) all choses in action and
causes of action of such Debtor (whether arising in contract, tort or otherwise
and whether or not currently in litigation) and all judgments in favor of such
Debtor; (g) all rights and claims of such Debtor under warranties and
indemnities, (h) all health care receivables; and (i) all rights of such Debtor
under any insurance, surety or similar contract or arrangement.

“Governmental Authority” shall mean any nation or government, any state,
province or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

“Instrument” shall mean any “instrument,” as such term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by any Debtor, and, in any
event, shall include all promissory notes (including without limitation, any
Intercompany Notes held by such Debtor), drafts, bills of exchange and trade
acceptances, whether now owned or hereafter acquired.

“Insurance Proceeds” shall have the meaning set forth in Section 4.4 of this
Agreement.

 

EXHIBIT F - 2

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

“Inventory” means any “inventory,” as such term is defined in Article or Chapter
9 of the UCC, now owned or hereafter acquired by a Debtor, and, in any event,
shall include, without limitation, each of the following, whether now owned or
hereafter acquired by such Debtor: (a) all goods and other Personal property of
such Debtor that are held for sale or lease or to be furnished under any
contract of service; (b) all raw materials, work-in-process, finished goods,
supplies and materials of such Debtor; (c) all wrapping, packaging, advertising
and shipping materials of such Debtor; (d) all goods that have been returned to,
repossessed by or stopped in transit by such Debtor; and (e) all Documents
evidencing any of the foregoing.

“Investment Property” means any “investment property” as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by a Debtor,
and in any event, shall include without limitation all shares of stock and other
equity, partnership or membership interests constituting securities, of the
Domestic Subsidiaries of such Debtor from time to time owned or acquired by such
Debtor in any manner, and the certificates and all dividends, cash, instruments,
rights and other property from time to time received, receivable or otherwise
distributed or distributable in respect of or in exchange for any or all of such
shares, but excluding any shares of stock or other equity, partnership or
membership interests in any Foreign Subsidiaries of such Debtor.

“Proceeds” means any “proceeds,” as such term is defined in Article or Chapter 9
of the UCC and, in any event, shall include, but not be limited to, (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to a
Debtor from time to time with respect to any of the Collateral, (b) any and all
payments (in any form whatsoever) made or due and payable to a Debtor from time
to time in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting, or purporting to act, for or on behalf of any
Governmental Authority), and (c) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.

“Records” are defined in Section 3.2 of this Agreement.

“Software” means all (i) computer programs and supporting information provided
in connection with a transaction relating to the program, and (ii) computer
programs embedded in goods and any supporting information provided in connection
with a transaction relating to the program whether or not the program is
associated with the goods in such a manner that it customarily is considered
part of the goods, and whether or not, by becoming the owner of the goods, a
Person acquires a right to use the program in connection with the goods, and
whether or not the program is embedded in goods that consist solely of the
medium in which the program is embedded.

“UCC” means the Uniform Commercial Code as in effect in the State of California;
provided, that if, by applicable law, the perfection or effect of perfection or
non-perfection of the security interest created hereunder in any Collateral is
governed by the Uniform Commercial Code as in effect on or after the date hereof
in any other jurisdiction, “UCC” means the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof relating to
such perfection or the effect of perfection or non-perfection.

“Vehicles” means all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title law of any state
and all tires and other appurtenances to any of the foregoing.

ARTICLE 2

Security Interest

Section 2.1 Grant of Security Interest. As collateral security for the prompt
payment and performance in full when due of the Indebtedness (whether at stated
maturity, by acceleration or otherwise), each Debtor hereby pledges, assigns,
transfers and conveys to Agent as collateral, and grants Agent a continuing Lien
on and security interest in, all of such Debtor’s right, title and interest in
and to the property described in Exhibit A (collectively, the “Collateral”).
Notwithstanding any termination, Bank’s Lien on the Collateral shall remain in
effect for so long as any Indebtedness (as defined in the Credit Agreement) is
outstanding. Borrower also hereby agrees not to sell, transfer, assign,
mortgage, pledge, lease, grant a security interest in, or encumber any of its
Intellectual Property (as defined in attached Exhibit A), except as permitted
under the Credit Agreement.

 

EXHIBIT F - 3

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

Section 2.2 Debtors Remain Liable. Notwithstanding anything to the contrary
contained herein, (a) Debtors shall remain liable under the contracts,
agreements, documents and instruments included in the Collateral to the extent
set forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by
Agent or any Lender of any of their respective rights or remedies hereunder
shall not release Debtors from any of their duties or obligations under the
contracts, agreements, documents and instruments included in the Collateral, and
(c) neither Agent nor any of Lenders shall have any indebtedness, liability or
obligation (by assumption or otherwise) under any of the contracts, agreements,
documents and instruments included in the Collateral by reason of this
Agreement, and none of them shall be obligated to perform any of the obligations
or duties of Debtors thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.

ARTICLE 3

Representations and Warranties

To induce Agent to enter into this Agreement and Agent and Lenders to enter into
the Credit Agreement, each Debtor represents and warrants to Agent and to each
Lender as follows, each such representation and warranty being a continuing
representation and warranty, surviving until termination of this Agreement in
accordance with the provisions of Section 7.12 of this Agreement:

Section 3.1 Title. Such Debtor is, and with respect to Collateral acquired after
the date hereof such Debtor will be, the legal and beneficial owner of the
Collateral free and clear of any Lien or other encumbrance, except for the
Permitted Liens.

Section 3.2 Change in Form or Jurisdiction; Successor by Merger; Location of
Books and Records. As of the date hereof, each Debtor (a) is duly organized and
validly existing as a corporation, a limited liability company or limited
partnership, as the case may be, under the laws of its jurisdiction of
organization; (b) is formed in the jurisdiction of organization and has the
registration number and tax identification number set forth on Schedule 3.2
attached hereto; (c) has not changed its respective corporate form or its
jurisdiction of organization at any time during the five years immediately prior
to the date hereof, except as set forth on such Schedule 3.2; (d) except as set
forth on such Schedule 3.2 attached hereto, no Debtor has, at any time during
the five years immediately prior to the date hereof, become the successor by
merger, consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise of any other Person, and (e) keeps true and accurate
books and records regarding the Collateral (collectively, “Records”) in the
office indicated on such Schedule 3.2.

Section 3.3 Representations and Warranties Regarding Certain Types of
Collateral.

 

  (a) Location of Inventory and Equipment. As of the date hereof, (i) all
Inventory (except Inventory in transit) and Equipment (except trailers, rolling
stock, vessels, aircraft and Vehicles) of each Debtor are located at the places
specified on Schedule 3.3(a) attached hereto, (ii) the name and address of the
landlord leasing any location to any Debtor is identified on such Schedule
3.3(a), and (iii) the name of and address of each bailee or warehouseman which
holds any Collateral and the location of such Collateral is identified on such
Schedule 3.3(a).

 

  (b) Account Information. As of the date hereof, all Deposit Accounts, cash
collateral account or investment accounts of each Debtor (except for those
Deposit Accounts located with Agent) are located at the banks specified on
Schedule 3.3(b) attached hereto which Schedule sets forth the true and correct
name of each bank where such accounts are located, such bank’s address, the type
of account and the account number.

 

  (c) Documents. As of the date hereof, except as set forth on Schedule 3.3(c),
none of the Inventory or Equipment of such Debtor (other than trailers, rolling
stock, vessels, aircraft and Vehicles) is evidenced by a Document (including,
without limitation, a negotiable document of title).

Section 3.4 [Reserved].

Section 3.5 [Reserved].

 

EXHIBIT F - 4

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Section 3.6 Priority. No financing statement, security agreement or other Lien
instrument covering all or any part of the Collateral is on file in any public
office with respect to any outstanding obligation of such Debtor except (i) as
may have been filed in favor of Agent pursuant to this Agreement and the other
Loan Documents and (ii) financing statements filed to perfect Permitted Liens.

Section 3.7 Perfection. Upon a) the filing of Uniform Commercial Code financing
statements in the jurisdictions listed on Schedule 3.7 attached hereto, b) in
the case of Investment Property consisting of certificated securities or
evidenced by instruments, in addition to filing of such UCC financing
statements, delivery of the certificates representing such certificated
securities and delivery of such instruments to Agent (and in the case of
securities issued by a foreign issuer, any actions required under foreign law to
perfect a security interest in such securities), in each case duly endorsed or
accompanied by duly executed instruments of assignment or transfer in blank, and
c) executing and delivering with the applicable depository institution,
securities intermediary, commodity intermediary or issuer or nominated party
under a letter of credit to execute and deliver a collateral control agreement
with respect to any Deposit Account, securities account or commodity account or
Letter-of-Credit Right in or to which any Debtor has any right or interest, the
security interest in favor of Agent created herein will constitute a valid and
perfected Lien upon and security interest in the Collateral.

ARTICLE 4

Covenants

Each Debtor covenants and agrees with Agent, until termination of this Agreement
in accordance with the provisions of Section 7.12 hereof, as follows:

Section 4.1 Covenants Regarding Certain Kinds of Collateral

 

  (a) Promissory Notes and Tangible Chattel Paper. If Debtors, now or at any
time hereafter, collectively hold or acquire any promissory notes or tangible
Chattel Paper for which the principal amount thereof or the obligations
evidenced thereunder are, in the aggregate, in excess of $500,000, the
applicable Debtors shall promptly notify Agent in writing thereof and forthwith
endorse, assign and deliver the same to Agent, accompanied by such instruments
of transfer or assignment duly executed in blank as Agent may from time to time
reasonably specify, and cause all such Chattel Paper to bear a legend reasonably
acceptable to Agent indicating that Agent has a security interest in such
Chattel Paper.

 

  (b) Electronic Chattel Paper and Transferable Records. If Debtors, now or at
any time hereafter, collectively hold or acquire an interest in any electronic
Chattel Paper or any “transferable record,” as that term is defined in the
federal Electronic Signatures in Global and National Commerce Act, or in the
Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,
worth, in the aggregate, in excess of $500,000, the applicable Debtors shall
promptly notify Agent thereof and, at the request and option of Agent, shall
take such action as Agent may reasonably request to vest in Agent control, under
Section 9-105 of the UCC, of such electronic chattel paper or control under the
federal Electronic Signatures in Global and National Commerce Act, or the
Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of
such transferable record.

 

  (c) Letter-of-Credit Rights. If Debtors, now or at any time hereafter,
collectively are or become beneficiaries under letters of credit, with an
aggregate face amount in excess of $1,000,000, the applicable Debtors shall
promptly notify Agent thereof and, at the request of Agent, the applicable
Debtors shall, pursuant to an agreement in form and substance reasonably
satisfactory to Agent either arrange (i) for the issuer and any confirmer of
such letters of credit to consent to an assignment to Agent of the proceeds of
the letters of credit or (ii) for Agent to become the transferee beneficiary of
the letters of credit, together with, in each case, any such other actions as
reasonably requested by Agent to perfect its first priority Lien in such letter
of credit rights. The applicable Debtor shall retain the proceeds of the
applicable letters of credit until a Default or Event of Default has occurred
and is continuing whereupon the proceeds are to be delivered to Agent and
applied as set forth in the Credit Agreement.

 

EXHIBIT F - 5

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  (d) Commercial Tort Claims. If Debtors, now or at any time hereafter,
collectively hold or acquire any commercial tort claims, which, the reasonably
estimated value of which are in aggregate excess of $1,000,000, the applicable
Debtors shall immediately notify Agent in a writing signed by such Debtors of
the particulars thereof and grant to Agent in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance reasonably satisfactory to Agent.

 

  (e) [Reserved].

 

  (f) Equipment and Inventory.

 

  (i) Location. Each Debtor shall keep the Equipment (other than Vehicles) and
Inventory (other than Inventory in transit) which is in such Debtor’s possession
or in the possession of any bailee or warehouseman at any of the locations
specified on Schedule 3.3(a) attached hereto or as otherwise disclosed in
writing to Agent from time to time, subject to compliance with the other
provisions of this Agreement, including subsection (ii) below.

 

  (ii) Landlord Consents and Bailee’s Waivers. Each Debtor shall use
commercially reasonable efforts to provide, as applicable, a bailee’s waiver or
landlord consent, in form and substance acceptable to Agent, for each non-Debtor
owned location of Collateral disclosed on Schedule 3.3(a) or otherwise disclosed
to Agent in writing, to the extent required under Section 7.13 or Section 7.19
of the Credit Agreement, and shall take all other actions required by Agent to
perfect Agent’s security interest in the Equipment and Inventory with the
priority required by this Agreement.

 

  (iii) Maintenance. Each Debtor shall maintain the Equipment and Inventory in
such condition as may be specified by the terms of the Credit Agreement.

 

  (g) [Reserved].

 

  (h) Accounts and Contracts. Each Debtor shall, in accordance with its usual
business practices in effect from time to time, endeavor to collect or cause to
be collected from each account debtor under its Accounts, as and when due, any
and all amounts owing under such Accounts. So long as no Default or Event of
Default has occurred and is continuing and except as otherwise provided in
Section 6.3, each Debtor shall have the right to collect and receive payments on
its Accounts, and to use and expend the same in its operations in each case in
compliance with the terms of each of the Credit Agreement.

 

  (i) Vehicles; Aircraft and Vessels. Notwithstanding any other provision of
this Agreement, no Debtor shall be required to make any filings as may be
necessary to perfect Agent’s Lien on its Vehicles, aircraft and vessels, unless
(i) a Default or an Event of Default has occurred and is continuing, whereupon
Agent may require such filings be made or (ii) such Debtor, either singly, or
together with the other Debtors, owns Vehicles, aircraft and vessels (other than
Vehicles provided for use by such Debtor’s executive employees and other than
aircrafts and vessels subject to permitted purchase money Liens) which have a
fair market value of at least $500,000, in aggregate amount, whereupon the
applicable Debtors shall provide prompt notice to Agent, and Agent, at its
option, may require the applicable Debtors to execute such agreements and make
such filings as may be necessary to perfect Agent’s Lien for the benefit of
Lenders and ensure the priority thereof on the applicable Vehicles, aircraft and
vessels.

 

  (j) [Reserved].

 

  (k) Deposit Accounts. Each Debtor agrees to promptly notify Agent in writing
of all Deposit Accounts, cash collateral accounts or investments accounts opened
after the date hereof (except with Agent), and such Debtor shall take such
actions as Agent may reasonably request to grant Agent a perfected, first
priority Lien over each of the Deposit Accounts, cash collateral accounts or
investment accounts to the extent required under Sections 7.9, 7.14 and 7.19 of
the Credit Agreement.

 

EXHIBIT F - 6

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Section 4.2 Encumbrances. Each Debtor shall not create, permit or suffer to
exist, and shall defend the Collateral against any Lien (other than the
Permitted Liens) or any restriction upon the pledge or other transfer thereof
(other than as specifically permitted in the Credit Agreement), and shall defend
such Debtor’s title to and other rights in the Collateral and Agent’s pledge and
collateral assignment of and security interest in the Collateral against the
claims and demands of all Persons. Except to the extent permitted by the Credit
Agreement or in connection with any release of Collateral under Section 7.13
hereof (but only to the extent of any Collateral so released), such Debtor shall
do nothing to impair the rights of Agent in the Collateral.

Section 4.3 Disposition of Collateral. Except as otherwise permitted under the
Credit Agreement, no Debtor shall enter into or consummate any transfer or other
disposition of Collateral.

Section 4.4 Insurance. The Collateral pledged by such Debtor or Debtors will be
insured (to the extent such Collateral is insurable) with insurance coverage in
such amounts and of such types as are required by the terms of the Credit
Agreement. In the case of all such insurance policies, each such Debtor shall
designate Agent, as mortgagee or lender loss payee and such policies shall
provide that any loss be payable to Agent, as mortgagee or lender loss payee, as
its interests may appear. Further, upon the request of Agent, each such Debtor
shall deliver certificates evidencing such policies, including all endorsements
thereon and those required hereunder, to Agent; and each such Debtor assigns to
Agent, as additional security hereunder, all its rights to receive proceeds of
insurance with respect to the Collateral. All such insurance shall, by its
terms, provide that the applicable carrier shall, prior to any cancellation
before the expiration date thereof, mail thirty (30) days’ prior written notice
to Agent of such cancellation. Each Debtor further shall provide Agent upon
request with evidence reasonably satisfactory to Agent that each such Debtor is
at all times in compliance with this paragraph. Upon the occurrence and during
the continuance of a Default or an Event of Default, Agent may, at its option,
act as each such Debtor’s attorney-in-fact in obtaining, adjusting, settling and
compromising such insurance and endorsing any drafts. Upon such Debtor’s failure
to insure the Collateral as required in this covenant, Agent may, at its option,
procure such insurance and its costs therefor shall be charged to such Debtor,
payable on demand, with interest at the highest rate set forth in the Credit
Agreement and added to the Indebtedness secured hereby. The Insurance Proceeds
(as defined in the Credit Agreement) shall be applied to the Indebtedness to the
extent required and in accordance with the Credit Agreement.

Section 4.5 Corporate Changes; Books and Records; Inspection Rights. (a) Each
Debtor shall not change its respective name, identity, corporate structure or
jurisdiction of organization, or identification number in any manner that might
make any financing statement filed in connection with this Agreement seriously
misleading within the meaning of Section 9-506 of the UCC unless such Debtor
shall have given Agent [thirty (30)] days prior written notice with respect to
any change in such Debtor’s corporate structure, jurisdiction of organization,
name or identity and shall have taken all action deemed reasonably necessary by
Agent under the circumstances to protect its Liens and the perfection and
priority thereof, (b) each Debtor shall keep the Records at the location
specified on Schedule 3.2 as the location of such books and records or as
otherwise specified in writing to Agent and (c) Debtors shall permit Agent,
Lenders, and their respective agents and representatives to conduct inspections,
discussion and audits of the Collateral in accordance with the terms of the
Credit Agreement.

Section 4.6 [Reserved].

Section 4.7 [Reserved].

Section 4.8 [Reserved].

Section 4.9 Further Assurances.

 

  (a)

At any time and from time to time, upon the request of Agent, and at the sole
expense of Debtors, each Debtor shall promptly execute and deliver all such
further agreements, documents and instruments and take such further action as
Agent may reasonably deem necessary to (i) preserve,

 

EXHIBIT F - 7

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  ensure the priority, effectiveness and validity of and perfect Agent’s
security interest in and pledge and collateral assignment of the Collateral
(including causing Agent’s name to be noted as secured party on any certificate
of title for a titled good if such notation is a condition of Agent’s ability to
enforce its security interest in such Collateral), unless such actions are
specifically waived under the terms of this Agreement and the other Loan
Documents, (ii) carry out the provisions and purposes of this Agreement and
(iii) to enable Agent to exercise and enforce its rights and remedies hereunder
with respect to any of the Collateral. Except as otherwise expressly permitted
by the terms of the Credit Agreement relating to disposition of assets and
except for Permitted Liens, each Debtor agrees to maintain and preserve Agent’s
security interest in and pledge and collateral assignment of the Collateral
hereunder and the priority thereof.

 

  (b) Each Debtor hereby irrevocably authorizes Agent at any time and from time
to time to file in any filing office in any jurisdiction any initial financing
statements and amendments thereto that (i) indicate any or all of the Collateral
upon which Debtors have granted a Lien, and (ii) provide any other information
required by Part 5 of Article 9 of the UCC, including organizational information
and in the case of a fixture filing or a filing for Collateral consisting of
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Each Debtor agrees to furnish any such
information required by the preceding paragraph to Agent promptly upon request.

ARTICLE 5

Rights of Agent

Section 5.1 Power of Attorney. Each Debtor hereby irrevocably constitutes and
appoints Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of such Debtor or in its own name, to take,
after the occurrence and during the continuance of an Event of Default, any and
all actions, and to execute any and all documents and instruments which Agent at
any time and from time to time deems necessary, to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, such
Debtor hereby gives Agent the power and right on behalf of such Debtor and in
its own name to do any of the following after the occurrence and during the
continuance of an Event of Default, without notice to or the consent of such
Debtor:

 

  (a) to demand, sue for, collect or receive, in the name of such Debtor or in
its own name, any money or property at any time payable or receivable on account
of or in exchange for any of the Collateral and, in connection therewith,
endorse checks, notes, drafts, acceptances, money orders, documents of title or
any other instruments for the payment of money under the Collateral or any
policy of insurance;

 

  (b) to pay or discharge taxes, Liens (other than Permitted Liens) or other
encumbrances levied or placed on or threatened against the Collateral;

 

  (c)

(i) to direct account debtors and any other parties liable for any payment under
any of the Collateral to make payment of any and all monies due and to become
due thereunder directly to Agent or as Agent shall direct; (ii) to receive
payment of and receipt for any and all monies, claims and other amounts due and
to become due at any time in respect of or arising out of any Collateral;
(iii) to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
proxies, stock powers, verifications and notices in connection with accounts and
other documents relating to the Collateral; (iv) to commence and prosecute any
suit, action or proceeding at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (v) to defend any suit, action or
proceeding brought against such Debtor with respect to any Collateral; (vi) to
settle, compromise or adjust any suit, action or proceeding described above and,
in connection therewith, to give such discharges or releases as Agent may deem
appropriate; (vii) to exchange any of the Collateral for other property upon any
merger, consolidation, reorganization, recapitalization or other readjustment of
the issuer thereof and, in connection therewith, deposit any of the Collateral
with any committee, depositary, transfer agent,

 

EXHIBIT F - 8

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registrar or other designated agency upon such terms as Agent may determine;
(viii) to add or release any guarantor, indorser, surety or other party to any
of the Collateral; (ix) to renew, extend or otherwise change the terms and
conditions of any of the Collateral; (x) to make, settle, compromise or adjust
any claim under or pertaining to any of the Collateral (including claims under
any policy of insurance); and (xi) to sell, transfer, pledge, convey, make any
agreement with respect to, or otherwise deal with, any of the Collateral as
fully and completely as though Agent were the absolute owner thereof for all
purposes, and to do, at Agent’s option and such Debtor’s expense, at any time,
or from time to time, all acts and things which Agent deems necessary to
protect, preserve, maintain, or realize upon the Collateral and Agent’s security
interest therein.

This power of attorney is a power coupled with an interest and shall be
irrevocable. Agent shall be under no duty to exercise or withhold the exercise
of any of the rights, powers, privileges and options expressly or implicitly
granted to Agent in this Agreement, and shall not be liable for any failure to
do so or any delay in doing so. This power of attorney is conferred on Agent
solely to protect, preserve, maintain and realize upon its security interest in
the Collateral. Agent shall not be responsible for any decline in the value of
the Collateral and shall not be required to take any steps to preserve rights
against prior parties or to protect, preserve or maintain any Lien given to
secure the Collateral.

Section 5.2 Setoff. In addition to and not in limitation of any rights of any
Lenders under applicable law, Agent and each Lender shall, upon the occurrence
and continuance of an Event of Default, without notice or demand of any kind,
have the right to appropriate and apply to the payment of the Indebtedness owing
to it (whether or not then due) any and all balances, credits, deposits,
accounts or moneys of Debtors then or thereafter on deposit with such Lenders;
provided, however, that any such amount so applied by any Lender on any of the
Indebtedness owing to it shall be subject to the provisions of the Credit
Agreement.

Section 5.3 Assignment by Agent. Agent may at any time assign or otherwise
transfer all or any portion of its rights and obligations as Agent under this
Agreement and the other Loan Documents (including, without limitation, the
Indebtedness) to any other Person, to the extent permitted by, and upon the
conditions contained in, the Credit Agreement and such Person shall thereupon
become vested with all the benefits and obligations thereof granted to Agent
herein or otherwise.

Section 5.4 Performance by Agent. If any Debtor shall fail to perform any
covenant or agreement contained in this Agreement, Agent may (but shall not be
obligated to) perform or attempt to perform such covenant or agreement on behalf
of Debtors, in which case Agent shall exercise good faith and make diligent
efforts to give Debtors prompt prior written notice of such performance or
attempted performance. In such event, Debtors shall, at the request of Agent,
promptly pay any reasonable amount expended by Agent in connection with such
performance or attempted performance to Agent, together with interest thereon at
the interest rate set forth in the Credit Agreement, from and including the date
of such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that Agent shall not have
any liability or responsibility for the performance (or non-performance) of any
obligation of Debtors under this Agreement.

Section 5.5 Certain Costs and Expenses. Debtors shall pay or reimburse Agent
within five (5) Business Days after demand for all reasonable costs and expenses
(including reasonable attorney’s and paralegal fees) incurred by it in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of any of the
Indebtedness (including in connection with any “workout” or restructuring
regarding the Indebtedness, and including in any insolvency proceeding or
appellate proceeding). The agreements in this Section 5.5 shall survive the
payment in full of the Indebtedness. Notwithstanding the foregoing, the
reimbursement of any fees and expenses incurred by Lenders shall be governed by
the terms and conditions of the applicable Credit Agreement.

Section 5.6 Indemnification. Debtors shall indemnify, defend and hold Agent, and
each Lender and each of their respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an “Indemnified Person”) harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including reasonable attorneys’ and paralegals’ fees) of any kind or nature
whatsoever which may at any time (including at any time following repayment of
the Indebtedness and the termination, resignation or replacement of Agent or
replacement of any Lender) be imposed on, incurred by or

 

EXHIBIT F - 9

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asserted against any such Indemnified Person in any way relating to or arising
out of this Agreement or any other Loan Document or any document relating to or
arising out of or referred to in this Agreement or any other Loan Document, or
the transactions contemplated hereby, or any action taken or omitted by any such
Indemnified Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
bankruptcy proceeding or appellate proceeding) related to or arising out of this
Agreement or the Indebtedness or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”); provided, that Debtors shall have no obligation
under this Section 5.6 to any Indemnified Person with respect to Indemnified
Liabilities to the extent resulting from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section 5.6 shall
survive payment of all other Indebtedness.

ARTICLE 6

Default

Section 6.1 Rights and Remedies. If an Event of Default shall have occurred and
be continuing, Agent shall have the following rights and remedies subject to the
direction and/or consent of Lenders as required under the Credit Agreement:

 

  (a) Agent may exercise any of the rights and remedies set forth in this
Agreement (including, without limitation, Article 5 hereof), in the Credit
Agreement, or in any other Loan Document, or by applicable law.

 

  (b)

In addition to all other rights and remedies granted to Agent in this Agreement,
the Credit Agreement or by applicable law, Agent shall have all of the rights
and remedies of a secured party under the UCC (whether or not the UCC applies to
the affected Collateral) and Agent may also, without previous demand or notice
except as specified below or in the Credit Agreement, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange,
broker’s board or at any of Agent’s offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as Agent may, in its reasonable
discretion, deem commercially reasonable or otherwise as may be permitted by
law. Without limiting the generality of the foregoing, Agent may (i) without
demand or notice to Debtors (except as required under the Credit Agreement or
applicable law), collect, receive or take possession of the Collateral or any
part thereof, and for that purpose Agent (and/or its Agents, servicers or other
independent contractors) may enter upon any premises on which the Collateral is
located and remove the Collateral therefrom or render it inoperable, and/or
(ii) sell, lease or otherwise dispose of the Collateral, or any part thereof, in
one or more parcels at public or private sale or sales, at Agent’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as Agent may, in its reasonable discretion, deem commercially reasonable or
otherwise as may be permitted by law. Agent and, subject to the terms of the
Credit Agreement, each of Lenders shall have the right at any public sale or
sales, and, to the extent permitted by applicable law, at any private sale or
sales, to bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) and become a purchaser of the Collateral or any
part thereof free of any right of redemption on the part of Debtors, which right
of redemption is hereby expressly waived and released by Debtors to the extent
permitted by applicable law. Agent may require Debtors to assemble the
Collateral and make it available to Agent at any place designated by Agent to
allow Agent to take possession or dispose of such Collateral. Debtors agree that
Agent shall not be obligated to give more than five (5) days prior written
notice of the time and place of any public sale or of the time after which any
private sale may take place and that such notice shall constitute reasonable
notice of such matters. The foregoing shall not require notice if none is
required by applicable law. Agent shall not be obligated to make any sale of
Collateral if, in the exercise of its reasonable discretion, it shall determine
not to do so, regardless of the fact that notice of sale of Collateral may have
been given. Agent may, without notice or publication (except as required by
applicable law), adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. Debtors shall be liable for all reasonable
expenses of

 

EXHIBIT F - 10

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  retaking, holding, preparing for sale or the like, and all reasonable
attorneys’ fees, legal expenses and other costs and expenses incurred by Agent
in connection with the collection of the Indebtedness and the enforcement of
Agent’s rights under this Agreement and the Credit Agreement. Debtors shall, to
the extent permitted by applicable law, remain liable for any deficiency if the
proceeds of any such sale or other disposition of the Collateral (conducted in
conformity with this clause (ii) and applicable law) applied to the Indebtedness
are insufficient to pay the Indebtedness in full. Agent shall apply the proceeds
from the sale of the Collateral hereunder against the Indebtedness in such order
and manner as provided in the Credit Agreement.

 

  (c) Agent may cause any or all of the Collateral held by it to be transferred
into the name of Agent or the name or names of Agent’s nominee or nominees.

 

  (d) Agent may exercise any and all rights and remedies of Debtors under or in
respect of the Collateral, including, without limitation, any and all rights of
Debtors to demand or otherwise require payment of any amount under, or
performance of any provision of any of the Collateral and any and all voting
rights and corporate powers in respect of the Collateral.

 

  (e) On any sale of the Collateral, Agent is hereby authorized to comply with
any limitation or restriction with which compliance is necessary (based on a
reasoned opinion of Agent’s counsel) in order to avoid any violation of
applicable law or in order to obtain any required approval of the purchaser or
purchasers by any applicable Governmental Authority.

 

  (f) Agent may direct account debtors and any other parties liable for any
payment under any of the Collateral to make payment of any and all monies due
and to become due thereunder directly to Agent or as Agent shall direct.

 

  (g) [Reserved].

 

  (h) For purposes of enabling Agent to exercise its rights and remedies under
this Section 6.1 and enabling Agent and its successors and assigns to enjoy the
full benefits of the Collateral, Debtors hereby grant to Agent an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to Debtors) to use, assign, license or sublicense any of the
Computer Records or Software (including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and all
computer programs used for the completion or printout thereof), exercisable upon
the occurrence and during the continuance of a Default or an Event of Default
(and thereafter if Agent succeeds to any of the Collateral pursuant to an
enforcement proceeding or voluntary arrangement with Debtor), except as may be
prohibited by any licensing agreement relating to such Computer Records or
Software. This license shall also inure to the benefit of all successors,
assigns, transferees of and purchasers from Agent.

Section 6.2 [Reserved].

Section 6.3 Establishment of Cash Collateral Account; and Lock Box.
Notwithstanding anything to the contrary in this Agreement, in the case of any
Event of Default under Section 9.1(a) of the Credit Agreement, immediately
following the occurrence thereof, and in the case of any other Event of Default,
upon the termination of any commitments to extend credit under the Credit
Agreement, the acceleration of any Indebtedness arising under the Credit
Agreement and/or the exercise of any other remedy in each case by the requisite
Lenders under Section 9.2 of the Credit Agreement:

 

  (a)

There shall be established by each Debtor with Agent, for the benefit of Lenders
in the name of Agent, a segregated non-interest bearing cash collateral account
(the “Cash Collateral Account”) bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of Agent and Lenders;
provided, however, that the Cash Collateral Account may be an interest-bearing
account with a commercial bank (including Comerica or any other Lender which is
a commercial bank) if determined by Agent, in its reasonable discretion, to be
practicable, invested

 

EXHIBIT F - 11

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  by Agent in its sole discretion, but without any liability for losses or the
failure to achieve any particular rate of return. Furthermore, in connection
with the establishment of a Cash Collateral Account under the first sentence of
this Section 6.3 (and on the terms and within the time periods provided
thereunder), (i) each Debtor agrees to establish and maintain (and Agent, acting
at the request of Lenders, may establish and maintain) at Debtor’s sole expense
a United States Post Office lock box (the “Lock Box”), to which Agent shall have
exclusive access and control. Each Debtor expressly authorizes Agent, from time
to time, to remove the contents from the Lock Box for disposition in accordance
with this Agreement; and (ii) each Debtor shall notify all account debtors that
all payments made to Debtor (a) other than by electronic funds transfer, shall
be remitted, for the credit of Debtor, to the Lock Box, and Debtor shall include
a like statement on all invoices, and (b) by electronic funds transfer, shall be
remitted to the Cash Collateral Account, and Debtor shall include a like
statement on all invoices. Each Debtor agrees to execute all documents and
authorizations as reasonably required by Agent to establish and maintain the
Lock Box and the Cash Collateral Account. It is acknowledged by the parties
hereto that any lockbox presently maintained or subsequently established by a
Debtor with Agent may be used, subject to the terms hereof, to satisfy the
requirements set forth in this Section 6.3.

 

  (b) Any and all cash (including amounts received by electronic funds
transfer), checks, drafts and other instruments for the payment of money
received by each Debtor at any time, in full or partial payment of any of the
Collateral consisting of Accounts or Inventory, shall forthwith upon receipt be
transmitted and delivered to Agent, properly endorsed, where required, so that
such items may be collected by Agent. Any such amounts and other items received
by a Debtor shall not be commingled with any other of such Debtor’s funds or
property, but will be held separate and apart from such Debtor’s own funds or
property, and upon express trust for the benefit of Agent until delivery is made
to Agent. All items or amounts which are remitted to a Lock Box or otherwise
delivered by or for the benefit of a Debtor to Agent on account of partial or
full payment of, or any other amount payable with respect to, any of the
Collateral shall, at Agent’s option, be applied to any of the Indebtedness,
whether then due or not, in the order and manner set forth in the Credit
Agreement. No Debtor shall have any right whatsoever to withdraw any funds so
deposited. Each Debtor further grants to Agent a first security interest in and
Lien on all funds on deposit in such account. Each Debtor hereby irrevocably
authorizes and directs Agent to endorse all items received for deposit to the
Cash Collateral Account, notwithstanding the inclusion on any such item of a
restrictive notation, e.g., “paid in full”, “balance of account”, or other
restriction.

Section 6.4 Default Under Credit Agreement. Subject to any applicable notice and
cure provisions contained in the Credit Agreement, the occurrence of any Event
of Default (as defined in the Credit Agreement), including without limit a
breach of any of the provisions of this Agreement, shall be deemed to be an
Event of Default under this Agreement. This Section 6.4 shall not limit the
Events of Default set forth in the Credit Agreement.

ARTICLE 7

Miscellaneous

Section 7.1 No Waiver; Cumulative Remedies. No failure on the part of Agent to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement are cumulative and not exclusive of any rights
and remedies provided by law.

Section 7.2 Successors and Assigns. Subject to the terms and conditions of the
Credit Agreement, this Agreement shall be binding upon and inure to the benefit
of Debtors and Agent and their respective heirs, successors and assigns, except
that Debtors may not assign any of their rights or obligations under this
Agreement without the prior written consent of Agent.

 

EXHIBIT F - 12

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Section 7.3 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE CREDIT AGREEMENT
REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto.

Section 7.4 Notices. All notices, requests, consents, approvals, waivers and
other communications hereunder shall be in writing (including, by facsimile
transmission) and mailed, faxed or delivered to the address or facsimile number
specified for notices, as provided in the Credit Agreement.

Section 7.5 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF PROCESS. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of California.

Section 7.6 Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.

Section 7.7 Survival of Representations and Warranties. All representations and
warranties made in this Agreement or in any certificate delivered pursuant
hereto shall survive the execution and delivery of this Agreement, and no
investigation by Agent shall affect the representations and warranties or the
right of Agent or Lenders to rely upon them.

Section 7.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

Section 7.9 Waiver of Bond. In the event Agent seeks to take possession of any
or all of the Collateral by judicial process, Debtors hereby irrevocably waive
any bonds and any surety or security relating thereto that may be required by
applicable law as an incident to such possession, and waives any demand for
possession prior to the commencement of any such suit or action.

Section 7.10 Severability. Any provision of this Agreement which is determined
by a court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

Section 7.11 Construction. Each Debtor and Agent acknowledge that each of them
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement shall be construed as if jointly drafted by Debtors and Agent.

Section 7.12 Termination; Reinstatement. If all of the Indebtedness (other than
contingent liabilities pursuant to any indemnity, including without limitation
Section 5.5 and Section 5.6 hereof, for claims which have not been asserted, or
which have not yet accrued) shall have been paid and performed in full (in cash)
and all commitments to extend credit or other credit accommodations under the
Credit Agreement have been terminated, Agent shall, upon the written request of
Debtors, execute and deliver to Debtors a proper instrument or instruments
acknowledging the release and termination of the security interests created by
this Agreement, and shall duly assign and deliver to Debtors (without recourse
and without any representation or warranty) such of the Collateral as may be in
the possession of Agent and has not previously been sold or otherwise applied
pursuant to this Agreement; provided however that, the effectiveness of this
Agreement shall continue or be reinstated, as the case may be, in the event:
(a) that any payment received or credit given by Agent or Lenders, or any of
them, is returned, disgorged, rescinded or required to be recontributed to any
party as an avoidable preference, impermissible setoff, fraudulent

 

EXHIBIT F - 13

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conveyance, restoration of capital or otherwise under any applicable state,
federal, or local law of any jurisdiction, including laws pertaining to
bankruptcy or insolvency, and this Agreement shall thereafter be enforceable
against Debtors as if such returned, disgorged, recontributed or rescinded
payment or credit has not been received or given by Agent or Lenders, and
whether or not Agent or any Lender relied upon such payment or credit or changed
its position as a

consequence thereof or (b) that any liability is imposed, or sought to be
imposed against Agent or Lenders, or any of them, relating to the environmental
condition of any of property mortgaged or pledged to Agent on behalf of Lenders
by any Debtor, any of Borrower or other party as collateral (in whole or part)
for any indebtedness or obligation evidenced or secured by this Agreement,
whether such condition is known or unknown, now exists or subsequently arises
(excluding only conditions which arise after acquisition by Agent or any Lender
of any such property, in lieu of foreclosure or otherwise, due to the wrongful
act or omission of Agent or such Lenders, or any person other than Borrower, the
Subsidiaries, or any Affiliates of Borrower or the Subsidiaries), and this
Agreement shall thereafter be enforceable against Debtors to the extent of all
such liabilities, costs and expenses (including reasonable attorneys’ fees)
incurred by Agent or Lenders as the direct or indirect result of any such
environmental condition but only for which any of Borrower is obligated to Agent
and Lenders pursuant to the Credit Agreement. For purposes of this Agreement
“environmental condition” includes, without limitation, conditions existing with
respect to the surface or ground water, drinking water supply, land surface or
subsurface strata and the ambient air.

Section 7.13 Release of Collateral. Agent shall, upon the written request of
Debtors, execute and deliver to Debtors a proper instrument or instruments
acknowledging the release of the security interest and Liens established hereby
on any Collateral: (a) if the sale or other disposition of such Collateral is
permitted under the terms of the Credit Agreement and, at the time of such
proposed release, both before and after giving effect thereto, no Default or
Event of Default has occurred and is continuing, (b) if the sale or other
disposition of such Collateral is not permitted under the terms of the Credit
Agreement, provided that the requisite Lenders under such Credit Agreement shall
have consented to such sale or disposition in accordance with the terms thereof,
or (c) if such release has been approved by the requisite Lenders in accordance
with Section 12.11(b) of the Credit Agreement.

Section 7.14 WAIVER OF JURY TRIAL. EACH DEBTOR AND AGENT WAIVES ITS RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY EITHER SUCH PARTY AGAINST THE OTHER, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH DEBTOR AND AGENT AGREE THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, EACH SUCH PARTY FURTHER AGREES THAT ITS RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

Section 7.15 Judicial Reference.

 

  (a) The parties prefer that any dispute between them be resolved in litigation
subject to a Jury Trial Waiver as set forth in this Agreement or the other Loan
Documents (“Jury Trial Waiver”), but the Jury Trial Waiver may not be
enforceable under certain circumstances. In the event the Jury Trial Waiver is
not enforceable, the parties elect to proceed under this Reference Provision.

 

  (b) In the event that the Jury Trial Waiver provision contained in the
Agreement is not enforceable, the parties elect to proceed under this Reference
Provision.

 

  (c) With the exception of the items specified in clause (d), below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to the Agreement will be resolved by a reference proceeding in
California in accordance with the provisions of Section 638 et seq. of the
California Code of Civil Procedure (“CCP”), or their successor sections, which
shall constitute the exclusive remedy for the resolution of any Claim, including
whether the Claim is subject to the reference proceeding. Except as otherwise
provided in the Agreement, venue for the reference proceeding will be in the
state or federal court in the county or district where venue is otherwise
appropriate under applicable law (the “Court”).

 

EXHIBIT F - 14

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  (d) The matters that shall not be subject to a reference are the following:
(i) foreclosure of any security interests in real or personal property,
(ii) exercise of self-help remedies (including, without limitation, set-off),
(iii) appointment of a receiver and (iv) temporary, provisional or ancillary
remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
Agreement does not limit the right of any party to exercise or oppose any of the
rights and remedies described in clauses (i) and (ii) or to seek or oppose from
a court of competent jurisdiction any of the items described in clauses
(iii) and (iv). The exercise of, or opposition to, any of those items does not
waive the right of any party to a reference pursuant to this Agreement.

 

  (e) The referee shall be a retired judge or justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days of a
written request to do so by any party, then, upon request of any party, the
referee shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party
shall have one peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).

 

  (f) The parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (i) set the matter
for a status and trial-setting conference within fifteen (15) days after the
date of selection of the referee, (ii) if practicable, try all issues of law or
fact within one hundred twenty (120) days after the date of the conference and
(iii) report a statement of decision within twenty (20) days after the matter
has been submitted for decision.

 

  (g) The referee will have power to expand or limit the amount and duration of
discovery. The referee may set or extend discovery deadlines or cutoffs for good
cause, including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered, no party shall be entitled to “priority”
in conducting discovery, depositions may be taken by either party upon seven
(7) days written notice, and all other discovery shall be responded to within
fifteen (15) days after service. All disputes relating to discovery which cannot
be resolved by the parties shall be submitted to the referee whose decision
shall be final and binding.

 

  (h) Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of hearings, the order of presentation of evidence, and all
other questions that arise with respect to the course of the reference
proceeding. All proceedings and hearings conducted before the referee, except
for trial, shall be conducted without a court reporter, except that when any
party so requests, a court reporter will be used at any hearing conducted before
the referee, and the referee will be provided a courtesy copy of the transcript.
The party making such a request shall have the obligation to arrange for and pay
the court reporter. Subject to the referee’s power to award costs to the
prevailing party, the parties will equally share the cost of the referee and the
court reporter at trial.

 

  (i)

The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the State of California. The rules
of evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a trial,
including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject of
the reference. Pursuant to CCP § 644, such decision shall be entered by the
Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any

 

EXHIBIT F - 15

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such decision will be final, binding and conclusive. The parties reserve the
right to appeal from the final judgment or order or from any appealable decision
or order entered by the referee. The parties reserve the right to findings of
fact, conclusions of laws, a written statement of decision, and the right to
move for a new trial or a different judgment, which new trial, if granted, is
also to be a reference proceeding under this provision.

 

  (j) If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or Justice, in accordance with the California Arbitration Act §1280 through
§1294.2 of the CCP as amended from time to time. The limitations with respect to
discovery set forth above shall apply to any such arbitration proceeding.

 

  (k) THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS
REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN
CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL
PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY,
DISPUTE OR CLAIM BETWEEN OR AMONG THEM WHICH ARISES OUT OF OR IS RELATED TO THE
AGREEMENT.

Section 7.16 Consistent Application. The rights and duties created by this
Agreement shall, in all cases, be interpreted consistently with, and shall be in
addition to (and not in lieu of), the rights and duties created by the Credit
Agreement or the other Loan Documents. In the event that any provision of this
Agreement shall be inconsistent with any provision of the Credit Agreement, such
provision of the Credit Agreement shall govern.

Section 7.17 Continuing Lien. The security interest granted under this Agreement
shall be a continuing security interest in every respect (whether or not the
outstanding balance of the Indebtedness is from time to time temporarily reduced
to zero) and Agent’s security interest in the Collateral as granted herein shall
continue in full force and effect for the entire duration that the Credit
Agreement remains in effect and until all of the Indebtedness are repaid and
discharged in full, and no commitment (whether optional or obligatory) to extend
any credit under the Credit Agreement remain outstanding.

[remainder of page left blank intentionally]

 

EXHIBIT F - 16

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IN WITNESS WHEREOF, the parties hereto have duly executed this Security
Agreement as of the day and year first written above.

 

AGENT:       DEBTOR:

COMERICA BANK,

as Administrative Agent

     

NEOPHOTONICS CORPORATION,

a Delaware corporation

By:            By:      Its:            Its:     

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EXHIBIT G

FORM OF BORROWING BASE CERTIFICATE

[Form to be provided by the Agent]

 

EXHIBIT G

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EXHIBIT H

FORM OF ASSIGNMENT AGREEMENT

Date:                 , 201        

 

To: Borrower

and

Agent

 

Re: Revolving Credit and Term Loan Agreement made as of the 21st day of March,
2013 (as amended, restated or otherwise modified from time to time, “Credit
Agreement”), by and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and NeoPhotonics Corporation, a
Delaware corporation (“Borrower”)

Ladies and Gentlemen:

Reference is made to Section 13.8 of the Credit Agreement. Unless otherwise
defined herein or the context otherwise requires, all initially capitalized
terms used herein without definition shall have the meanings specified in the
Credit Agreement.

This Agreement constitutes notice to each of you of the proposed assignment and
delegation by                                          
                                        [insert name of assignor] (the
“Assignor”) to                                          
                                        [insert name of assignee] (the
“Assignee”), and, subject to the terms and conditions of the Credit Agreement,
the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, effective on the “Effective Date” (as
hereafter defined) that undivided interest in each of Assignor’s rights and
obligations under the Credit Agreement and the other Loan Documents in the
amounts as set forth on the attached Schedule 1, such that, after giving effect
to the foregoing assignment and assumption, and the concurrent assignment by
Assignor to Assignee on the date hereof, the Assignee’s interest in the
Revolving Credit (and participations in any outstanding Letters of Credit and
Swing Line Advances), and the Term Loan shall be as set forth in the attached
Schedule 2 with respect to the Assignee.

The Assignor hereby instructs the Agent to make all payments from and including
the Effective Date hereof in respect of the interest assigned hereby, directly
to the Assignee. The Assignor and the Assignee agree that all interest and fees
accrued up to, but not including, the Effective Date of the assignment and
delegation being made hereby are the property of the Assignor, and not the
Assignee. The Assignee agrees that, upon receipt of any such interest or fees
accrued up to the Effective Date, the Assignee will promptly remit the same to
the Assignor.

The Assignee hereby confirms that it has received a copy of the Credit Agreement
and the exhibits and schedules referred to therein, and all other Loan Documents
which it considers necessary, together with copies of the other documents which
were required to be delivered under the Credit Agreement as a condition to the
making of the loans thereunder. The Assignee acknowledges and agrees that it:
(a) has made and will continue to make such inquiries and has taken and will
take such care on its own behalf as would have been the case had its Percentage
been granted and its loans been made directly by such Assignee to the Borrower
without the intervention of the Agent, the Assignor or any other Lender; and
(b) has made and will continue to make, independently and without reliance upon
the Agent, the Assignor or any other Lender, and based on such documents and
information as it has deemed appropriate, its own credit analysis and decisions
relating to the Credit Agreement. The Assignee further acknowledges and agrees
that neither the Agent, nor the Assignor has made any representations or
warranties about the creditworthiness of the Borrower or any other party to the
Credit Agreement or any other of the Loan Documents, or with respect to the
legality, validity, sufficiency or enforceability of the Credit Agreement, or
any other of the Loan Documents. This assignment shall be made without recourse
to or warranty by the Assignor, except as set forth herein.

 

EXHIBIT H - 1

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Assignee represents and warrants that it is a Person to which assignments are
permitted pursuant to Section 13.8 of the Credit Agreement.

Except as otherwise provided in the Credit Agreement, effective as of the
Effective Date:

 

  (a) the Assignee: (i) shall be deemed automatically to have become a party to
the Credit Agreement and the other Loan Documents, to have assumed all of the
Assignor’s obligations thereunder to the extent of the Assignee’s percentage
referred to in the second paragraph of this Assignment Agreement, and to have
all the rights and obligations of a party to the Credit Agreement and the other
Loan Documents, as if it were an original signatory thereto to the extent
specified in the second paragraph hereof; and (ii) agrees to be bound by the
terms and conditions set forth in the Credit Agreement and the other Loan
Documents as if it were an original signatory thereto; and

 

  (b) the Assignor’s obligations under the Credit Agreement and the other Loan
Documents shall be reduced by the Percentage referred to in the second paragraph
of this Assignment Agreement.

As used herein, the term “Effective Date” means the date on which all of the
following have occurred or have been completed, as reasonably determined by the
Agent:

 

  (1) the delivery to the Agent of an original of this Assignment Agreement
executed by the Assignor and the Assignee;

 

  (2) the payment to the Agent, of all accrued fees, expenses and other items
for which reimbursement is then owing under the Credit Agreement;

 

  (3) the payment to the Agent of the processing fee referred to in
Section 13.8(d) of the Credit Agreement; and

 

  (4) all other restrictions and items noted in Section 13.8 of the Credit
Agreement have been completed.

The Agent shall notify the Assignor and the Assignee, along with Borrower, of
the Effective Date.

The Assignee hereby advises each of you of the following administrative details
with respect to the assigned loans:

 

  (A) Address for Notices:

Institution Name:

Address:

Attention:

Telephone:

Facsimile:

 

  (B) Payment Instructions:

 

  (C) Proposed effective date of assignment.

 

EXHIBIT H - 2

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The Assignee has delivered to the Agent (or is delivering to the Agent
concurrently herewith) the tax forms referred to in Section 13.13 of the Credit
Agreement to the extent required thereunder, and other forms reasonably
requested by the Agent. The Assignor has delivered to the Agent (or shall
promptly deliver to Agent following the execution hereof), the original of each
Note held by the Assignor under the Credit Agreement.

The laws of the State of California shall govern the validity, interpretation
and enforcement of this Agreement.

* * *

Signatures Follow on Succeeding Pages

 

EXHIBIT H - 3

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Please evidence your consent to and acceptance of the proposed assignment and
delegation set forth herein by signing and returning counterparts hereof to the
Assignor and the Assignee.

 

[ASSIGNOR]

By:

   

Its:

    [ASSIGNEE]

By:

   

Its:

   

 

EXHIBIT H - 4

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ASSIGNMENT AGREEMENT ACCEPTED AND CONSENTED TO

this          day of         , 201        :

 

COMERICA BANK, as Administrative Agent By:     Its:    
                                                                          * By:
    Its:    

[*Borrower’s consent will be required except as specified in Section 13.8 of the
Credit Agreement.]

[This form of Assignment Agreement (including footnotes) is subject in all
respects to the terms and conditions of the Credit Agreement which shall govern
in the event of any inconsistencies or omissions.]

 

EXHIBIT H - 5

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EXHIBIT I

FORM OF GUARANTY

THIS GUARANTY dated as of             ,          (as amended, supplemented,
amended and restated or otherwise modified from time to time, the “Guaranty”),
is made by the undersigned Guarantors (collectively, the “Guarantors” and each,
individually, a “Guarantor”) to Comerica Bank, a Texas banking association
(“Comerica”), as administrative agent for and on behalf of the Lenders (as
defined below) (in such capacity, the “Agent”).

RECITALS:

A. Neophotonics Corporation (“Borrower”) has entered into that certain Revolving
Credit and Term Loan Agreement dated as of March     , 2013 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
“Credit Agreement”) with each of the financial institutions from time to time
signatory thereto (collectively, including their respective successors and
assigns, the “Lenders”) and the Agent, pursuant to which the Lenders have
agreed, subject to the satisfaction of certain terms and conditions, to extend
or to continue to extend financial accommodations to Borrower, as provided
therein.

B. As a condition to entering into and performing their respective obligations
under the Credit Agreement, the Lenders and the Agent have required that each of
the Guarantors provide to the Agent, for and on behalf of the Lenders, this
Guaranty.

C. Each of the Guarantors desires to see the success of Borrower. Furthermore,
each of the Guarantors shall receive direct and/or indirect benefits from
extensions of credit made or to be made pursuant to the Credit Agreement to
Borrower.

D. The business operations of Borrower and the Guarantors are interrelated and
complement one another, and such entities have a common business purpose, with
intercompany bookkeeping and accounting adjustments used to separate their
respective properties, liabilities, and transactions. To permit their
uninterrupted and continuous operations, such entities now require and will from
time to time hereafter require funds and credit accommodations for general
business purposes, and the proceeds of advances under the credit facilities
extended under the Credit Agreement will directly or indirectly benefit Borrower
and the Guarantors hereunder, severally and jointly.

E. The Agent is acting as agent for the Lenders pursuant to Section 12 of the
Credit Agreement.

NOW, THEREFORE, to induce each of the Lenders to enter into and perform its
obligations under the Credit Agreement, each of the Guarantors has executed and
delivered this Guaranty.

1. Definitions. As used in this Guaranty, capitalized terms not otherwise
defined herein have the meanings provided for such terms in the Credit
Agreement. The term “Lenders” as used herein shall include any successors or
assigns of the Lenders in accordance with the Credit Agreement. In addition, the
following term shall have the following meaning:

 

EXHIBIT I - 1

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“Guaranteed Obligations” shall mean, collectively, all Indebtedness (as defined
in the Credit Agreement) (including, without limitation, interest accruing at
the then applicable rate provided in the Credit Agreement after maturity thereof
and accruing on or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding by or against
the Credit Parties or any one of them, whether or not a claim for post-filing or
post-petition interest is allowed in such a proceeding and including, without
limitation, interest at the highest allowable per annum rate specified in any
document, instrument or agreement applicable to any of the Indebtedness), and
all other liabilities and obligations of any Credit Party, in each case whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter incurred, which may arise under, out of, or in connection with the
Credit Agreement, this Guaranty and the other Loan Documents. Notwithstanding
anything to the contrary in this Guaranty, with respect to any Guarantor, the
term “Guaranteed Obligations” shall not include any obligation of any Credit
Party with respect to a “swap,” as defined in Section 1(a)(47) of the Commodity
Exchange Act (“CEA”), entered into on or after October 12, 2012, if at the time
that swap is entered into, such Guarantor is not an “eligible contract
participant,” as defined in Section 1(a)(18) of the CEA.

2. Guaranty. Each of the Guarantors hereby, jointly and severally, guarantees to
the Lenders the due and punctual payment to the Lenders when due, whether by
acceleration or otherwise, and performance of the Guaranteed Obligations. Each
of such Guarantors further jointly and severally agrees to pay any and all
expenses (including reasonable attorneys’ fees), that may be paid or incurred by
the Agent or any Lender in enforcing or preserving rights with respect to or
collecting any or all of the Guaranteed Obligations and/or enforcing any rights
with respect to, or collecting against the Guarantors under this Guaranty.

3. Unconditional Character of Guaranty. The obligations of each of the
Guarantors under this Guaranty shall be absolute and unconditional, and shall be
a guaranty of payment and not of collection, irrespective of the validity,
regularity or enforceability of the Credit Agreement or any of the other Loan
Documents, or any provision thereof, the absence of any action to enforce the
same, any waiver or consent with respect to or any amendment of any provision
thereof (provided that any amendment of this Guaranty shall be in accordance
with the terms hereof), the recovery of any judgment against any Person or
action to enforce the same, any failure or delay in the enforcement of the
obligations of any Credit Party under the Credit Agreement or any of the other
Loan Documents, or any setoff, counterclaim, recoupment, limitation, defense or
termination whether with or without notice to the Guarantors. Each of the
Guarantors hereby waives diligence, demand for payment, filing of claims with
any court, any proceeding to enforce any provision of the Credit Agreement or
any of the other Loan Documents, any right to require a proceeding first against
Borrower or against any other Guarantor or other Person providing collateral, or
to exhaust any security for the performance of the obligations of Borrower, any
protest, presentment, notice or demand whatsoever, and each Guarantor hereby
covenants that this Guaranty shall not be terminated, discharged or released
until, subject to Section 15 hereof, final payment in full of all of the
Guaranteed Obligations

 

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(other than inchoate indemnity and reimbursement obligations for which no claim
has been made) due or to become due and the termination of any and all
commitments of Agent, Issuing Lender, Swing Line Lender and the other Lenders to
extend credit (whether optional or obligatory) under the Credit Agreement or any
other Loan Document, and only to the extent of any such payment, performance and
discharge. Each Guarantor hereby further covenants that no security now or
subsequently held by the Agent or the Lenders for the payment of the Guaranteed
Obligations (including, without limitation, any security for any of the
foregoing), whether in the nature of a security interest, pledge, lien,
assignment, setoff, suretyship, guaranty, indemnity, insurance or otherwise, and
no act, omission or other conduct of the Agent or the Lenders in respect of such
security, shall affect in any manner whatsoever the unconditional obligations of
this Guaranty, and that the Agent and each of the Lenders in their respective
sole discretion and without notice to any of the Guarantors, may release,
exchange, enforce, apply the proceeds of and otherwise deal with any such
security without affecting in any manner the unconditional obligations of this
Guaranty.

Without limiting the generality of the foregoing, the obligations of the
Guarantors under this Guaranty, and the rights of the Agent to enforce the same,
on behalf of the Lenders by proceedings, whether by action at law, suit in
equity or otherwise, shall not be in any way affected to the extent permitted by
applicable law, by (i) any insolvency, bankruptcy, liquidation, reorganization,
readjustment, composition, dissolution, winding up or other proceeding involving
or affecting Borrower, any or all of the Guarantors or any other Person or any
of their respective Affiliates including any discharge of, or bar or stay
against collecting, all or any of the Guaranteed Obligations in or as a result
of any such proceeding; (ii) any change in the ownership of any of the capital
stock (or other ownership interests) of the Lenders or any or all of the
Guarantors, or any other Person providing collateral for any of the Guaranteed
Obligations, or any of their respective Affiliates; (iii) the election by the
Agent or any Lender, in any bankruptcy proceeding of any Person, to apply or not
apply Section 1111(b)(2) of the Bankruptcy Code; (iv) any extension of credit or
the grant of any security interest or lien under the Bankruptcy Code; (v) any
agreement or stipulation with respect to the provision of adequate protection in
any bankruptcy proceeding of any Person; (vi) the avoidance of any security
interest or lien in favor of the Agent or any Lender for any reason; (vii) any
action taken by the Agent or any Lender that is authorized by this paragraph or
any other provision of this Guaranty; or (viii) any other principle or provision
of law, statutory or otherwise, which is or might be in conflict with the terms
hereof.

4. Waivers. Each of the Guarantors hereby waives to the fullest extent possible
under applicable law:

(a) any defense based upon or arising by reason of:

 

  (i) the doctrine of marshaling of assets or upon an election of remedies by
Agent or the Lenders, including, without limitation, an election to proceed by
non-judicial rather than judicial foreclosure;

 

  (ii) any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in other respects more burdensome than that
of the principal;

 

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  (iii) any disability or other defense of Borrower or any other Person (other
than payment in full of the Guaranteed Obligations);

 

  (iv) any lack of authority of any officer, director, partner, agent or any
other person acting or purporting to act on behalf of Borrower or any other
Person, or any defect in the formation of Borrower or any other Person;

 

  (v) the application by Borrower of the proceeds of any Guaranteed Obligations
for purposes other than the purposes represented by Borrower to the Lenders or
intended or understood by the Lenders or the Guarantors;

 

  (vi) any act or omission by the Lenders which directly or indirectly results
in or aids the discharge of Borrower or any Guaranteed Obligations by operation
of law or otherwise; or

 

  (vii) any modification of Guaranteed Obligations, in any form whatsoever
including without limit any modification made after effective termination, and
including without limit, the renewal, extension, acceleration or other change in
time for payment of the Guaranteed Obligations, or other change in the terms of
any Guaranteed Obligations, including without limit increase or decrease of the
interest rate;

(b) any duty on the part of Agent or any of the Lenders to disclose to such
Guarantor any facts Agent or the Lenders may now or hereafter know about
Borrower, regardless of whether Agent or any Lender has reason to believe that
any such facts materially increase the risk beyond that which such Guarantor
intends to assume or has reason to believe that such facts are unknown to such
Guarantor or has a reasonable opportunity to communicate such facts to such
Guarantor;

(c) any other event or action (excluding compliance by such Guarantor with the
provisions hereof) that would result in the discharge by operation of law or
otherwise of such Guarantor from the performance or observance of any
obligation, covenant or agreement contained in this Guaranty; and

(d) all rights to participate in any security now or hereafter held by the Agent
or any Lender.

Each Guarantor understands that, absent this waiver, the Agent’s election of
remedies, including but not limited to its decision to proceed to nonjudicial
foreclosure on any real property securing the Guaranteed Obligations, could
preclude the Agent, on behalf of the Lenders, from obtaining a deficiency
judgment against Borrower and each Guarantor pursuant to California Code of
Civil Procedure Sections 580a, 580b, 580d or 726 and could also destroy any
subrogation rights which such Guarantor has against Borrower. Each Guarantor
further understands that, absent this waiver, California law, including without
limitation, California Code of Civil Procedure Sections 580a, 580b, 580d or 726,
could afford such Guarantor one or more affirmative defenses to any action
maintained by the Agent, on behalf of the Lenders, against such Guarantor on
this Guaranty.

 

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Each Guarantor waives any and all rights and provisions of California Code of
Civil Procedure Sections 580a, 580b, 580d and 726, including, but not limited to
any provision thereof that: (i) may limit the time period for the Agent, on
behalf of the Lenders, to commence a lawsuit against Borrower or any Guarantor
to collect any of the Guaranteed Obligations owing by Borrower or any Guarantor
to Lenders; (ii) may entitle Borrower or any Guarantor to a judicial or
nonjudicial determination of any deficiency owed by Borrower or any Guarantor to
the Agent, on behalf of the Lenders, or to otherwise limit the Agent’s right to
collect a deficiency based on the fair market value of such real property
security; (iii) may limit the Agent’s right to collect a deficiency judgment
after a sale of any real property securing the Guaranteed Obligations; (iv) may
require the Agent to take only one action to collect the Guaranteed Obligations
or that may otherwise limit the remedies available to the Agent to collect the
Guaranteed Obligations.

Each Guarantor waives all rights and defenses arising out of an election of
remedies by the Agent, on behalf of the Lenders, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed the Agent’s and the Lenders’ rights of
subrogation and reimbursement against Borrower by the operation of Section 580d
of the California Code of Civil Procedure or otherwise.

Without limiting the generality of any other waiver or other provision set forth
in this Guaranty, each Guarantor waives all rights and defenses that such
Guarantor may have because the Guaranteed Obligations are secured by real
property to the fullest extent permissible under applicable law. This means,
among other things:

(a) The Agent, on behalf of the Lenders, may collect from any Guarantor without
first foreclosing on any real or personal property collateral pledged by
Borrower to secure the Guaranteed Obligations.

(b) If the Agent, on behalf of the Lenders, forecloses on any real property
collateral pledged by Borrower to secure the Guaranteed Obligations:

 

  (i) The amount of the Guaranteed 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.

 

  (ii) The Agent, on behalf of the Lenders, may collect from any Guarantor even
if the Agent, on behalf of the Lenders, by foreclosing on the real property
pledged as collateral, has destroyed any right that the any Guarantor may have
to collect from Borrower.

This is an unconditional and irrevocable waiver of any rights and defenses each
Guarantor may have because the Guaranteed Obligations are secured by real
property to the fullest extent permissible under applicable law. 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.

 

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WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH
IN THIS GUARANTY, EACH GUARANTOR HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH
WAIVER IS PERMITTED BY LAW, ANY AND ALL BENEFITS, DEFENSES TO PAYMENT OR
PERFORMANCE, OR ANY RIGHT TO PARTIAL OR COMPLETE EXONERATION ARISING DIRECTLY OR
INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS 2799, 2808,
2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2847, 2848, 2849,
AND 2850.

Each of the Guarantors acknowledges and agrees that this is a knowing and
informed waiver of the undersigned’s rights as discussed above and that the
Agent and the Lenders are relying on this waiver in extending credit to
Borrower.

5. Waiver of Subrogation. Each Guarantor hereby waives any claim for
reimbursement, contribution, exoneration, indemnity or subrogation, or any other
similar claim, which such Guarantor may have or obtain against Borrower, by
reason of the existence of this Guaranty, or by reason of the payment by such
Guarantor of any of the Guaranteed Obligations or the performance of this
Guaranty, the Credit Agreement or any of the other Loan Documents, until the
Guaranteed Obligations (other than inchoate indemnity and reimbursement
obligations for which no claim has been made) have been repaid and discharged in
full, no Letters of Credit shall remain outstanding and all commitments to
extend credit under the Credit Agreement or any of the other Loan Documents
(whether optional or obligatory) have been terminated. Any amounts paid to such
Guarantor on account of any such claim at any time when the obligations of such
Guarantor under this Guaranty shall not have been fully and finally paid shall
be held by such Guarantor in trust for Agent and the Lenders, segregated from
other funds of such Guarantor, and forthwith upon receipt by such Guarantor
shall be turned over to Agent in the exact form received by such Guarantor (duly
endorsed to Agent by such Guarantor, if required), to be applied to such
Guarantor’s obligations under this Guaranty, whether matured or unmatured, in
such order and manner as Agent may determine.

Each of the Guarantors acknowledges and agrees that this is a knowing and
informed waiver of the undersigned’s rights as discussed above and that the
Agent and the Lenders are relying on this waiver in extending credit to
Borrower.

6. Other Transactions. The Agent and each of the Lenders may deal with Borrower
and any security held by them for the obligations of Borrower in the same manner
and as freely as if this Guaranty did not exist and the Agent shall be entitled,
on behalf of the Lenders, without notice to any of the Guarantors, among other
things, to grant to Borrower such extension or extensions of time to perform any
act or acts as may seem advisable to the Agent (on behalf of the Lenders) at any
time and from time to time, and to permit Borrower to incur additional
indebtedness to the Agent, the Lenders, or any of them, without terminating,
affecting or impairing the validity or enforceability of this Guaranty or the
obligations of the Guarantors hereunder.

 

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7. Remedies; Right to Offset. The Agent may proceed, either in its own name (on
behalf of the Lenders) or in the name of each or any of the Guarantors, or
otherwise, to protect and enforce any or all of its rights under this Guaranty
by suit in equity, action at law or by other appropriate proceedings, or to take
any action authorized or permitted under applicable law, and shall be entitled
to require and enforce the performance of all acts and things required to be
performed hereunder by the Guarantors. Each and every remedy of the Agent and of
the Lenders shall, to the extent permitted by law, be cumulative and shall be in
addition to any other remedy given hereunder or now or hereafter existing at law
or in equity.

At the option of the Agent, any or all of the Guarantors may be joined in any
action or proceeding commenced by the Agent against Borrower or any of the other
parties providing Collateral for any of the Guaranteed Obligations, and recovery
may be had against any or all of the Guarantors in such action or proceeding or
in any independent action or proceeding against any of them, without any
requirement that the Agent or the Lenders first assert, prosecute or exhaust any
remedy or claim against Borrower and/or any of the other parties providing
Collateral for any of the Guaranteed Obligations.

Each of the Guarantors acknowledges the rights of the Agent and of each of the
Lenders, subject to the applicable terms and conditions of the Credit Agreement,
to offset against the Guaranteed Obligations of any Guarantor to the Lenders
under this Guaranty, any amount owing by the Agent or the Lenders, or either or
any of them to such Guarantors, whether represented by any deposit of such
Guarantors (or any of them) with the Agent or any of the Lenders or otherwise.

8. Borrower’s Financial Condition. Each Guarantor delivers this Guaranty based
solely on its own independent investigation of (or decision not to investigate)
the financial condition of Borrower and is not relying on any information
furnished by Agent or the Lenders. Each Guarantor assumes full responsibility to
keep itself informed concerning the financial condition of Borrower and all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations, the status of the Guaranteed Obligations or any other matter which
such Guarantor may deem necessary or appropriate, now or later.

9. Representations and Warranties; Covenants. Each Guarantor (a) ratifies,
confirms and, by reference thereto (as fully as though such matters were
expressly set forth herein), represents and warrants with respect to itself
those matters set forth in Article 6 of the Credit Agreement to the extent
applicable to such Guarantor and those matters set forth in the recitals hereto,
and such representations and warranties shall be deemed to be continuing
representations and warranties true and correct in all material respects so long
as this Guaranty shall be in effect; and (b) agrees to comply with the covenants
set forth in Article 7 and Article 8 of the Credit Agreement to the extent
applicable to such Guarantor, and (ii) not to otherwise engage in any action or
inaction, the result of which would cause a violation of any term or condition
of the Credit Agreement.

10. Governing Law; Severability. This Guaranty shall be governed by and
construed in accordance with the laws of the State of California. If any term or
provision of this Guaranty or the application thereof to any circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this Guaranty, or
the application of such term or provision to circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Guaranty shall be valid and enforceable to the
fullest extent permitted by law.

 

EXHIBIT I - 7

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11. Notices. All notices, requests, consents, approvals, waivers and other
communications hereunder shall be in writing (including, by facsimile
transmission) and mailed, faxed or delivered to the address or facsimile number
specified for notices on the signature pages to this Guaranty; or, as directed
to the Guarantors or the Agent, to such other address or number as shall be
designated by such party in a written notice to the other. All such notices,
requests and communications shall, when sent by overnight delivery, or faxed, be
effective when delivered for overnight (next business day) delivery, or
transmitted in legible form by facsimile machine (with electronic confirmation
of receipt), respectively, or if mailed, upon the third Business Day after the
date deposited into the U.S. mail, or if otherwise delivered, upon delivery;
except that notices to the Agent shall not be effective until actually received
by the Agent.

12. Amendments; Future Subsidiaries. The terms of this Guaranty may not be
altered, modified, amended, supplemented or terminated in any manner whatsoever
unless the same shall be in writing and signed by or on behalf of the requisite
Lenders as determined pursuant to the Credit Agreement. Any Person at any time
required to become a Guarantor pursuant to Section 7.13 of the Credit Agreement
or otherwise shall become obligated as Guarantors hereunder (each as fully as
though an original signatory hereto) by executing and delivering to the Agent
and the Lenders that certain joinder agreement in the form attached hereto as
Exhibit A.

13. No Waiver. No waiver or release shall be deemed to have been made by the
Agent or any of the Lenders of any of their respective rights hereunder unless
the same shall be in writing and signed by or on behalf of the requisite Lenders
as determined pursuant to the Credit Agreement, and any such waiver shall be a
waiver or release only with respect to the specific matter and Guarantor or
Guarantors involved, and shall in no way impair the rights of the Agent or any
of the Lenders or the obligations of the Guarantors under this Guaranty in any
other respect at any other time.

14. Joint and Several Obligation, etc. The obligation of each of the Guarantors
under this Guaranty shall be several and also joint, each with all and also each
with any one or more of the others, and may be enforced against each severally,
any two or more jointly, or some severally and some jointly. Any one or more of
the Guarantors may be released from its obligations hereunder with or without
consideration for such release and the obligations of the other Guarantors
hereunder shall be in no way affected thereby. The Agent, on behalf of Lenders,
may fail or elect not to prove a claim against any bankrupt or insolvent
Guarantor and thereafter, the Agent and the Lenders may, without notice to any
Guarantors, extend or renew any part or all of the obligations of Borrower under
the Credit Agreement or otherwise, and may permit any such Person to incur
additional indebtedness, without affecting in any manner the unconditional
obligation of each of the Guarantors hereunder. Such action shall not affect any
right of contribution among the Guarantors.

 

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15. Release; Reinstatement. Upon the final payment and discharge in full of all
Guaranteed Obligations and the termination of any and all commitments of Agent,
Issuing Lender, Swing Line Lender and the Lenders to extend credit (whether
optional or obligatory) under the Credit Agreement or any other Loan Document,
the Agent shall deliver to such Guarantors, upon written request therefor, (a) a
written release of this Guaranty and (b) appropriate discharges of any
Collateral provided by the Guarantors for this Guaranty; provided however that,
the effectiveness of this Guaranty shall continue or be reinstated, as the case
may be, in the event: (x) that any payment received or credit given by the Agent
or the Lenders, or any of them, is returned, disgorged, rescinded or required to
be recontributed to any party as an avoidable preference, impermissible setoff,
fraudulent conveyance, restoration of capital or otherwise under any applicable
state, federal, or local law of any jurisdiction, including laws pertaining to
bankruptcy or insolvency, and this Guaranty shall thereafter be enforceable
against the Guarantors as if such returned, disgorged, recontributed or
rescinded payment or credit has not been received or given by the Agent or the
Lenders, and whether or not the Agent or any Lender relied upon such payment or
credit or changed its position as a consequence thereof or (y) that any
liability is imposed, or sought to be imposed against the Agent or the Lenders,
or any of them, relating to the environmental condition of any of property
mortgaged or pledged to the Agent on behalf of the Lenders by any Guarantor,
Borrower or other party as collateral (in whole or part) for any indebtedness or
obligation evidenced or secured by this Guaranty, whether such condition is
known or unknown, now exists or subsequently arises (excluding only conditions
which arise after acquisition by the Agent or any Lender of any such property,
in lieu of foreclosure or otherwise, due to the wrongful act or omission of the
Agent or such Lenders, or any person other than Borrower, the Subsidiaries, or
Affiliates of Borrower or the Subsidiaries), and this Guaranty shall thereafter
be enforceable against the Guarantors to the extent of all such liabilities,
costs and expenses (including reasonable attorneys’ fees) incurred by the Agent
or Lenders as the direct or indirect result of any such environmental condition
but only for which Borrower is obligated to the Agent and the Lenders pursuant
to the Credit Agreement. For purposes of this Guaranty “environmental condition”
includes, without limitation, conditions existing with respect to the surface or
ground water, drinking water supply, land surface or subsurface strata and the
ambient air.

16. Consent to Jurisdiction. Each of the Guarantors hereby irrevocably submits
to the non-exclusive jurisdiction of any United States federal or California
state court sitting in the County of San Francisco, California in any action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents and Guarantors hereby irrevocably agree that all claims in respect of
such action or proceeding may be heard and determined in any such United States
federal or California state court. Each of the Guarantors irrevocably consents
to the service of any and all process in any such action or proceeding brought
in any court in or of the State of California (and to the receipt of any and all
notices hereunder) by the delivery of copies of such process to Guarantors at
their respective addresses identified in Section 11 hereof in the manner set
forth therein.

17. Headings. The headings, captions, and arrangements used in this Guaranty are
for convenience only and shall not affect the interpretation of this Guaranty.

18. Counterparts. This Guaranty may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

EXHIBIT I - 9

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19. JURY TRIAL WAIVER. EACH GUARANTOR AND THE AGENT ACKNOWLEDGE THAT THE RIGHT
TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER
CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH GUARANTOR AND THE
AGENT, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES
ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE
OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS GUARANTY OR THE GUARANTEED
OBLIGATIONS.

(a) In the event that the jury trial waiver contained in this Section 19 is not
enforceable, the parties elect to proceed as follows:

(b) With the exception of the items specified in clause (c), below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Guaranty or any other Loan Document will be resolved by a
reference proceeding in California in accordance with the provisions of
Section 638 et seq. of the California Code of Civil Procedure (“CCP”), or their
successor sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject to the reference
proceeding. Except as otherwise provided in the Guaranty, venue for the
reference proceeding will be in the state or federal court in the county or
district where venue is otherwise appropriate under applicable law (the
“Court”).

(c) The matters that shall not be subject to a reference are the following:
(i) foreclosure of any security interests in real or personal property,
(ii) exercise of self-help remedies (including, without limitation, set-off),
(iii) appointment of a receiver and (iv) temporary, provisional or ancillary
remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
Section does not limit the right of any party to exercise or oppose any of the
rights and remedies described in clauses (i) and (ii) or to seek or oppose from
a court of competent jurisdiction any of the items described in clauses
(iii) and (iv). The exercise of, or opposition to, any of those items does not
waive the right of any party to a reference pursuant to this Section.

(d) The referee shall be a retired judge or justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days of a
written request to do so by any party, then, upon request of any party, the
referee shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party
shall have one peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).

(e) The parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (a) set the matter
for a status and trial-setting conference within fifteen (15) days after the
date of selection of the referee, (b) if practicable, try all issues of law or
fact within one hundred twenty (120) days after the date of the conference and
(c) report a statement of decision within twenty (20) days after the matter has
been submitted for decision.

 

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(f) The referee will have power to expand or limit the amount and duration of
discovery. The referee may set or extend discovery deadlines or cutoffs for good
cause, including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered, no party shall be entitled to “priority”
in conducting discovery, depositions may be taken by either party upon seven
(7) days written notice, and all other discovery shall be responded to within
fifteen (15) days after service. All disputes relating to discovery which cannot
be resolved by the parties shall be submitted to the referee whose decision
shall be final and binding.

(g) Except as expressly set forth in this Section, the referee shall determine
the manner in which the reference proceeding is conducted including the time and
place of hearings, the order of presentation of evidence, and all other
questions that arise with respect to the course of the reference proceeding. All
proceedings and hearings conducted before the referee, except for trial, shall
be conducted without a court reporter, except that when any party so requests, a
court reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making
such a request shall have the obligation to arrange for and pay the court
reporter. Subject to the referee’s power to award costs to the prevailing party,
the parties will equally share the cost of the referee and the court reporter at
trial.

(h) The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the State of California. The rules
of evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a trial,
including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject of
the reference. Pursuant to CCP § 644, such decision shall be entered by the
Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any such decision will be final, binding and conclusive.
The parties reserve the right to appeal from the final judgment or order or from
any appealable decision or order entered by the referee. The parties reserve the
right to findings of fact, conclusions of laws, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this provision.

(i) If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or Justice, in accordance with the California Arbitration Act § 1280 through §
1294.2 of the CCP as amended from time to time. The limitations with respect to
discovery set forth above shall apply to any such arbitration proceeding.

 

EXHIBIT I - 11

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THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS REFERENCE
PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH
PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES,
AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR
CLAIM BETWEEN OR AMONG THEM WHICH ARISES OUT OF OR IS RELATED TO THE GUARANTY.

20. Limitation under Applicable Insolvency Laws. Notwithstanding anything to the
contrary contained herein, it is the intention of the Guarantors, the Agent and
the Lenders that the amount of the respective Guarantor’s obligations hereunder
shall be in, but not in excess of, the maximum amount thereof not subject to
avoidance or recovery by operation of applicable law governing bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (collectively, “Applicable Insolvency Laws”). To that end, but only in the
event and to the extent that the Guarantor’s respective obligations hereunder or
any payment made pursuant thereto would, but for the operation of the foregoing
proviso, be subject to avoidance or recovery under Applicable Insolvency Laws,
the amount of the Guarantor’s respective obligations hereunder shall be limited
to the largest amount which, after giving effect thereto, would not, under
Applicable Insolvency Laws, render the Guarantor’s respective obligations
hereunder unenforceable or avoidable or subject to recovery under Applicable
Insolvency Laws. To the extent any payment actually made hereunder exceeds the
limitation contained in this Section 20, then the amount of such excess shall,
from and after the time of payment by the Guarantors (or any of them), be
reimbursed by the Lenders upon demand by such Guarantors. The foregoing proviso
is intended solely to preserve the rights of the Agent and the Lenders hereunder
against the Guarantors to the maximum extent permitted by Applicable Insolvency
Laws and neither Borrower nor any Guarantor nor any other Person shall have any
right or claim under this Section 20 that would not otherwise be available under
Applicable Insolvency Laws.

[SIGNATURES FOLLOW ON SUCCEEDING PAGES]

 

EXHIBIT I - 12

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IN WITNESS WHEREOF, each of the undersigned Guarantors has executed this
Guaranty as of the date first above written.

 

GUARANTORS: [GUARANTOR] By:     Its:     Address for Notices:

 

 

Fax No.: Telephone No.: Attention:

 

EXHIBIT I - 13

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EXHIBIT A

JOINDER AGREEMENT

(Guaranty)

THIS JOINDER AGREEMENT (the “Joinder Agreement”) is dated as of             ,
         by                      (“New Guarantor”).

WHEREAS, pursuant to Section 7.13 of that certain Revolving Credit and Term Loan
Agreement dated as of March __, 2013 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the “Credit Agreement”) by and
among Neophotonics Corporation (the “Borrower”), the financial institutions
signatory thereto from time to time (the “Lenders”) and Comerica Bank, as
administrative agent for the Lenders (in such capacity, the “Agent”), the
Lenders have agreed to extend credit to Borrower on the terms set forth in the
Credit Agreement and pursuant to Section 12 of that certain Guaranty dated as of
            ,          (as amended, restated or otherwise modified from time to
time, the “Guaranty”) executed and delivered by the Guarantors named therein
(“Guarantors”) in favor of Agent, for and on behalf of the Lenders, the New
Guarantor must execute and deliver a Joinder Agreement in accordance with the
Credit Agreement and the Guaranty.

NOW THEREFORE, as a further inducement to each of the Lenders to continue to
provide credit accommodations to Borrower, New Guarantor hereby covenants and
agrees as follows:

A. All capitalized terms used herein shall have the meanings assigned to them in
the Credit Agreement unless expressly defined to the contrary.

B. New Guarantor hereby enters into this Joinder Agreement in order to comply
with Section 7.13 of the Credit Agreement and Section 12 of the Guaranty and
does so in consideration of the extension of the Indebtedness, from which New
Guarantor shall derive direct and indirect benefit as with the other Guarantors
(all as set forth and on the same basis as in the Guaranty).

C. New Guarantor shall be considered, and deemed to be, for all purposes of the
Credit Agreement, the Guaranty and the other Loan Documents, a Guarantor under
the Guaranty and hereby ratifies and confirms its obligations under the
Guaranty, all in accordance with the terms thereof.

D. No Default or Event of Default (each term being defined in the Credit
Agreement) has occurred and is continuing under the Credit Agreement.

E. This Joinder Agreement shall be governed by the laws of the State of
California and shall be binding upon New Guarantor and its successors and
assigns.

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IN WITNESS WHEREOF, the undersigned New Guarantor has executed and delivered
this Joinder Agreement as of             ,         .

 

[NEW GUARANTOR] By:     Its:    

 

2

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EXHIBIT J

FORM OF COVENANT COMPLIANCE REPORT

 

TO: Comerica Bank, as Agent

 

RE: Revolving Credit and Term Loan Agreement made as of the 21st day of March,
2013 (as amended, restated or otherwise modified from time to time, “Credit
Agreement”), by and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and NeoPhotonics Corporation, a
Delaware corporation (“Borrower”)

This Covenant Compliance Report (“Report”) is furnished pursuant to
Section 7.2(a) of the Credit Agreement and sets forth various information as of
            , 20     (the “Computation Date”).

 

1. Funded Debt to Adjusted EBITDA Ratio (Section 7.9(a)). On the Computation
Date, the Funded Debt to Adjusted EBITDA Ratio, which is required to be not less
than                      to 1.0 was                      to 1.0, as computed in
the supporting documents attached hereto as Schedule 1.

 

2. Sum of Eligible Accounts and Cash (Section 7.9(b)(1)). On the Computation
Date, the sum of (a) 80% of Eligible Accounts, plus (b) the aggregate Cash
maintained with Agent or a Lender at one of Agent’s or such Lender’s branches
including, without limitation, the custodial accounts maintained with Comerica
Bank, to which assets have been custodied for investment management by Comerica
Securities, Deutsche Bank and other financial institutions), as applicable,
located in the United States as of such date, which is required to be not less
than the sum of (i) the then applicable Revolving Credit Aggregate Commitment
plus (ii) the then applicable Term Loan Aggregate Commitment (minus any
amortization, prepayments (whether mandatory or voluntary) or other permanent
reductions in the amount thereof), is $            , as computed in the
supporting documents attached hereto as Schedule 2.

 

3. Ratio of Cash to Commitments (Section 7.9(b)(2)). On the Computation Date,
the ratio of (1) the Cash set forth in Paragraph 2 above, to (2) the sum of
(i) the then applicable Revolving Credit Aggregate Commitment plus (ii) the then
applicable Term Loan Aggregate Commitment (minus any amortization, prepayments
(whether mandatory or voluntary) or other permanent reductions in the amount
thereof), which is required to be not less than 0.60 to 1.00, is
                     to 1.00, as computed in the supporting documents attached
hereto as Schedule 3.

 

4. Sum of Cash and Unused Revolving Credit Availability (Section 7.9(c)). On the
Computation Date, the aggregate balance of Borrower’s aggregate Cash maintained
with any financial institution, whether foreign or domestic, plus the then
applicable Unused Revolving Credit Availability, which is required to be not
less than $60,000,000, is $            , as computed in the supporting documents
attached hereto as Schedule 4.

 

5. Capital Expenditures (Section 8.6). On the Computation Date, Capital
Expenditures, which were required to be not more than $             in the
aggregate for the calendar year in which the Computation Date occurs, were
$             in the aggregate to date for such year, as evidenced in the
supporting documentation attached as Schedule 5.

The Borrower’s Representative hereby certifies that:

A. To the best of my knowledge, all of the information set forth in this Report
(and in any Schedule attached hereto) is true and correct in all material
respects.

B. To the best of my knowledge, the representation and warranties of the Credit
Parties contained in the Credit Agreement and in the Loan Documents are true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and at the date hereof, except
to the extent that such representations and warranties expressly relate to an
earlier specific date, in which case such representations and warranties were
true and correct in all material respects as of the date when made.

 

EXHIBIT J - 1

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C. I have reviewed the Credit Agreement and this Report is based on an
examination sufficient to assure that this Report is accurate.

D. To the best of my knowledge, except as stated in Schedule 6 hereto (which
shall describe any existing Default or Event of Default and the notice and
period of existence thereof and any action taken with respect thereto or
contemplated to be taken by Borrowers or any other Credit Party), no Default or
Event of Default has occurred and is continuing on the date of this Report.

Capitalized terms used in this Report and in the Schedules hereto, unless
specifically defined to the contrary, have the meanings given to them in the
Credit Agreement.

IN WITNESS WHEREOF, this Report has been executed and delivered by the Borrower
this      day of         , 201    .

 

NEOPHOTONICS CORPORATION By:     Its:    

 

EXHIBIT J - 2

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EXHIBIT K

FORM OF SWING LINE PARTICIPATION CERTIFICATE

            , 201    

 

[Name of Lender]      

 

Re: Revolving Credit and Term Loan Agreement made as of the 21st day of March,
2013 (as amended, restated or otherwise modified from time to time, “Credit
Agreement”), by and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and NeoPhotonics Corporation, a
Delaware corporation (“Borrower”)

Ladies and Gentlemen:

Pursuant to subsection 2.5(e) of the Credit Agreement, the undersigned hereby
acknowledges receipt from you of $             as payment for a participating
interest in the following Swing Line Loan:

Date of Swing Line Loan:                                                  

Principal Amount of Swing Line Loan:                                          

The participation evidenced by this certificate shall be subject to the terms
and conditions of the Credit Agreement including without limitation
Section 2.5(e) thereof.

 

Very truly yours, Comerica Bank, as Agent By:     Its:    

 

EXHIBIT K

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EXHIBIT L

FORM OF REQUEST FOR TERM LOAN ADVANCE

 

No.                        Dated:             , 201        

 

To: Comerica Bank, as Agent

 

Re: Revolving Credit and Term Loan Agreement made as of the 21st day of March,
2013 (as amended, restated or otherwise modified from time to time, “Credit
Agreement”), by and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and NeoPhotonics Corporation, a
Delaware corporation (“Borrower”)

Pursuant to the Credit Agreement, the Borrower hereby requests that the Lenders
refund or convert, as applicable, an Advance under the Term Loan from Lenders as
follows:

 

(A) Date of Advance:

 

(B) Type of Activity:

¨ Refunding

¨ Conversion

 

(C) Type of Advance (check only one):

¨ Base Rate Advance

¨ Eurodollar-based Advance

 

(D) Amount of Advance:

$                         

 

(E) Interest Period (applicable to Eurodollar-based Advances)

                     months

 

(F)                                      Disbursement Instructions

¨ Comerica Bank Account No.                             

¨ Other:                                                      

   

Borrower hereby certifies as follows:

1. There is no Default or Event of Default in existence, and none will exist
upon the refunding or conversion of such Advance (both before and immediately
after giving effect to such Advance); and

 

EXHIBIT L - 1

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2. The representations and warranties of the Credit Parties contained in the
Credit Agreement and the other Loan Documents are true and correct in all
material respects and shall be true and correct in all material respects as of
the date of this Request (both before and immediately after giving effect to
such Request), other than any representation or warranty that expressly speaks
only as of a different date.

[Signature Page Follows]

 

EXHIBIT L

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Capitalized terms used herein, except as defined to the contrary, have the
meanings given them in the Credit Agreement.

 

NEOPHOTONICS CORPORATION By:     Its:    

Agent Approval:                                          

 

EXHIBIT L

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EXHIBIT M

FORM OF TERM LOAN NOTE

 

$                            , 201    

FOR VALUE RECEIVED, NeoPhotonics Corporation, a Delaware corporation
(“Borrower”), promises to pay to the order of [insert name of applicable
financial institution] (“Payee”), in care of Agent, at Detroit, Michigan, the
principal sum of [insert amount derived from Percentages] Dollars
($            ), or if less, the aggregate principal amount of the Term Loan
Advances made by the Payee, in lawful money of the United States of America
payable in quarterly principal installments each in the amount and on the dates
set forth in the Credit Agreement (as defined below) until the Term Loan
Maturity Date, when the entire unpaid balance of principal and interest thereon
shall be due and payable. Interest shall be payable at the rate (including the
default rate) and on the dates provided in the Revolving Credit and Term Loan
Agreement made as of the 21st day of March, 2013 (as amended, restated or
otherwise modified from time to time, “Credit Agreement”), by and among the
financial institutions from time to time signatory thereto (individually a
“Lender,” and any and all such financial institutions collectively the
“Lenders”), Comerica Bank, as Administrative Agent for the Lenders (in such
capacity, the “Agent”), and Borrower.

This Note evidences Term Loan Advances made under, is subject to, may be
accelerated and may be prepaid in accordance with, the terms of the Credit
Agreement, to which reference is hereby made.

This Note shall be interpreted and the rights of the parties hereunder shall be
determined under the laws of, and enforceable in, the State of Michigan.

Borrowers hereby waive presentment for payment, demand, protest and notice of
dishonor and nonpayment of this Note and agree that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.

*   *   *

[SIGNATURES FOLLOW ON SUCCEEDING PAGES]

 

EXHIBIT M - 1

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Nothing herein shall limit any right granted Payee by any other instrument or by
law.

 

NEOPHOTONICS CORPORATION By:     Its:    

 

EXHIBIT M - 2

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EXHIBIT N

FORM OF TERM LOAN RATE REQUEST

 

No.                        Dated:             , 201    

 

To: Comerica Bank, as Agent

 

Re: Revolving Credit and Term Loan Agreement made as of the 21st day of March,
2013 (as amended, restated or otherwise modified from time to time, “Credit
Agreement”), by and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and NeoPhotonics Corporation, a
Delaware corporation (“Borrower”)

Pursuant to the Credit Agreement, the Borrower hereby requests that the Lenders
refund or convert, as applicable, an Advance under the Term Loan from Lenders as
follows:

 

(G) Date of Advance:

 

(H) Type of Activity:

¨ Refunding

¨ Conversion

 

(I) Type of Advance (check only one):

¨ Base Rate Advance

¨ Eurodollar-based Advance

 

(J) Amount of Advance:

$                    

 

(K) Interest Period (applicable to Eurodollar-based Advances)

                     months

 

(L)                                      Disbursement Instructions

¨ Comerica Bank Account No.                                     

¨ Other:                                                 

   

Borrower hereby certifies as follows:

1. There is no Default or Event of Default in existence, and none will exist
upon the refunding or conversion of such Advance (both before and immediately
after giving effect to such Advance); and

 

EXHIBIT N - 1

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2. The representations and warranties of the Credit Parties contained in the
Credit Agreement and the other Loan Documents are true and correct in all
material respects and shall be true and correct in all material respects as of
the date of this Request (both before and immediately after giving effect to
such Request), other than any representation or warranty that expressly speaks
only as of a different date.

[Signature Page Follows]

 

EXHIBIT N

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Capitalized terms used herein, except as defined to the contrary, have the
meanings given them in the Credit Agreement.

 

NEOPHOTONICS CORPORATION By:     Its:    

Agent Approval:                                 

 

EXHIBIT N