Exhibit 10.46
 
REVOLVING CREDIT AGREEMENT
 
This Revolving Credit Agreement (“Agreement”) is made as of the 21st day of
November, 2008, 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 Administrative Agent
for the Lenders (in such capacity, the “Agent”), Arranger, Syndication Agent and
Documentation Agent, and Obagi Medical Products, Inc. (“Obagi”) and OMP, Inc.
(“OMP” and together with Obagi, the “Borrowers” and each individually, a
“Borrower”).
 
RECITALS
 
A.           Borrowers have requested that the Lenders extend to them 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 on the terms and conditions set forth in this Agreement.
 
NOW THEREFORE, in consideration of the covenants contained herein, the
Borrowers, the Lenders, and the Agent 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 Control Agreement(s)” shall mean those certain account control
agreements, or similar agreements that are delivered pursuant to Section 7.14 of
this Agreement or otherwise, as the same may be amended, restated or otherwise
modified from time to time.
 
“Account Debtor” shall mean the party who is obligated on or under any Account.
 
“Advance(s)” shall mean, as the context may indicate, a borrowing requested by a
Borrower, and made by the Revolving Credit Lenders under Section 2.1 hereof,
including without limitation any readvance, refunding or conversion of such
borrowing pursuant to Section 2.3 hereof, and any advance deemed to have been
made in respect of a Letter of Credit under Section 3.6(a) hereof, and shall
include, as applicable, a Eurodollar-based Advance, a Base Rate Advance and a
Daily Funding-based Advance.
 
“Affected Lender” shall have the meaning set forth in Section 13.13 hereof.
 
“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person. A Person shall be deemed to
 

 
 
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control another Person for the purposes of this definition if such Person
possesses, directly or indirectly, the power (i) to vote 10% (or 20% with
respect to a Borrower or Subsidiary of Borrower) or more of the Equity Interests
having ordinary voting power for the election of directors or managers of such
other Person or (ii) to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.
 
“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, Agent’s Grand
Cayman Branch (or for the account of said branch office, at Agent’s main office
in Santa Clara, California, United States).
 
“Alternate Base Rate” shall mean, for any day, an interest rate per annum equal
to the Federal Funds Effective Rate in effect on such day, plus one percent
(1.0%).
 
“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, with respect to each Advance, the
Eurodollar-based Rate, the Base Rate or the Daily Funding-based Rate, in each
case as selected by the Borrowers 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) to
any Person (other than to a Borrower or a Guarantor).
 
“Assignment Agreement” shall mean an Assignment Agreement substantially in the
form of Exhibit E hereto.
 
“Authorized Signer” shall mean each person who has been authorized by a 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
Applicable Margin plus the greater of (i) the Daily Adjusting LIBOR Rate and
(ii) the Prime-based Rate. “Base Rate Advance” shall mean an Advance which bears
interest at the Base Rate.
 
“Borrower” and “Borrowers” shall have the meaning ascribed to such terms in the
preamble to this Agreement.
 
“Borrower Representative” shall mean, initially, OMP, Inc., or any other
Borrower identified as the Borrower Representative in a written notice delivered
to Agent and signed by all Borrowers.
 
“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 Los Angeles, California 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 unrestricted cash and cash equivalents.
 
“Change of Control” shall mean (a) an event or series of events whereby any
Person or “group” (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended) shall either (x) acquire beneficial
ownership of more than 50% of any outstanding class of common stock of any
Borrower having ordinary voting power in the election of directors of such
Borrower or (y) obtain the power (whether or not exercised) to elect a majority
of such Borrower’s directors or (b) the occurrence of event or series of events
that would trigger a violation of the any change of control or change in control
provision in any of the Subordinated Debt Documents.
 
“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 is stored or otherwise located,
or a warehouseman, processor or other bailee of inventory or other property
owned by any Credit Party, that acknowledges the
 

 
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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 Agent may require in its sole discretion, as the same may
be amended, restated or otherwise modified from time to time.
 
“Collateral Documents” shall mean the Security Agreement, the Collateral Access
Agreements, and all other security documents (and any joinders thereto) executed
by any Credit 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, and its successors or assigns.
 
“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” and “Consolidating” shall refer to Borrowers and their respective
Subsidiaries, determined on a Consolidated or 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.
 
“Covenant Compliance Report” shall mean the report to be furnished by Borrowers
to the Agent pursuant to Section 7.2(a) hereof, substantially in the form
attached hereto as Exhibit G and certified by a Responsible Officer of the
Borrower Representative, in which report Borrowers 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 Borrowers and any Guarantors, 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 sum of one percent (1%) plus 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 Bank 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 Bank is required to maintain reserves against a
category of liabilities which includes eurodollar deposits or includes a
category of assets which includes

 

 
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eurodollar loans, the rate at which such reserves are required to be maintained
on such category.

 
“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.
 
“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.
 
“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 a 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 such Borrower or
a Domestic Subsidiary of such 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 and 5.2 have been satisfied.
 
“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 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) Agent (and in the case of an assignment of a commitment under the Revolving
Credit and the Issuing Lender, and (ii) unless an Event of Default has occurred
and is continuing, the Borrowers (each such approval not to be unreasonably
withheld or delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include any of the Borrowers, or any of the Borrowers’
Affiliates or Subsidiaries; and provided further that notwithstanding clause
(d)(ii) of this definition, no assignment shall be made to an entity which is a
competitor of any Credit Party without the consent of the Borrowers, which
consent may be withheld in the sole discretion of the Borrowers.
 

 
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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 or hosted
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 (a) the Applicable Margin, plus (b) the quotient of the following:
 
 
(i)
the LIBOR Rate;

 
divided by
 
 
(ii)
a percentage (expressed as a decimal) equal to 1.00 minus the maximum rate
during such Eurodollar-Interest Period at which Agent or any Lender 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 or any Lender 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.

 
“Eurodollar-Interest Period” shall mean, for any Eurodollar-based Advance, an
Interest Period of one, two, three or six months (or any shorter or longer
periods agreed to in advance by the Borrowers, Agent and the Lenders) as
selected by Borrowers, for such Eurodollar-based Advance pursuant to Section 2.3
hereof.
 
“Eurodollar Lending Office” shall mean, (a) with respect to the Agent, Agent’s
office located at its Grand Caymans Branch or such other branch of Agent,
domestic or foreign, as it may hereafter designate as its Eurodollar Lending
Office by written notice to Borrowers and the Lenders and (b) as to each of the
Lenders, its office, branch or affiliate located at its address set
 

 
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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
Borrowers and Agent.
 
“Event of Default” shall mean each of the Events of Default specified in Section
9.1 hereof.
 
“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 Agent from three Federal funds brokers of recognized standing
selected by Agent, all as conclusively determined by the Agent, such sum to be
rounded upward, if necessary, to the nearest whole multiple of 1/100th of 1%.
 
“Fees” shall mean the Revolving Credit Facility Fee, the Letter of Credit Fees
and the other fees and charges (including any agency fees) payable by Borrowers
to the Lenders, the Issuing Lender or Agent hereunder.
 
“Final Maturity Date” shall mean the Revolving Credit Maturity Date.
 
“Fiscal Year” shall mean the twelve-month period ending on each December 31.
 
“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 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.
 
“GAAP” shall mean, as of any applicable date of determination, generally
accepted accounting principles in the United States of America, as applicable on
such date, consistently applied, as in effect from time to time.
 

 
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“Governmental Obligations” means 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 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 Domestic Subsidiary of a Borrower (excluding any
Domestic Subsidiary that is a 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, 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 F, 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
 

 
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political subdivision thereof) pertaining to any substance or material which is
regulated for reasons of health, safety or the environment 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, 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 Borrowers 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
(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 Borrowers
and their respective 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 profits 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 Agent with respect to the Collateral under or pursuant to the
terms of any Loan Document and any liabilities of any Credit Party to 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
 

 
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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.
 
“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 satisfactory
to Agent.
 
“Interest Period” shall mean 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 hereof; 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, 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 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.
 
“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 Borrowers and
the Revolving Credit Lenders.
 
“Issuing Office” shall mean such office as Issuing Lender shall designate as its
Issuing Office.
 
“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, and any assignee which becomes a Lender pursuant
to Section 13.9 hereof.
 

 
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“Letter of Credit Agreement” shall mean, collectively, the letter of credit
application and related documentation executed and/or delivered by the Borrowers
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 Million Dollars ($5,000,000)
 
“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 Borrowers pursuant to 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 8:00 a.m. (California 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
Agent and 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 Agent is offered dollar deposits at or about 8:00 a.m. (California 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

 

 
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(b)
with respect to 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 the per annum rate for a period
equal to one (1) month appearing on Page BBAM of the Bloomberg Financial Markets
Information Service as of 8:00 a.m. (California time) (or soon thereafter as
practical) on such day, or if such day is not a Business Day, on the immediately
preceding 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 Agent and 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
Agent is offered dollar deposits at or about 8:00 a.m. (California 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.
 
“Majority Lenders” shall mean at any time (a) so long as the Revolving Credit
Aggregate Commitment has not been terminated, Lenders holding more than 50.0% of
the Revolving Credit Aggregate Commitment and (b) if the Revolving Credit
Aggregate Commitment has been terminated (whether by maturity, acceleration or
otherwise), Lenders holding more than 50.0% of the aggregate principal amount
then outstanding under the Revolving Credit; provided that, for purposes of
determining Majority Lenders hereunder, the Letter of Credit Obligations 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.
 
“Majority Revolving Credit Lenders” shall mean at any time (a) so long as the
Revolving Credit Aggregate Commitment has not been terminated, the Revolving
Credit Lenders holding more than 50.0% of the Revolving Credit Aggregate
Commitment and (b) if the Revolving Credit Aggregate Commitment has been
terminated (whether by maturity, acceleration or otherwise), Revolving Credit
Lenders holding more than 50.0% of the aggregate principal
 

 
12

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amount then outstanding under the Revolving Credit; provided that, for purposes
of determining Majority Revolving Credit Lenders hereunder, the Letter of Credit
Obligations 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.
 
“Material Adverse Effect” shall mean a material adverse effect on (a) the
condition (financial or otherwise), business, performance, operations,
properties or prospects of the Credit Parties taken as a whole, (b) the ability
of any Credit Party to perform its obligations under this Agreement, the Notes
(if issued) or any other Loan Document to which it is a party, or (c) the
validity or enforceability of this Agreement, any of the Notes (if issued) or
any of the other Loan Documents or the rights or remedies of the Agent or the
Lenders hereunder or thereunder.
 
“Material Contract” shall mean (i) unless otherwise defined or limited in this
Agreement, each agreement or contract to which any Credit Party is a party or in
respect of which any Credit Party has any liability, that by its terms (without
reference to any indemnity or reimbursement provision therein) provides for
aggregate future guaranteed payments in respect of any such individual agreement
or contract of at least $50,000 and (ii) any other agreement or contract the
loss of which would be reasonably likely to result in a Material Adverse Effect;
provided that Material Contracts shall not be deemed to include any Pension
Plans, collective bargaining agreements, or casualty or liability or other
insurance policies maintained in the ordinary course of business.
 
 “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, the issuance of Equity Interests 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 net income (as determined in
accordance with GAAP) of a Person for such period but excluding in any event:
(i) any gains or losses on the sale or other disposition, not in the ordinary
course of business, of investments or fixed or capital assets, and any taxes on
the excluded gains and any tax deductions or credits on account of any excluded
losses; (ii) net earnings of any entity in which such Person has an ownership
interest, unless such net earnings shall have been actually received by such
Person in the form of cash distributions; and (iii)extraordinary items as
defined by GAAP.
 
“Notes” shall mean the Revolving Credit Notes.
 
“Obagi” shall have the meaning ascribed to such term in the preamble of this
Agreement.
 
“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
 

 
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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.
 
“OMP” shall have the meaning ascribed to such term in the preamble of this
Agreement.
 
“PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
 
“Pension Plan” shall mean any plan established and maintained by a Credit Party,
or contributed to by a Credit Party, which 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 the Revolving Credit Percentage.
 
“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;
 
(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; and
 

 
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(f) Any fund or other pooling arrangement which exclusively purchases and holds
the investments itemized in (a) through (e) above.
 
“Permitted Liens” shall mean with respect to any Person:
 
(a) Liens for (i) taxes or governmental assessments or charges 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 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) thirty
(30) 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;
 
(e) minor survey exceptions or minor 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 interest
of any lessor or sublessor under any lease permitted hereunder which, in each
case, does not 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
 

 
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(g) 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; and
 
(h) continuations of Liens that are permitted under subsections (a)-(f) 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.
 
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 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.
 
“Prime-based Advance” shall mean an Advance which bears interest at the
Prime-based Rate, plus the Applicable Margin.
 
“Prime-based Rate” shall mean, for any day, that rate of interest which is equal
to the greater of (i) the Prime Rate, and (ii) the Alternate Base Rate.
 
“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.
 
“Purchasing Lender” shall have the meaning set forth in Section 13.13.
 
“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 13.9(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(a)).
 
“Request for Advance” shall mean a Request for Revolving Credit Advance.
 
“Request for Revolving Credit Advance” shall mean a request for a Revolving
Credit Advance issued by a Borrower under Section 2.3 of this Agreement in the
form attached hereto as Exhibit A.
 
“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
 

 
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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 or the treasurer 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
Borrowers 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 a 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(a) 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).
 
“Revolving Credit Facility Fee” shall mean the fee payable to 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) November
21, 2011, 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 Borrowers 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.
 

 
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“Revolving Credit Percentage” means, 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.
 
“Security Agreement” shall mean, the security agreement executed and delivered
by the Borrowers 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 D, as amended, restated or
otherwise modified from time to time.
 
“Stock Repurchase Program” shall have the meaning ascribed to such term in
Section 8.5 of this Agreement.
 
“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.
 
“Subordination Agreements” shall mean, collectively, any subordination
agreements entered into by any Person from time to time in favor of 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 Borrowers.
 
“Tangible Effective Net Worth” shall mean, as of any date of determination, the
aggregate net book value of the assets of Borrowers as of such date (excluding
all amounts owing to Borrowers, or either of them, by officers, directors,
shareholders and other affiliates and all patents, patent rights, trademarks,
trade names, franchises, copyrights, licenses, goodwill and all other intangible
assets of Borrowers), after all appropriate deductions in accordance with GAAP
(including, without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization), plus the aggregate amount of Subordinated Debt
of Borrowers, all as determined on a consolidated basis for the Borrowers and in
accordance with GAAP.
 

 
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“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.
 
“USA Patriot Act” is defined in Section 6.7 hereof.
 
“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.
 
“Wisconsin Letter of Credit” shall mean the $5,000 Letter of Credit dated May
28, 2008, with an expiration date of May 27, 2009, and more particularly
described on Schedule 8.1.
 
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
Borrowers 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) Borrowers hereby jointly and severally and unconditionally promise 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 Borrowers 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 Borrowers 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 13.9(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
Borrowers to each Revolving Credit Lender hereunder in respect of the Revolving
Credit
 

 
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(d) Advances and (iii) both the amount of any sum received by the Agent
hereunder from Borrowers in respect of the Revolving Credit Advances and each
Revolving Credit Lender’s share thereof.
 
(e) 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 Borrowers 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 Borrowers to repay the Revolving Credit Advances (and all other
amounts owing with respect thereto) made to Borrowers by the Revolving Credit
Lenders in accordance with the terms of this Agreement.
 
(f) Borrowers agree that, upon written request to the Agent by any Revolving
Credit Lender, Borrowers will execute and deliver, to such Revolving Credit
Lender, at Borrowers’ 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
 
.  Borrowers 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
Agent of a Request for Revolving Credit Advance executed by an Authorized Signer
for the Borrowers, 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;

 
(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 Interest Period applicable thereto, provided, however, that the initial
Revolving Credit Advance made under this Agreement shall be a Base 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 Agent
by 12:00 p.m. (P.S.T.) 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.
(P.S.T.) on the proposed date for such Revolving Credit Advance;
 

 
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(c) on the proposed date of such Revolving Credit Advance, the sum of (x) the
aggregate principal amount of all Revolving Credit Advances outstanding on such
date (including, without duplication the Advances that are deemed to be
disbursed by Agent under Section 3.6(a) hereof in respect of Borrowers’
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 for the issuance of any Letters of Credit,
shall not exceed the Revolving Credit Aggregate Commitment;
 
(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 $250,000 or the remainder available under the Revolving Credit
Aggregate Commitment if less than $250,000;
 
(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 $250,000 in the case of the first such advance (or a larger
integral multiple of at least $100,000), and thereafter in amounts in integral
amounts of at least $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 five (5) different Eurodollar-Interest Periods;
 
(f) a Request for Revolving Credit Advance, once delivered to Agent, shall not
be revocable by Borrowers and shall constitute a certification by Borrowers 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 Borrowers 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;

 
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 Borrowers to make such requests and, in the event
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 Agent, on the same day as such telephone or email
 

 
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request, an executed Request for Revolving Credit Advance. Borrowers hereby
authorize 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, Borrowers acknowledge that Borrowers
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 Borrowers 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 a Borrower
under Section 2.3 hereof, 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 Agent, as
follows:
 
(i)  
for Base Rate Advances at the office of Agent located at 75 E Trimble Road, San
Jose, CA 95131, not later than 1:00 p.m. (P.S.T.) 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
a Borrower without exceptions noted in the compliance certification therein,
Agent shall make available to Borrowers the aggregate of the amounts so received
by it from the Revolving Credit Lenders in like funds and currencies:
 
(i)  
for Base Rate Advances or Daily Funding-based Advances not later than 4:00 p.m.
(P.S.T. time) on the date of such Revolving Credit Advance, by credit to an
account of Borrowers maintained with Agent or to such other account or third
party as Borrowers 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 Borrowers maintained with Agent’s Correspondent or to such other
account or third party as Borrowers may direct, provided such direction is
timely given.

 
(c) Agent shall deliver the documents and papers received by it for the account
of each Revolving Credit Lender to such Revolving Credit Lender. Unless Agent
shall have been
 

 
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(d) 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 Agent such Revolving Credit Lender’s Percentage of such
Advance, Agent may assume that such Revolving Credit Lender has made such amount
available to Agent on such date, as aforesaid.  Agent may, but shall not be
obligated to, make available to Borrowers the amount of such payment in reliance
on such assumption. If such amount is not in fact made available to Agent by
such Revolving Credit Lender, as aforesaid, 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 Agent’s demand therefor
and the Agent has in fact made a corresponding amount available to Borrowers,
the Agent shall promptly notify Borrowers and Borrowers shall pay such amount to
Agent, if such notice is delivered to Borrowers prior to 1:00 p.m. (P.S.T.) on a
Business Day, on the day such notice is received, and otherwise on the next
Business Day, and such amount paid by Borrowers shall be applied as a prepayment
of the Revolving Credit (without any corresponding reduction in the Revolving
Credit Aggregate Commitment), reimbursing Agent for having funded said amounts
on behalf of such Revolving Credit Lender.  The Borrowers shall retain their
claim against such Revolving Credit Lender with respect to the amounts repaid by
them to Agent and, if such Revolving Credit Lender subsequently makes such
amounts available to Agent, Agent shall promptly make such amounts available to
the Borrowers as a Revolving Credit Advance. Agent shall also be entitled to
recover from such Revolving Credit Lender or Borrowers, 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 Agent to Borrowers, to the date such
amount is recovered by 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 Borrowers, the rate of interest then applicable to such Advance
of the Revolving Credit.

 
Until such Revolving Credit Lender has paid 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 Borrowers 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 [Reserved.]
 
2.6 Interest Payments; Default Interest.
 
(a) Interest on the unpaid balance of all Base Rate Advances of the Revolving
Credit 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, as
applicable, and shall be payable in immediately available funds commencing on
December 1, 2008, and on the first day of each month thereafter.
 

 
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(b) 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.
 
(c) 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.
 
(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,
immediately upon receipt by Agent of notice from the Majority Revolving Credit
Lenders, interest shall be payable on demand on all Revolving Credit 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, two percent (2%) for the remainder of the then
existing Interest Period, if any, and at all other such times, and for all Base
Rate Advances and from time to time outstanding, at a per annum rate equal to
the Base Rate, plus two percent (2%).
 
2.7 Optional Prepayments.
 
(a) (i) The Borrowers may prepay all or part of the outstanding principal of any
Base Rate Advance(s) of the Revolving Credit at any time, provided that, 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 Two
Hundred Fifty Thousand Dollars ($250,000), and (ii) the Borrowers 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 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 Two Hundred Fifty Thousand Dollars
($250,000).
 
(b) 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, 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
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
 

 
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continuing, then, on the last day of the applicable Interest Period the
principal amount of any Eurodollar-based Advance 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 Borrowers 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 Borrowers
shall pay to the Agent for distribution to the Lenders pro-rata in accordance
with their respective Percentages, a Revolving Credit Facility Fee annually in
arrears commencing January 1, 2009, and on the first day of each year thereafter
(in respect of the prior twelve months or any portion thereof). The Revolving
Credit Facility Fee shall be determined by multiplying 0.275% 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, Agent shall
make prompt payment to each Lender of its share of the Revolving Credit Facility
Fee based upon its respective 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 the outstanding Letter of Credit Obligations,
shall exceed the Revolving Credit Aggregate Commitment, Borrowers 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 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 as
determined by the Agent and then, to the extent that any excess remains after
payment in full of all Revolving Credit Advances, to provide cash collateral in
support of any Letter of Credit Obligations in an amount equal to the lesser of
(x) 110% 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 the basis
set forth in Section 9.2 hereof. Borrowers acknowledge 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, and then to
Eurodollar-based Advances of the Revolving Credit.
 
(b) 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, Borrowers 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
 

 
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(c) Agent and upon such deposit the obligation of Borrowers 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, 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 Borrowers will be obligated to pay any
resulting breakage costs under Section 11.1.
 
2.11 Optional Reduction or Termination of Revolving Credit Aggregate Commitment
 
.  Borrowers 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 Five Million Dollars ($5,000,000) 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) Borrowers
shall prepay in accordance with the terms hereof the amount, if any, by which
the aggregate unpaid principal amount of Revolving Credit 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; and (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; provided, however that if the termination or reduction of the
Revolving Credit Aggregate Commitment requires the prepayment of a
Eurodollar-based 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, then, pursuant to Section 11.1, Borrower shall
compensate the Revolving Credit Lenders for any losses or, so long as no Default
or Event of Default has occurred and is continuing, Borrower may deposit the
amount of such prepayment in a collateral account as provided in Section
2.10(b). Reductions of the Revolving Credit Aggregate Commitment and any
accompanying prepayments of Advances of the Revolving Credit shall be
distributed by 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 Borrowers. 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, and then to Eurodollar-based Advances of the Revolving
Credit.
 
2.12 Use of Proceeds of Advances
 
.  Advances of the Revolving Credit shall be used to finance working capital and
other lawful corporate purposes.
 
3.  
LETTERS OF CREDIT.

 

 
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4.  
Letters of Credit

 
.  Subject to the terms and conditions of this Agreement, Issuing Lender may
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 Borrowers 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 Borrowers, 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 One
Hundred Thousand Dollars ($100,000) (or $5,000 in the case of the Wisconsin
Letter of Credit 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) one year 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 the International Standby Practices 98, and any successor
documentation thereto and to the extent not inconsistent therewith, the laws of
the State of California. 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.
 
4.1 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
Borrowers 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 (including all Advances deemed disbursed by Agent under Section 3.6(a)
hereof in respect of Borrowers’ Reimbursement Obligations) hereunder requested
or outstanding on such date do not exceed the Revolving Credit Aggregate
Commitment;
 
(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) Borrowers 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;
 

 
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(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 Borrowers 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; and
 
(g) 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 Borrowers 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.
 
4.2 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, Agent shall give notice,
substantially in the form attached as Exhibit C, 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.
 
4.3 Letter of Credit Fees; Increased Costs
 
(a) Borrowers 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 any applicable fee letter.

 

 
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(iii)  
All payments by Borrowers 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 Borrowers 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 annually in advance 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 upon any amendment thereto or extension thereof. 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.

 
(b) If any change in any law or regulation or in the interpretation thereof by
any court or administrative or governmental authority charged with the
administration thereof, adopted after the date hereof, 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 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, Borrowers 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
 

 
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(c) prepared in good faith and shall be conclusive evidence, absent manifest
error, as to the amount thereof.
 
4.4 Other Fees
 
.  In connection with the Letters of Credit, and in addition to the Letter of
Credit Fees, Borrowers 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.
 
4.5 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 Existing Letter of Credit), 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, Borrowers agree 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. (P.S.T.), in Dollars, on (i) the Business Day that Borrowers
received notice of such presentment and honor, if such notice is received prior
to 11:00 a.m. (P.S.T.) or (ii) the Business Day immediately following the day
that Borrowers received such notice, if such notice is received after 11:00 a.m.
(P.S.T.).
 
(c) If the Issuing Lender shall honor a draft or other demand for payment
presented or made under any Letter of Credit, but Borrowers do 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 Borrowers 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.  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 Borrowers do 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
Borrowers is or must be returned or rescinded upon or during any bankruptcy or
reorganization of any Credit Party or otherwise, then Agent shall notify each
Revolving Credit Lender, and each Revolving Credit Lender will be obligated to
pay the Agent for the account of the Issuing Lender its pro rata share (based on
its Revolving Credit
 

 
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(e) 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 Borrowers 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 P.S.T. 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 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.
 
(f) 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
Borrowers 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, plus the
Letter of Credit Obligations (other than the Reimbursement Obligations to be
reimbursed by this Advance) on such date exceed the then applicable Revolving
Credit Aggregate Commitment).
 
(g) 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 Borrowers on the date such draft or demand is honored, and to
each Revolving Credit Lender on such date unless Borrowers 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 Borrowers 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 Borrowers under
this Section 3.6.
 
(h) 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 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 Lenders, as applicable.  In the event that the Issuing Lender receives
such a notice, the Issuing
 

 
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(i) Lender shall have no obligation to issue any Letter of Credit until such
notice is withdrawn by 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. 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.
 
4.6 Obligations Irrevocable
 
.  The obligations of Borrowers to make payments to 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 Borrowers
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
Borrowers from the performance or observance of any obligation, covenant or
agreement contained in Section 3.6 hereof.
 

 
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(h) No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which Borrowers have or may have against the
beneficiary of any Letter of Credit shall be available hereunder to Borrowers
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 Borrowers, after satisfaction in full of the absolute and
unconditional obligations of Borrowers 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 Agent, Issuing Lender or any
Revolving Credit Lender in connection with such Letter of Credit.
 
4.7 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 with
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 Borrowers, 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 Borrowers 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
Borrowers 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 Borrowers’ 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, 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
 

 
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(e) 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 Agent, for redistribution in accordance with
this Agreement.
 
4.8 Indemnification
 
.  Borrowers hereby indemnify and agree 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.
 
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 each Borrower to the extent, but only to the extent, of any
direct, as opposed to consequential or incidental, damages suffered by any
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.
 

 
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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 Borrowers pursuant to any Letter of Credit Agreement or any
Letter of Credit, to the extent not reimbursed by Borrowers 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 Borrowers, 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.
 
5.  
[RESERVED.]

 
6.  
CONDITIONS.

 
The obligations of the Lenders to make Advances or loans pursuant to this
Agreement and the obligation of the Issuing Lender to issue Letters of Credit
are subject to the following conditions:
 
6.1 Conditions of Initial Advances
 
.  The obligations of the Lenders to make initial Advances or loans pursuant to
this Agreement and the obligation of the Issuing Lender to issue initial Letters
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.  Borrowers shall have
executed and delivered to Agent for the account of each Lender requesting Notes,
the Revolving Credit Notes; Borrowers shall have executed and delivered this
Agreement; and such Notes (if any), this Agreement and the other Loan Documents
shall be in full force and effect.
 
(b) Corporate Authority.  Agent shall have received, with a counterpart thereof
for each Lender, a certificate of its Secretary or Assistant Secretary dated as
of the Effective Date as to:
 
(i)  
corporate resolutions (or the equivalent) of each Borrower 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 Borrower is party, and authorizing the execution and delivery of this
Agreement and the other Loan Documents, and in the case of Borrowers,
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
Borrower executing any Loan Document and in the case of the

 

 
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(iii)  
Borrowers, the officers who are authorized to execute any Requests for Advance,
or requests for the issuance of Letters of Credit,

 
(iv)  
a certificate of good standing or continued existence (or the equivalent
thereof) from the state of its incorporation or formation, and from every state
or other jurisdiction where such Borrower is qualified to do business, which
jurisdictions are listed on Schedule 5.1(b) attached hereto, and

 
(v)  
copies of such Borrower’s certificate 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 Agent and fully executed by each party thereto:
 
(i)  
The following Collateral Documents, each in form and substance acceptable to
Agent and fully executed by each party thereto and dated as of the Effective
Date: the Security Agreement, Short Form Intellectual Property Security
Agreements (as defined in the Security Agreement) and the Account Control
Agreement (as defined in the Security Agreement), each executed and delivered by
the Borrowers.

 
(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) which name any Borrower
(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 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 Agent in proper form for
filing, registration or recordation.

 

 
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(iv)  
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.

 
(d) Compliance with Certain Documents and Agreements.  Each Borrower 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 Borrower. No Person
(other than 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.
 
(e) Opinions of Counsel.  The Borrowers shall furnish Agent prior to the initial
Advance under this Agreement, with signed copies for each Lender, opinions of
counsel to the Borrowers, 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.
 
(f) Payment of Fees.  Borrowers shall have paid any 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 Agent).
 
(g) Financial Statements.  Borrowers shall have delivered to the Lenders and the
Agent, in form and substance satisfactory to Agent: (a) audited consolidated and
consolidating (if any) financial statements of OMP and its Consolidated
Subsidiaries for the Fiscal Year ending December 31, 2007, and presented in
accordance with GAAP, and (b) quarterly consolidated and consolidating (if any)
financial statements prepared by Borrowers for the fiscal quarter ended June 30,
2008.
 
(h) Appraisals; Audits; Due Diligence.  Agent and Lenders shall have received,
in each case in form and substance satisfactory to the Agent, (a) an audit of
all accounts receivable and inventory of Borrowers and their respective
Subsidiaries, (b) appraisals of all fixed assets of Borrowers and their
respective Subsidiaries, and (c) such other reports or due diligence materials
as Agent and the Majority Lenders may reasonably request.
 
(i) Management Agreement and Employment Agreements.  Agent shall have received
copies of the Management Agreement and all employment agreements of the Credit
Parties which shall remain in effect following the Effective Date as set forth
on Schedule 6.17 hereof, the terms of which are reasonably acceptable to Agent
and the Majority Lenders.
 
(j) Material Contracts.  Agent shall have received copies of each Material
Contract that by its terms provides for aggregate future guaranteed payments to
or from Credit Parties of at least $500,000.
 
(k) Governmental and Other Approvals.  Agent shall have received copies of all
authorizations, consents, approvals, licenses, qualifications or formal
exemptions, filings,
 

 
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(l) 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 Borrower in connection with the
transactions contemplated by the Loan Documents to occur on the Effective Date.
 
(m) Closing Certificate.  The Agent shall have received, with a signed
counterpart for each Lender, a certificate of a Responsible Officer of Borrower
Representative 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 Borrower; (b) the
representations and warranties made by the Credit 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; and (d) since June 30, 2008 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 Borrowers.
 
6.2 Continuing Conditions
 
.  The obligations of each Lender to make Advances (including the initial
Advance) under this Agreement and the obligation of the Issuing Lender to issue
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).
 
7.  
REPRESENTATIONS AND WARRANTIES.

 
Borrowers represent and warrant to the Agent, the Lenders and the Issuing Lender
as follows:
 
7.1 Corporate Authority
 
.  Each Credit 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 Credit 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 Credit 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.
 
7.2 Due Authorization
 
.  Execution, delivery and performance of this Agreement, and the other Loan
Documents, to which each Credit Party is party, and the issuance of the Notes by
Borrowers (if requested) are within such Person’s corporate power, have been
duly authorized, are not in contravention of any law applicable to such Credit
Party or the terms of such Credit
 

 
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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.
 
7.3 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, 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(a) hereof identifies all of the real property owned or leased,
as lessee thereunder, by the Credit 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
Borrowers, 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.
 
7.4 Taxes
 
.  Except as set forth on Schedule 6.4 hereof, OMP and each of its Subsidiaries,
as applicable, 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 Person, 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 Person as may be required by GAAP.
 
7.5 No Defaults
 
.  Neither OMP nor any of its Subsidiaries is in default under or with respect
to any agreement, instrument or undertaking to which it is a party or by which
it or any of its property is bound which would cause or would reasonably be
expected to cause a Material Adverse Effect.
 
7.6 Enforceability of Agreement and Loan Documents
 
.  This Agreement and each of the other Loan Documents to which any Credit Party
is a party (including without limitation,
 

 
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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 Credit Party, enforceable against such Credit 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).
 
7.7 Compliance with Laws
 
. Except as disclosed on Schedule 6.7, OMP and each of its Subsidiaries 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 Hazardous Material Laws, and is in
compliance with any Requirement of Law, 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 OMP or its Subsidiaries will, to
Borrowers’ knowledge, violate 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)).
 
7.8 Non-contravention
 
.  The execution, delivery and performance of this Agreement and the other Loan
Documents (including each Request for Advance) to which each Credit Party is a
party are not in contravention of the terms of any indenture, agreement or
undertaking to which such Credit 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.
 
7.9 Litigation
 
.  Except as set forth on Schedule 6.9 hereof, there is no suit, action,
proceeding, including, without limitation, any bankruptcy proceeding or
governmental investigation pending against or to the knowledge of Borrowers,
threatened against OMP or any of its Subsidiaries (other than any suit, action
or proceeding in which OMP or any of its Subsidiaries is the plaintiff and in
which no counterclaim or cross-claim against such Person has been filed), or any
judgment, decree, injunction, rule, or order of any court, government,
department, commission, agency, instrumentality or arbitrator outstanding
against OMP or any of its Subsidiaries, nor is OMP or any of its Subsidiaries 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.
 
7.10 Consents, Approvals and Filings, Etc
 
.  Except as set forth on Schedule 6.10 hereof, 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) is required in connection with (a) the execution, delivery and
performance: (i) by any Credit Party of this Agreement and any of the other Loan
Documents to which such Credit
 

 
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Party is a party or (ii) by the Credit 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, and (b) otherwise necessary to the operation of its business, except
in each case for (x) such matters which have been previously obtained, and (y)
such filings to be made concurrently herewith or promptly following the
Effective Date, including termination of the security interests and revolving
credit facility with GE Business Financial Services, Inc., 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 Borrowers, are not the subject of any attack or threatened
attack (in each case in any material respect) by appeal or direct proceeding or
otherwise.
 
7.11 Agreements Affecting Financial Condition
 
.  Neither OMP nor any of its Subsidiaries 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.
 
7.12 No Investment Company or Margin Stock
 
.  Neither OMP nor any of its Subsidiaries is an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.  Neither OMP nor any
of its Subsidiaries 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 OMP or any of its Subsidiaries 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.
 
7.13 ERISA
 
.  Neither OMP nor any of its Subsidiaries maintains or contributes to any
Pension Plan subject to Title IV of ERISA, except as set forth on Schedule 6.13
hereto 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.  Neither OMP
nor any of its Subsidiaries 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 OMP or any of its
Subsidiaries 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.  Neither OMP nor
any of its Subsidiaries 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 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).
 

 
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Conditions Affecting Business or Properties
 
.  Neither the respective businesses nor the properties of OMP or any of its
Subsidiaries 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.
 
7.14 Environmental and Safety Matters
 
.  Except as set forth in Schedules 6.9, 6.10 and 6.15:
 
(a) all facilities and property owned or leased by the Credit Parties are in
material compliance with all Hazardous Material Laws;
 
(b) to the best knowledge of Borrowers, 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 Hazardous Material Law, or

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

 
(c) to the best knowledge of Borrowers, 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 Hazardous Material Law or create a significant
adverse effect on the value of the property.
 
7.15 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.
 
7.16 Management Agreements
 
.  Schedule 6.17 attached hereto is an accurate and complete list of all
management and significant employment agreements in effect on or as of the
Effective Date to which any Credit Party is a party or is bound.
 
7.17 Material Contracts
 
.  Schedule 6.18 attached hereto is an accurate and complete list of all
Material Contracts in effect on or as of the Effective Date to which any Credit
Party is a party or is bound.
 
7.18 Franchises, Patents, Copyrights, Tradenames, etc
 
.  OMP and each of its Subsidiaries 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 OMP or any of its Subsidiaries during the five-year period ending as of
the Effective Date.
 

 
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Capital Structure
 
.  Schedule 6.20 attached hereto sets forth all issued and outstanding Equity
Interests of each Credit Party, including the number of authorized, issued and
outstanding Equity Interests of each Credit Party, the par value of such Equity
Interests and the holders of such Equity Interests, all on and as of the
Effective Date. All issued and outstanding Equity Interests of each Credit Party
are duly authorized and validly issued, fully paid, nonassessable, free and
clear of all Liens (except for the benefit of Agent) and such Equity Interests
were issued in compliance with all applicable state, federal and foreign laws
concerning the issuance of securities.  Except as disclosed on Schedule 6.20,
there are no preemptive or other outstanding rights, options, warrants,
conversion rights or similar agreements or understandings for the purchase or
acquisition from any Credit Party, of any Equity Interests of any Credit Party.
 
7.19 Accuracy of Information
 
.  (a)  The audited financial statements for the Fiscal Year ended December 31,
2007, furnished to Agent and the Lenders prior to the Effective Date fairly
present in all material respects the financial condition of OMP and its
Consolidated Subsidiaries and the results of their operations for the periods
covered thereby, and have been prepared in accordance with GAAP. The projections
delivered to the Agent prior to the Effective Date are based upon good faith
estimates and assumptions believed by management of each of the Borrowers 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) From December 31, 2007 through the Effective Date, there has been no
material adverse change in the business, operations, condition, property or
prospects (financial or otherwise) of OMP or its Subsidiaries taken as a whole.
 
(c)           To the best knowledge of the Credit Parties, as of the Effective
Date, (i) OMP and its Subsidiaries 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 OMP and
its Subsidiaries which contingent obligations and losses in the aggregate could
reasonably be expected to have a Material Adverse Effect.
 
7.20 Solvency
 
.  After giving effect to the consummation of the transactions contemplated by
this Agreement and other Loan Documents, OMP and each of its Subsidiaries 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
Representative to Agent and the Lenders in good faith and in exchange for fair,
equivalent consideration. The Credit Parties do not intend to nor does
management of the Credit Parties believe that OMP or any of its Subsidiaries
will incur debts beyond their ability to pay as they mature.  Neither OMP nor
any of its Subsidiaries 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 OMP or any of its
Subsidiaries, nor does any Credit Party have any knowledge of any threatened
bankruptcy or insolvency proceedings against OMP or any of its Subsidiaries.
 

 
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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 Representative, threatened against OMP or any
of its Subsidiaries by any employees of OMP or any of its Subsidiaries, other
than non-material employee grievances or controversies arising in the ordinary
course of business. Set forth on Schedule 6.23 are all union contracts or
agreements to which OMP or any of its Subsidiaries is party as of the Effective
Date and the related expiration dates of each such contract.
 
7.21 Licenses
 
.  Except as disclosed on Schedule 6.24, neither Borrower is a party to, nor is
bound by, any inbound license agreement that prohibits or otherwise restricts
such Borrower from assigning or granting a security interest in such inbound
license agreement or any related property. For the purpose of clarity, the
parties agree that inbound license agreements shall not include commonly
available off-the-shelf software programs that are licensed by either Borrower
pursuant to “shrink wrap” licenses.
 
7.22 No Misrepresentation
 
.  Neither this Agreement nor any other Loan Document, certificate, information
or report furnished or to be furnished by or on behalf of OMP or any of its
Subsidiaries to 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 Credit
Party after diligent inquiry, that could reasonably be expected to have a
Material Adverse Effect that has not expressly been disclosed to Agent in
writing.
 
7.23 Corporate Documents and Corporate Existence
 
.  As to each Credit Party, (a) it is an organization as described on Schedule
1.3 hereto and has provided the Agent and the Lenders with complete and correct
copies of its certificate 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.
 
8.  
AFFIRMATIVE COVENANTS.

 
Each 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:
 
8.1 Financial Statements
 
.  Furnish to the Agent, in form and detail satisfactory to 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 unaudited
Consolidating (if any) financial statements of OMP and its Consolidated
Subsidiaries as at the end of such Fiscal Year and the related audited
Consolidated and unaudited Consolidating (if any) statements of income,
stockholders equity, and cash flows of OMP and its Consolidated Subsidiaries for
such Fiscal
 

 
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(b) Year or partial 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; and
 
(c) as soon as available, but in any event within forty five (45) days after the
end of each fiscal quarter of OMP (except the last quarter of each Fiscal Year),
Borrower prepared unaudited Consolidated and Consolidating (if any) balance
sheets of OMP and its Consolidated Subsidiaries as at the end of such quarter
and the related unaudited statements of income, stockholders equity and cash
flows of OMP 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 Representative as being
fairly stated in all material respects.
 
All such financial statements shall be complete and correct in all material
respects and 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.
 
8.2 Certificates; Other Information
 
.  Furnish to the Agent, in form and detail acceptable to 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) and 7.1(b) of this Agreement for each fiscal year-end and fiscal
quarter-end, respectively, a Covenant Compliance Report duly executed by a
Responsible Officer of Borrower Representative;
 
(b) Promptly upon receipt thereof, copies of all significant reports submitted
by OMP’s firm 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 OMP and its Consolidated Subsidiaries made
by such accountants, including any 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 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) Within ninety (90) days after the end of each Fiscal Year, projections for
OMP and its Consolidated Subsidiaries 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 Representative as being based on reasonable
estimates and assumptions taking into account all facts and information known
(or
 

 
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(e) reasonably available to any Borrower or Subsidiary) by a Responsible Officer
of the Borrower Representative;
 
(f) Within forty five (45) days after and as of the end of each fiscal quarter,
including the last month of each Fiscal Year, or more frequently as requested by
the Agent or the Majority Revolving Credit Lenders the monthly aging of the
accounts receivable and accounts payable of the Borrowers;
 
(g) Within forty five (45) days of the last day of each fiscal quarter, a report
signed by each Borrower, in form reasonably acceptable to Agent and in the form
of Exhibit H attached hereto, listing any applications or registrations that
Borrowers, or either of them, have made or filed in respect of any Intellectual
Property Collateral (as defined in the Security Agreement) and the status of any
outstanding applications or registrations, as well as any material change in
either Borrower’s Intellectual Property Collateral, including but not limited to
any subsequent ownership right of a Borrower in or to any Intellectual Property
Collateral;
 
(h) Within forty five (45) days of the last day of each fiscal quarter, a
customer contract report signed by each Borrower, in form and detail reasonably
acceptable to Agent, which report shall include, without limitation, a listing
of (i) each of Borrowers’ customer contract or agreement that provides for
aggregate future payments in respect of such individual contract or agreement of
at least $500,000 (a “Major Contract”), (ii) all Major Contracts that have been
executed since the last customer contract report was submitted to Agent and
(iii) all Major Contracts that have expired, been suspended or been terminated
since the last customer contract report was submitted to Agent.  In addition,
upon Agent’s or any Lender’s request, Borrowers shall provide Agent with copies
of any of the Major Contracts requested by Agent or any Lender;
 
(i) 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 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 Agent may reasonably
specify; and
 
(j) Such additional financial and/or other information as Agent or any Lender
may from time to time reasonably request, promptly following such request.
 
8.3 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 OMP or its Subsidiaries, as applicable.
 
8.4 Conduct of Business and Maintenance of Existence; Compliance with Laws.
 

 
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8.5 Continue to engage in their respective business and operations substantially
as conducted immediately prior to the Effective Date;
 
(a) 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;
 
(b) 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;
 
(c) Comply with all Contractual Obligations and 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
 
(d) (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.
 
8.6 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 Agent may reasonably request; and (e) if requested by
Agent, certificates evidencing such policies, including all endorsements
thereto, to be deposited with Agent, such certificates being in form and
substance reasonably acceptable to Agent.
 
8.7 Inspection of Property; Books and Records, Discussions
 
.  Permit Agent and each Lender, through their authorized attorneys, accountants
and representatives on an annual basis, unless an Event of Default or Default
exists or is continuing (a) at all reasonable times during normal business
hours, upon the request of 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
 

 
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business hours, upon the request of the Agent, to conduct full or partial
collateral audits of the Accounts and Inventory of the Credit Parties and
appraisals of all or a portion of the fixed assets (including real property) of
the Credit Parties, such audits and appraisals to be completed by an appraiser
as may be selected by Agent and consented to by Borrowers (such consent not to
be unreasonably withheld), with all reasonable costs and expenses of such audits
to be reimbursed by the Credit Parties, provided that so long as no Event of
Default or Default exists, Borrowers shall not be required to reimburse Agent
for such audits or appraisals more frequently than once each Fiscal Year; (c)
during normal business hours and at their own risk, to enter onto the real
property owned or leased by any Credit 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 Credit Parties’ offices, discuss each Credit Party’s respective financial
matters with their respective officers, as applicable, and, by this provision,
Borrowers authorize, and will cause each of their respective Subsidiaries to
authorize, 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.
 
8.8 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 OMP or any of
its Subsidiaries and any Governmental Authority or other third party, or any
investigation of OMP or any of its Subsidiaries 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
OMP or any of its Subsidiaries 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 OMP or any of its Subsidiaries 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 OMP or any of its Subsidiaries 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 OMP or any
of its Subsidiaries or any other material amendment to OMP’s or any of its
Subsidiaries’ 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
 

 
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(f) proposed effectiveness of such changes, acquisition or creation, as the case
may be (or such shorter period to which Agent may consent);
 
(g) not less than fifteen (15) Business Days (or such other shorter period to
which Agent may agree) prior to the proposed effective date thereof, any
proposed material amendments, restatements or other modifications to any
Subordinated Debt Documents; and
 
(h) 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.
 
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of Borrower Representative 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
Person has taken or proposes to take with respect thereto.
 
8.9 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
Hazardous Material Laws in effect and remain in compliance therewith, and handle
all Hazardous Materials in material compliance with all applicable Hazardous
Material Laws;
 
(b) (i) Promptly notify 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 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 Agent and the Majority Lenders any material actions
and proceedings relating to compliance with Hazardous Material Laws to which OMP
or any of its Subsidiaries 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 Hazardous
Material Laws, remediate or monitor contamination arising from a release or
disposal of Hazardous Material, which solely, or together with other releases or
disposals of Hazardous Materials could reasonably be expected to have a Material
Adverse Effect;
 
(d) Provide such information and certifications which Agent or any Lender may
reasonably request from time to time to evidence compliance with this Section
7.8.
 
8.10 Financial Covenants.
 
(a) Minimum Quick Ratio. Maintain, on a consolidated basis, as of the end of
each fiscal quarter, commencing with the fiscal quarter ending September 30,
2008, a ratio of (i) the sum of the aggregate Cash of Borrowers plus the
aggregate amount of Accounts of Borrowers as of such date of determination, to
(ii) current liabilities of Borrowers of not less than 1.00 to 1.00.
 

 
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(b) Total Liabilities to Tangible Effective Net Worth. Maintain, on a
consolidated basis, as of the end of each fiscal quarter, commencing with the
fiscal quarter ending September 30, 2008, a ratio of Borrowers’ total
liabilities to Tangible Effective Net Worth of not more than 1.75 to 1.00.
 
(c) Minimum Net Income. Maintain, on a consolidated basis, as of the end of each
Fiscal Year, commencing with the Fiscal Year ending December 31, 2008, Net
Income of not less than $1,000,000 and not have, on a consolidated basis, Net
Income of less than $0 for more than two consecutive fiscal quarters.
 
8.11 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 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.
 
8.12 Compliance with ERISA; ERISA Notices.
 
(a) Comply in all material respects with all material 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 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 OMP or
any of its Subsidiaries; (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 OMP or any of its
Subsidiaries 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 OMP or any of its Subsidiaries from any Multiemployer Plan if any
such Person 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 OMP or any of
its Subsidiaries 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.
 
8.13 Defense of Collateral
 
.  Defend the Collateral from any Liens other than Liens permitted by Section
8.2.
 
8.14 Future Subsidiaries; Additional Collateral.
 

 
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8.15 With respect to each Person which becomes a Domestic Subsidiary of any
Borrower (directly or indirectly) subsequent to the Effective Date cause such
new Domestic Subsidiary to execute and deliver to the Agent, for and on behalf
of each of the Lenders (unless waived by Agent), in Agent’s sole discretion,
either:
 
(i)  
within thirty (30) days after the date such Person becomes a Domestic Subsidiary
(or such longer time period as the Agent may determine), a joinder agreement to
this Agreement, the Note, and any applicable Collateral Documents whereby such
Domestic Subsidiary becomes obligated as a Borrower under this Agreement, the
Note and the applicable Collateral Documents; or

 
(ii)  
within thirty (30) days after the date such Person becomes a Domestic Subsidiary
(or such longer time period as the Agent may determine), and at Agent’s request,

 
 
(a)
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; and

 
 
(b)
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; and

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

 
(b) (i) With respect to the acquisition of any leasehold interest in real
property by any Credit Party after the Effective Date, not later than thirty
(30) days after the acquisition is consummated or the owner of the applicable
leasehold interest becomes a Domestic Subsidiary (or such longer time period as
Agent may determine), the applicable Credit Party shall deliver to the Agent a
copy of the applicable lease agreement and shall execute or cause to be
executed, at Agent’s option, unless otherwise waived by Agent, a Collateral
Access Agreement in form and substance reasonably acceptable to Agent together
with such other documentation as may be reasonably required by 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, Credit Parties
shall take, or cause to be taken, such additional steps as are necessary or
 

 
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advisable under applicable law to perfect and ensure the validity and priority
of the Liens granted under this Section 7.13.
 
8.16 Accounts
 
.  Maintain all deposit accounts and securities accounts of any Credit Party
with Agent or a Lender, provided that, with respect to any such accounts
maintained with any Lender (other than Agent), such Credit Party (i) shall cause
to be executed and delivered an Account Control Agreement in form and substance
satisfactory to Agent and (ii) has taken all other steps necessary, or in the
opinion of the Agent, desirable to ensure that Agent has a perfected security
interest in such account.  Notwithstanding the foregoing, until September 5,
2011, OMP shall be permitted to maintain brokerage account number F 81327700
with Thomas Weisal Partners (the “TWP Account”) solely for the purpose of
facilitating the Stock Repurchase Program, which account shall not be governed
by an Account Control Agreement.  On or before September 5, 2011 Borrowers shall
close the TWP Account or deliver to Agent a fully executed Account Control
Agreement governing the TWP Account.
 
8.17 Inbound Licenses
 
.  Prior to entering into or becoming bound by any inbound license
agreement:  (i) provide written notice to Agent of the material terms of such
inbound license agreement with a description of its likely impact on such
Borrower’s business or financial condition, and (ii) in good faith use
commercially reasonable efforts to obtain the consent of, or waiver by, any
Person whose consent or waiver is necessary for such Borrower’s interest in such
inbound licenses or contract rights to be deemed Collateral and for Agent, for
and on behalf of the Lenders, to have a security interest in such licenses or
contract rights that might otherwise be restricted by the terms of the
applicable license agreement, whether now existing or entered into in the
future, provided, however, that such Borrower’s failure to obtain any such
consent or waiver shall not constitute a Default under this Agreement.  For the
purpose of clarity, the parties agree that inbound licenses shall not include
commonly available off-the-shelf software programs that are licensed by such
Borrower pursuant to “shrink wrap” licenses.
 
8.18 Use of Proceeds
 
.  Use all Advances of the Revolving Credit as set forth in Section 2.12 hereof.
Borrowers 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.
 
8.19 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 Agent may
reasonably require, such documentation to be in form and substance reasonably
acceptable to Agent, and prepared at the expense of the Borrowers.
 
(b) Execute and deliver or cause to be executed and delivered to Agent within a
reasonable time following Agent’s request, and at the expense of the Borrowers,
such other
 

 
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(c) documents or instruments as Agent may reasonably require to effectuate more
fully the purposes of this Agreement or the other Loan Documents.
 
(d) 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.
 
8.20 Collateral Access Agreements.
 
(a) As soon as possible, but in any event within forty five (45) days after the
Effective Date, Borrowers shall furnish, or cause to be furnished to Agent, for
the real property locations at 2205 E. Carson Street, Suite B1-B3, Long Beach,
CA 90820 and 3760 Kilroy Airport Way, Suites 500 and 610, Long Beach, CA 90806
(i) a true, complete and accurate copy of the fully executed applicable lease,
bailment or warehouse agreement, as the case may be; and (ii) a Collateral
Access Agreement substantially in the form attached hereto as Exhibit I with
respect to each such location.
 
(b) Agent shall not require a Collateral Access Agreement for any real property
location (other than as provided in Section 7.18(a)) so long as (i) no Event of
Default or Default exists or is continuing, and (ii) all Inventory at such real
property location consists solely of Inventory which would be properly
classified as “raw materials” or as “finished goods inventory” under and in
accordance with GAAP, and any such “finished goods inventory” is shipped from
such real property location as soon as practicable after the goods become
“finished goods inventory”, such time frame being in the ordinary course of
business consistent with past practice with each bulk product supplier or
contract manufacturer, but in no event not later than the time period required
by the applicable purchase order, product specifications or manufacturing
contract; provided, however, for any real property location leased by either
Borrower that does not meet these requirements, Borrowers shall furnish, or
cause to be furnished to Agent, as soon as possible, but in any event within
thirty (30) days after written request by Agent, (i) a true, complete and
accurate copy of the fully executed applicable lease, bailment or warehouse
agreement, as the case may be, and (ii) a Collateral Access Agreement with
respect to such real property location.
 
9.  
NEGATIVE COVENANTS.

 
Each Borrower covenants and agrees that, so long as any Lender has any
commitment to extend credit hereunder, or any of the Indebtedness remains
outstanding and unpaid, it will not, and, as applicable, it will not permit any
of its Subsidiaries to without first obtaining the consent of Agent, which
consent (so long as Default or Event of Default exists or is continuing) will
not be unreasonably withheld or delayed:
 
9.1 Limitation on Debt
 
.  Create, incur, assume or suffer to exist any Debt, except:
 
(a) Indebtedness of any Credit Party to 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
attached hereto and any renewals or refinancing of such Debt (provided that (i)
the aggregate principal
 

 
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(c) amount of such renewed or refinanced Debt shall not exceed the aggregate
principal amount of the original Debt outstanding on the Effective Date (less
any principal payments and the amount of any commitment reductions made thereon
on or prior to such renewal or refinancing), (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;
 
(d) any Debt of such 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 hereof) shall
not exceed $1,000,000, 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;
 
(e) Subordinated Debt;
 
(f) Debt under any Hedging Transactions, provided that such transaction is
entered into for risk management purposes and not for speculative purposes;
 
(g) Debt arising from judgments or decrees not deemed to be a Default or Event
of Default under subsection (g) of Section 9.1; and
 
(h) Debt owing to a Person that is a Credit Party, but only to the extent
permitted under Section 8.7 hereof.
 
9.2 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; provided, however, that no such Lien shall be created over any
owned real property of any Credit Party for which Agent has received a Mortgage
or for which such Credit Party is required to execute a Mortgage pursuant to the
terms of this Agreement;
 
(c) Liens created pursuant to the Loan Documents; and
 

 
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(d) other Liens, existing on the Effective Date, set forth on Schedule 8.2 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 any Borrower or any Subsidiary of any Borrower (except for those
Liens for the benefit of Agent and the Lenders) shall be permitted under the
terms of this Agreement.
 
9.3 Acquisitions
 
.  Except for acquisitions permitted under Section 8.7(g), 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.
 
9.4 Limitation on Mergers, Dissolution or Sale of Assets
 
.  Enter into any merger or consolidation or convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, Equity Interests (other than in connection with
future public offerings of its Common Stock, or as permitted by its charter or
pursuant to any equity incentive plans now or hereafter adopted), receivables
and leasehold interests, but excluding sales of its products in the ordinary
course of business), 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, parts, property or
equipment, or property or equipment no longer used or useful in the conduct of
the applicable Credit Party’s business;
 
(c) mergers or consolidations of any Subsidiary of a Borrower with or into any
Borrower or any Guarantor so long as such 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;
 
(d) any Subsidiary of a Borrower may liquidate or dissolve into a Borrower or a
Guarantor if Borrowers determine in good faith that such liquidation or
dissolution is in the best interests of Borrowers, so long as no Default or
Event of Default has occurred and is continuing or would result therefrom;
 
(e) sales or transfers, including without limitation upon voluntary liquidation
from any Subsidiary to a Borrower or a Guarantor, provided that the applicable
Borrower or Guarantor takes such actions as Agent may reasonably request to
ensure the perfection and priority of the Liens in favor of the Lenders over
such transferred assets;
 
(f) (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 $100,000
in any Fiscal Year and no Default or Event of Default has occurred and is
 

 
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(g) 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;
 
(h) the sale or disposition of Permitted Investments and other cash equivalents
in the ordinary course of business;
 
(i) dispositions of owned or leased vehicles in the ordinary course of business;
and
 
(j) suspensions or terminations of foreign qualifications so long as such
qualifications are no longer required in such jurisdictions in order for
Borrowers or any of their Subsidiaries to conduct business.
 
The Lenders hereby consent and agree to the release by Agent of any and all
Liens on the property sold or otherwise disposed of in compliance with this
Section 8.4.
 
9.5 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) at any time prior to August 5, 2011, OMP may repurchase its Equity Interests
with an aggregate purchase or redemption price not to exceed $10,000,000 (the
“Stock Repurchase Program”), provided that such repurchase 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 such repurchase or would result from
the making of such repurchase;
 
(b) during any Fiscal Year, Borrowers may make Cash distributions and dividends
on account of their Equity Interests in an aggregate amount not to exceed twenty
five percent (25%) of Net Income of Borrowers for the preceding Fiscal Year of
Borrowers;
 
(c) each Credit Party may pay cash Distributions to any Borrower; and
 
(d) 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.
 
9.6 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 Capital Expenditures, the amount of which in any Fiscal
Year shall not exceed (i) for the Fiscal Years ending December 31, 2008 and
December 31, 2009, $6,000,000 per Fiscal Year for
 

 
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the Borrowers in the aggregate and (ii) for each Fiscal Year ending thereafter,
the sum of $3,000,000 per Fiscal Year for the Borrowers in the aggregate.
 
9.7 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
hereof;
 
(c) sales on open account in the ordinary course of business;
 
(d) intercompany loans or intercompany Investments made by OMP or any of its
Subsidiaries to or in any Guarantor or any Borrower; provided that, in the case
of any intercompany loans or intercompany Investments made by any Borrower in
any Guarantor, the aggregate amount from time to time outstanding in respect
thereof shall not exceed $50,000; and provided, further, 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 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 OMP or any of its
Subsidiaries for moving, entertainment, travel and other similar expenses in the
ordinary course of business in the aggregate at any time outstanding;
 
(g) Investments in any joint ventures provided that both at the time of and
immediately after giving effect to any such joint venture Investment (i) no
Default or Event of Default shall have occurred and be continuing or shall
result from the making of such joint venture Investment, (ii) the aggregate Cash
amount of all such joint venture Investments during the current Fiscal Year does
not exceed $2,000,000 at any time and (iii) the aggregate Equity Interest given
by a Borrower in connection with any such joint venture Investment does not
exceed twenty percent (20%) of the aggregate amount of such Borrower’s Equity
Interest or joint venturer partner’s outstanding capital stock or other equity
securities; and
 
(h) other Investments not described above provided that both at the time of and
immediately after giving effect to any such Investment (i) no Default or Event
of Default shall have occurred and be continuing or shall result from the making
of such Investment and (ii) the aggregate amount of all such Investments shall
not exceed $1,000,000 at any time outstanding.
 
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
 

 
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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.
 
9.8 Transactions with Affiliates
 
.  Except as set forth in Schedule 8.8, 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 the Borrowers or Guarantors; (b)
transactions otherwise permitted under this Agreement; and (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.
 
9.9 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.
 
9.10 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 a Borrower to pay or make dividends or distributions in cash or
kind to any 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 Agent on behalf of Lenders Liens upon, security
interests in and pledges of their respective assets, except to the extent such
restrictions exist in documents creating Liens permitted by Section 8.2(b)
hereunder.
 
9.11 Prepayment of Debt
 
.  Make any prepayment (whether optional or mandatory), repurchase, redemption,
defeasance or any other payment in respect of any Subordinated Debt.
 
9.12 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.
 
9.13 Modification of Certain Agreements
 
.  Make, permit or consent to any amendment or other modification to the
constitutional documents of any Credit Party or any Material Contract 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) is negotiated and executed
in the ordinary course of such Borrower’s business and (iv) could not reasonably
be expected to have a Material Adverse Effect.
 
9.14 Management Fees
 
.  Pay or otherwise advance, directly or indirectly, any management, consulting
or other fees to an Affiliate, other than expense reimbursements and director
fees not to exceed $25,000 in the aggregate per calendar year to Stonington
Partners (Borrower’s larger stockholder) for attending Board of Director and
other committee meetings.
 

 
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Fiscal Year
 
.  Permit the Fiscal Year of any Credit Party to end on a day other than
December 31.
 
10.  
DEFAULTS.

 
10.1 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 or (ii) any Reimbursement Obligation or (iii) any
Fees;
 
(b) non-payment of any other amounts due and owing by a Borrower under this
Agreement or by any Credit Party under any of the other Loan Documents to which
it is a party, other than as set forth in subsection (a) above, within three (3)
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 Borrowers 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, 7.16 or Article 8 in its entirety;
 
(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 OMP or any of its Subsidiaries in the payment of any
indebtedness for borrowed money, whether under a direct obligation or guaranty
(other than Indebtedness hereunder) of OMP or any of its Subsidiaries in excess
of Fifty Thousand Dollars ($50,000) (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 OMP or any of its Subsidiaries with respect
to any indebtedness for borrowed money (other than Indebtedness hereunder) in
excess of Fifty Thousand Dollars ($50,000) (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 Fifty Thousand Dollars
($50,000) (or the equivalent thereof in any currency other than Dollars)
individually or in the aggregate against OMP or any of its Subsidiaries, and
such judgments shall remain unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of thirty (30) consecutive days from the date of its
entry;
 

 
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(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 OMP or any of its Subsidiaries 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 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 OMP or
any of its Subsidiaries from any Multiemployer Plan, which in the case of any of
the foregoing, could reasonably be expected to have a Material Adverse Effect;
 
(i) except as expressly permitted under this Agreement, OMP or any of its
Subsidiaries shall be dissolved (other than a dissolution of a Subsidiary of a
Borrower which is not a Guarantor or a Borrower) 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 OMP
or any of its Subsidiaries; or if OMP or any of its Subsidiaries 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 OMP or any of its
Subsidiaries, it shall not have been dismissed within sixty (60) 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 OMP or
any of its Subsidiaries) and shall not have been removed within sixty (60) days;
or if an order shall be entered approving any petition for reorganization of OMP
or any of its Subsidiaries and shall not have been reversed or dismissed within
sixty (60) days;
 
(j) a Change of Control, unless consented to in writing by Lenders;
 
(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, Agent or Issuing Lender), or such
subordination provisions shall fail to be enforceable by 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; or
 
(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
 

 
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(m) Document), as applicable, or the validity, binding effect or enforceability
thereof shall be contested by any party thereto (other than any Lender, Agent or
Issuing 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.
 
10.2 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 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 Borrowers; (c) upon the occurrence of any
Event of Default specified in Section 9.1(i) and notwithstanding the lack of any
declaration by 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 shall be automatically
and immediately terminated; (d) the Agent shall, upon being directed to do so by
the Majority Revolving Credit Lenders, demand immediate delivery of cash
collateral, and each Borrower agrees to deliver such cash collateral upon
demand, in an amount equal to 110% 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
Borrowers or any Credit Party that interest shall be payable on demand on all
Indebtedness (other than Revolving Credit Advances with respect to which
Sections 2.6 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 two
percent (2%); 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.
 
10.3 Rights Cumulative
 
.  No delay or failure of 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 Agent and Lenders
under this Agreement are cumulative and not exclusive of any right or remedies
which Lenders would otherwise have.
 
10.4 Waiver by Borrowers of Certain Laws
 
.  To the extent permitted by applicable law, each 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
 

 
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connection with this Agreement. These waivers have been voluntarily given, with
full knowledge of the consequences thereof.
 
10.5 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 13.11 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 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. Each Borrower expressly agrees that this Section may not be waived
or modified by the Lenders or Agent by course of performance, estoppel or
otherwise.
 
10.6 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 Borrowers but
subject to the provisions of Section 10.3 hereof (any requirement for such
notice being expressly waived by Borrowers), setoff and apply against any and
all of the obligations of Borrowers 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 Borrowers and
any property of Borrowers 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 Agent or any Lender is adequate to cover the Indebtedness. Promptly
following any such setoff, such Lender shall give written notice to Agent and
Borrowers of the occurrence thereof. Borrowers hereby grant 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 Borrowers 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.
 
11.  
PAYMENTS, RECOVERIES AND COLLECTIONS.

 
11.1 Payment Procedure.
 
(a) All payments to be made by Borrowers shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff.  Except as
otherwise provided herein, all payments made by the Borrowers of principal,
interest or fees hereunder shall be made without setoff or counterclaim on the
date specified for payment under this Agreement and must be received by Agent
not later than 1:00 p.m. (P.S.T.) on the date such payment is required or
intended to be made in Dollars in immediately available funds to Agent at
Agent’s office located at 75 E Trimble Road, San Jose, CA 95131, 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. Any payment received
by the Agent after 1:00 p.m. (P.S.T.) 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
 

 
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(b) Lending Office, in like funds and currencies, of all amounts received by it
for the account of such Lender.
 
(c) Unless the Agent shall have been notified in writing by Borrowers at least
two (2) Business Days prior to the date on which any payment to be made by
Borrowers is due that Borrowers do not intend to remit such payment, the Agent
may, in its sole discretion and without obligation to do so, assume that
Borrowers have remitted such payment when so due and the Agent may, in reliance
upon such assumption, make available to each Revolving Credit Lender on such
payment date an amount equal to such Lender’s share of such assumed payment. If
Borrowers have 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.
 
(d) Subject to the definition of “Interest Period” in Article 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.
 
(e) All payments to be made by Borrowers under this Agreement or any of the
Notes 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 taxes on the overall income, net income, net profits
or net receipts or similar taxes (or any franchise taxes imposed in lieu of such
taxes) on the Agent or any Lender (or any branch maintained by Agent or a
Lender) as a result of a present or former connection between the Agent or such
Lender and the governmental authority, political subdivision, federation or
organization imposing such taxes), unless Borrowers are compelled by law to make
payment subject to such tax. In such event, Borrowers shall:
 
(i)  
pay to the Agent for 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 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, 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 Borrowers of any
such taxes payable by Borrowers.

 

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

 
11.2 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, upon the termination of
the Revolving Credit Aggregate Commitment, the acceleration of any Indebtedness
arising under this Agreement and/or the exercise of any other remedy in each
case by the requisite Lenders under Section 9.2 hereof, 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 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 any
Reimbursement Obligations), on a pro rata basis, next to any obligations owing
by any Credit Party under any Hedging Agreements 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.
 
11.3 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 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 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.
 
12.  
CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS.

 
12.1 Reimbursement of Prepayment Costs
 
.  If (i) Borrowers make any payment of principal with respect to any
Eurodollar-based 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) Borrowers convert or
refund (or attempt to convert or refund) any such Advance on any day other than
the last day of the Interest Period applicable thereto; (iii) Borrowers fail to
borrow, refund or convert any Eurodollar-based Advance after notice has been
given by Borrowers to Agent in accordance with the terms hereof requesting such
Advance; or (iv) or if any Borrower fails to make any payment of principal in
respect of a Eurodollar-based Advance when due, the Borrowers shall reimburse
Agent for itself and/or on
 

 
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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 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 Agent and Lenders, as the case may be, shall
have funded or committed to fund such Advance. The amount payable hereunder by
Borrowers to Agent for itself and/or 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 Agent and Lenders, as the case may be) which would have accrued to
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 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 Borrowers, Agent and
Lenders shall deliver to Borrowers a certificate setting forth the basis for
determining such losses, costs and expenses, which certificate shall be
conclusively presumed correct, absent manifest error.
 
12.2 Eurodollar Lending Office
 
.  For any Eurodollar Advance, if Agent or a Lender, as applicable, shall
designate a Eurodollar Lending Office which maintains books separate from those
of the rest of Agent or such Lender, 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.
 
12.3 Circumstances Affecting LIBOR Rate Availability
 
.  If Agent or the Majority Lenders (after consultation with 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 Agent shall forthwith give notice thereof to
Borrower. Thereafter, until Agent notifies 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 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 a Prime-based Advance (without regard to satisfaction of any conditions to
conversion contained elsewhere herein), and (iii) effective following such
notice, each Advance which bears interest at or by reference to the Daily
Adjusting LIBOR Rate shall automatically be converted into a Prime-based Advance
(without regard to satisfaction of any conditions to conversion contained
elsewhere herein).
 

 
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Laws Affecting LIBOR Rate Availability
 
.  If, after the date of this Agreement, the adoption or introduction of, or any
change in, any applicable law, rule or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any of the Lenders
(or any of their respective Eurodollar Lending Offices) with any request or
directive (whether or not having the force of law) of any such authority, 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 Borrower and to
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 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 Prime-based Rate, plus the Applicable Margin 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 a Prime-based Advance. For
purposes of this Section, a change in law, rule, regulation, interpretation or
administration shall include, without limitation, any change made or which
becomes effective on the basis of a law, rule, regulation, interpretation or
administration presently in force, the effective date of which change is delayed
by the terms of such law, rule, regulation, interpretation or administration.
 
12.4 Increased Cost of Advances Carried at the LIBOR Rate
 
.  If, after the date of this Agreement, the adoption or introduction of, or any
change in, any applicable law, rule or regulation or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any of the Lenders (or any of their respective Eurodollar Lending Offices)
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
 
 
(a)
shall 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 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 the rate of tax on the overall net income of any of the Lenders
or any of their respective Eurodollar Lending Offices); or

 
 
(b)
shall 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;

 
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
 

 
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reference to the LIBOR Rate 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 Agent, and Agent shall promptly notify Borrower of such
fact and demand compensation therefor and, within ten (10) Business Days after
such notice, 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. Agent will promptly notify Borrower of any event of which it
has knowledge which will entitle Lenders to compensation pursuant to this
Section, or which will cause Borrower to incur additional liability under
Section 11.1 hereof, provided that Agent shall incur no liability whatsoever to
the Lenders or Borrower in the event it fails to do so. A certificate of 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.
 
12.5 Capital Adequacy and Other Increased Costs.
 
(a) If, after the Effective Date of this Agreement, 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 presently
applicable to any Lender or Agent, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Lender or Agent with any guideline,
request or directive of any such authority (whether or not having the force of
law), including any risk based capital guidelines, affects or would affect the
amount of capital required to be maintained by such Lender or Agent (or any
corporation controlling such Lender or Agent) and such Lender or 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 Agent’s obligations or Advances hereunder
and such increase has the effect of reducing the rate of return on such Lender’s
or 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
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 Agent to be material
(collectively, “Increased Costs”), then Agent or such Lender shall notify
Borrowers, and thereafter Borrowers shall pay to such Lender or Agent, as the
case may be, within ten (10) Business Days of written demand therefor from such
Lender or Agent, additional amounts sufficient to compensate such Lender or
Agent (or such controlling corporation) for any increase in the amount of
capital and reduced rate of return which such Lender or Agent reasonably
determines to be allocable to the existence of such Lender’s or 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 Agent, as the case may be, shall be submitted by such Lender or by
Agent to Borrowers, 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.
 

 
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(b) Notwithstanding the foregoing, however, Borrowers shall not be required to
pay any increased costs under Sections 11.5, 11.6 or 3.4(c) for any period
ending prior to the date that is 180 days prior to the making of a Lender’s
initial request for such additional amounts unless the applicable change in law
or other event resulting in such increased costs is effective retroactively to a
date more than 180 days prior to the date of such request, in which case a
Lender’s request for such additional amounts relating to the period more than
180 days prior to the making of the request must be given not more than 180 days
after such Lender becomes aware of the applicable change in law or other event
resulting in such increased costs.
 
12.6 Right of Lenders to Fund through Branches and Affiliates
 
.  Each 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 Borrowers.
 
12.7 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
Borrowers 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 September 30, 2008, the Applicable Margins and
Applicable Fee Percentages shall be those set forth under the Level II 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 a Borrower and any of its Subsidiaries (relating to
the current or any prior fiscal period) or for any other reason, Agent
determines that the Applicable Margin and/or the Applicable Fee Percentages as
calculated by Borrowers 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, Borrowers
 

 
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(d) shall automatically and retroactively be obligated to pay to Agent, promptly
upon demand by 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, Agent and Lenders shall have no
obligation to recalculate such interest or fees or to repay any interest or fees
to the Borrowers.
 
13.  
AGENT.

 
13.1 Appointment of 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 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.
 
13.2 Deposit Account with Agent or any Lender
 
.  Each Borrower authorizes Agent and each Lender, in Agent’s or such Lender’s
sole discretion, upon notice to the Borrowers 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.
 
13.3 Scope of 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 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. 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. Agent may treat
the payee of any Note as the holder thereof. Agent may employ agents and may
consult with legal
 

 
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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.
 
13.4 Successor Agent
 
.  Agent may resign as such at any time upon at least thirty (30) days prior
notice to Borrowers and each of the Lenders. If Agent at any time shall resign
or if the office of 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 Borrowers (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 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, Borrowers, 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, Borrowers, 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 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 Agent.
 
13.5 Credit Decisions
 
.  Each Lender acknowledges that it has, independently of Agent and each other
Lender and based on the financial statements of Borrowers 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 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.
 
13.6 Authority of 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
 

 
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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 Agent considers to be necessary
or desirable for the protection, collection and enforcement of the Notes, this
Agreement or the other Loan Documents.
 
13.7 Indemnification of 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 Borrowers, but without limiting any obligation of
Borrowers to make such reimbursement), ratably according to their respective
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 Borrowers, but without limiting the obligation of Borrowers 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 Borrowers 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 Agent shall elect in its sole discretion to have such indemnity
confirmed by the Lenders (as to specific matters or otherwise), 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.
 
13.8 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 a 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
 

 
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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 Borrowers hereunder.
 
13.9 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 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.
 
13.10 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, 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 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.
 
13.11 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 the post amble to Section 12.10 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
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
 

 
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(c) 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
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 a Borrower or a Subsidiary of a 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).
 
13.12 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.
 
13.13 Agent’s Fees
 
.  Until the Indebtedness has been repaid and discharged in full and no
commitment to extend any credit hereunder is outstanding, Borrowers 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 any 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.
 
13.14 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.
 
13.15 No Reliance on Agent’s Customer Identification Program.
 
(a) Each Lender acknowledges and agrees that neither such Lender, nor any of its
Affiliates, participants or assignees, may relay 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
 

 
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(b) “CIP Regulations”), or any other Anti-Terrorism Law, including any programs
involving any of the following items relating to or in connection with a
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.
 
(c) 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.
 
14.  
MISCELLANEOUS.

 
14.1 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.
 
14.2 Consent to Jurisdiction
 
.  The Borrowers, the Agent and Lenders hereby irrevocably submit to the
non-exclusive jurisdiction of any United States Federal Court or California
state court sitting in the County of Santa Clara, California in any action or
proceeding arising out of or relating to this Agreement or any of the Loan
Documents and the Borrowers, Agent and Lenders hereby irrevocably agree that all
claims in respect of such action or proceeding may be heard and determined in
any such United States Federal Court or California state court. Each Borrower
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 by the delivery
of copies of such process to it at the applicable addresses specified on the
signature page hereto or by certified mail directed to such address or such
other address as may be designated by it in a notice to the other parties that
complies as to delivery with the terms of Section 13.7. Nothing in this Section
shall affect the right of the Lenders and the Agent or Borrowers to serve
process in any other manner permitted by law or limit the right of the Lenders
or the Agent (or any of them) to bring any such action or proceeding against any
Credit Party or any of their property in the courts with subject matter
jurisdiction of any other jurisdiction. Each Borrower irrevocably waives any
objection to the laying of venue of any such suit or proceeding in the above
described courts.
 
14.3 Law of California
 
.  This Agreement, the Notes and, except where otherwise expressly specified
therein to be governed by local law, the other Loan Documents shall be governed
by and construed and enforced in accordance with the laws of the State of
California (without regard to its conflict of laws provisions). Whenever
possible each provision of this
 

 
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
 
14.4 Interest
 
.  In the event the obligation of Borrowers 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
Borrowers are 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.
 
14.5 WAIVER OF JURY TRIAL
 
.  THE UNDERSIGNED 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 PARTY, AFTER CONSULTING (OR HAVING HAD THE
OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS CHOICE, KNOWINGLY AND VOLUNTARILY,
AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN
THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER
DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.
 
(a) In the event that the jury trial waiver contained in this Section 13.15 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 Agreement 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 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”).
 
(c) The matters that shall not be subject to a reference are the following: (i)
non-judicial 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.
 

 
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(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.
 
(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
 

 
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(i) 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.
 
14.6 Closing Costs and Other Costs; Indemnification.
 
(a) Borrowers shall pay or reimburse (a) 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 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 Borrowers, and (b) 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
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
Borrowers or any other Credit Party, or otherwise incurred by 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 Agent, its Affiliates, or any Lender which would
not have been asserted were it not for Agent’s or such Affiliate’s or Lender’s
relationship with
 

 
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(b) Borrowers hereunder or otherwise, shall also be paid by Borrowers. All of
said amounts required to be paid by Borrowers hereunder and not paid forthwith
upon demand, as aforesaid, shall bear interest, from the date incurred to the
date payment is received by Agent, at the Base Rate, plus two percent (2%).
 
(c) Borrowers agree to indemnify and hold 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 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 13.6(b), provided that, the Borrowers shall be
obligated to reimburse Agent and the Lenders for only a single financial
consultant selected by Agent in consultation with the Lenders.
 
Borrowers agree to defend, indemnify and hold harmless 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 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
Requirement of Law; provided, however, that the Borrowers shall have no
obligations under this Section 13.6(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 Borrowers under
this Section 13.6(c) shall be in addition to any and all other obligations and
liabilities Borrowers may have to Agent or any of the Lenders at common law or
pursuant to any other agreement.
 
14.7 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 13.7 or at such other address as may be
 

 
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(b) designated by such party in a notice to the other parties that complies as
to delivery with the terms of this Section 13.7 or posted to an E-System set up
by or at the direction of 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 Representative or
any Borrower shall be deemed to be a notice to all of the Credit Parties.
 
(c) 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
Borrowers may, in their respective 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.
 
14.8 Further Action
 
.  Borrowers, from time to time, upon written request of 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.
 
14.9 Successors and Assigns; Participations; Assignments.
 
(a) This Agreement shall be binding upon and shall inure to the benefit of the
Borrowers and the Lenders and their respective successors and assigns.
 
(b) The foregoing shall not authorize any assignment by Borrowers 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); 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) be less than
$5,000,000; and

 
(ii)  
the parties to any assignment shall execute and deliver to Agent an Assignment
Agreement substantially (as determined by Agent) in the form attached hereto as
Exhibit E (with appropriate insertions acceptable to Agent), together with a
processing and recordation fee in the amount, if any, required as set forth in
the Assignment Agreement (provided however that such Lender need not deliver an
Assignment Agreement in connection with assignments to such Lender’s Affiliates
or to a Federal Reserve Bank).

 
Until the Assignment Agreement becomes effective in accordance with its terms,
and Agent has confirmed that the assignment satisfies the requirements of this
Section 13.9, the Borrowers 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 13.9, 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, Borrowers 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
 

 
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Agent, the Lenders and the Borrowers acknowledge and agree 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 Borrowers 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 a Borrower or any of such 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; and

 
(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 covered by
Section 13.9(a) through (e) hereof (provided that a participant may exercise
approval rights over such matters only on an indirect basis, acting through such
Lender and the Credit Parties, 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 10 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 10 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

 

 
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(iv)  
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.

 
(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 Agent shall maintain at its principal office 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 Borrowers, 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 Borrowers or any 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
Borrowers of the making of any entry in the Register or any change in such
entry.
 
(h) Borrowers authorize 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 13.12 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.
 
14.10 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.
 
14.11 Amendment and Waiver
 
.  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
 

 
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given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by the Lender or Lenders affected thereby, do any of the
following: (a) increase the stated amount of such Lender’s commitment hereunder,
(b) reduce the principal of, or interest on, any outstanding Indebtedness or any
Fees or other amounts payable hereunder, (c) postpone any date fixed for any
payment of principal of, or interest on, any outstanding Indebtedness or any
Fees or other amounts payable hereunder, (d) except as expressly permitted
hereunder or under the Collateral Documents, release all or substantially all of
the Collateral (provided that neither 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 Agent and the Lenders, provided however that
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), (e) terminate or modify any indemnity provided to the Lenders
hereunder or under the other Loan Documents, except as shall be otherwise
expressly provided in this Agreement or any other Loan Document, or (f) change
the definitions of “Revolving Credit Percentage”, “Interest Periods”, “Majority
Lenders”, “Majority Revolving Credit Lenders”, Sections 10.2 or 10.3 hereof or
this Section 13.11; provided, further, that notwithstanding the foregoing, the
definitions of “Eligible Accounts”, “Eligible Inventory” may be changed, and the
Revolving Credit Maturity Date may be postponed or extended, only with the
consent of all of the Revolving Credit Lenders; and provided further, that no
amendment, waiver or consent shall, unless in a writing signed by Issuing Lender
affect the rights or duties of Issuing Lender under this Agreement or any of the
other Loan Documents and no amendment, waiver, or consent shall, unless in a
writing signed by the Agent affect the rights or duties of the Agent under this
Agreement or any other Loan Document. 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).
 
The Agent shall, upon the written request of the Borrowers, 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 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 13.11; 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 a Borrower or a Subsidiary of a 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)
Agent shall not be required to execute any such release or subordination
agreement under clauses (1) or (2) above on terms
 

 
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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.
 
14.12 Confidentiality
 
.  Each Lender agrees that it will not disclose without the prior consent of the
Borrowers (other than to its employees, its Subsidiaries, another Lender, an
Affiliate of a Lender or to its auditors or counsel) 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 13.9(f) hereof.
 
14.13 Substitution of Lenders
 
.  If (a) any Lender has failed to fund its Revolving Credit Percentage of any
Revolving Credit Advance, or to fund a Revolving Credit Advance to repay a or
any Reimbursement Obligations, (b) the obligation of any Lender to make
Eurodollar-based Advances has been suspended pursuant to Section 11.3 or 11.4,
(c) any Lender has demanded compensation under Section 3.4(c), 11.5 or 11.6 or
(d) any Lender has not approved an amendment, waiver or other modification of
this Agreement, if such amendment or waiver has been approved by the Majority
Lenders and the consent of such Lender is required (in each case, an “Affected
Lender”), then the Agent or the Borrowers shall have the right to make written
demand on the Affected Lender (with a copy to the Borrowers in the case of a
demand by the Agent or with a copy to the Agent in the case of a demand by the
Borrowers) to assign and the Affected Lender shall assign, to one or more
financial institutions that comply with the provisions of Section 13.9 hereof
(the “Purchasing Lender” or “Purchasing Lenders”) to purchase the Advances of
the Revolving Credit of such Affected Lender (including, without limitation, its
participating interests in outstanding Letters of Credit) and assume the
commitment of the Affected Lender to extend credit under the Revolving Credit
(including without limitation its obligation to purchase participations interest
in and Letters of Credit) under this Agreement. The Affected Lender shall be
obligated to sell its Advances of the Revolving Credit, and assign its
commitment to extend credit under the Revolving Credit (including without
limitation its obligations to purchase participations in Letters of Credit) to
such Purchasing Lender or Purchasing Lenders within ten (10) days after
receiving notice from the Borrowers requiring it to do so, at an aggregate price
equal to the outstanding principal amount thereof, plus unpaid interest accrued
thereon up to but excluding the date of the sale. In connection with any such
sale, and as a condition thereof, the Borrowers shall pay to the Affected Lender
all fees
 

 
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accrued for its account hereunder to but excluding the date of such sale, plus,
if demanded by the Affected Lender within ten (10) Business Days after such
sale, (i) the amount of any compensation which would be due to the Affected
Lender under Section 11.1 if the Borrowers had prepaid the outstanding
Eurodollar-based Advances of the Affected Lender on the date of such sale and
(ii) any additional compensation accrued for its account under Sections 3.4(c),
11.5 and 11.6 to but excluding said date. Upon such sale, the Purchasing Lender
or Purchasing Lenders shall assume the Affected Lender’s commitment, and the
Affected Lender shall be released from its obligations hereunder to a
corresponding extent. If any Purchasing Lender is not already one of the
Lenders, the Affected Lender, as assignor, such Purchasing Lender, as assignee,
the Borrowers and the Agent, shall enter into an Assignment Agreement pursuant
to Section 13.9 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. In connection with any assignment pursuant to this Section 13.13,
the Borrowers or the Purchasing Lender shall pay to the Agent the administrative
fee for processing such assignment referred to in Section 13.9.
 
14.14 Withholding Taxes
 
.  If any Lender is not a “united states person” within the meaning of Section
7701(a)(30) of the Internal Revenue Code, such Lender shall promptly (but in any
event prior to the initial payment of interest hereunder or prior to its
accepting any assignment under Section 13.9 hereof, as applicable) deliver to
the Agent two executed copies of (i) Internal Revenue Service Form W-8BEN or any
successor form specifying the applicable tax treaty between the United States
and the jurisdiction of such Lender’s domicile which provides for the exemption
from withholding on interest payments to such Lender, (ii) Internal Revenue
Service Form W-8ECI or any successor form evidencing that the income to be
received by such Lender hereunder is effectively connected with the conduct of a
trade or business in the United States or (iii) other evidence satisfactory to
the Agent that such Lender is exempt from United States income tax withholding
with respect to such income; provided, however, that such Lender shall not be
required to deliver to Agent the aforesaid forms or other evidence with respect
to Advances to Borrowers, if such Lender has assigned its entire interest
hereunder (including its Revolving Credit Commitment Amount, any outstanding
Advances hereunder and participations in Letters of Credit issued hereunder and
any Notes issued to it by Borrowers), to an Affiliate which is incorporated
under the laws of the United States or a state thereof, and so notifies the
Agent. Such Lender shall amend or supplement any such form or evidence as
required to insure that it is accurate, complete and non-misleading at all
times. 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, such Lender shall pay
to the Agent the excess of the aggregate amount required to be withheld from
such payments over the aggregate amount actually withheld by the Agent. In
addition, from time to time upon the reasonable request and the sole expense of
Borrowers, each Lender and the Agent shall (to the extent it is able to do so
based upon applicable facts and circumstances), complete and provide Borrowers
with such forms, certificates or other documents as may be reasonably necessary
to allow Borrowers, as applicable, to make any payment under this Agreement or
the other Loan Documents without any withholding for or on the account of any
tax under Section 10.1(d) hereof (or with such withholding at a reduced rate),
provided that the execution and delivery of such forms, certificates or other
documents does not adversely affect or otherwise restrict the rights and
benefits (including without limitation economic benefits)
 

 
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available to such Lender or the Agent, as the case may be, under this Agreement
or any of the other Loan Documents, or under or in connection with any
transactions not related to the transactions contemplated hereby.
 
14.15 Taxes and Fees
 
.  Should any tax (other than as a result of a Lender’s failure to comply with
Section 13.14 or a tax based upon the net income or capitalization of any Lender
or the Agent by any jurisdiction where a Lender or the Agent is or has been
located), 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, Borrowers agree to pay the same, together with any interest
or penalties thereon arising from any Borrower’s actions or omissions, and
agrees to hold the Agent and the Lenders harmless with respect thereto provided,
however, that Borrowers 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 or fees.  Notwithstanding the foregoing, nothing
contained in this Section 13.15 shall affect or reduce the rights of any Lender
or the Agent under Section 11.5 hereof.
 
14.16 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 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.
 
14.17 Complete Agreement; Conflicts
 
.  This Agreement, the Notes (if issued), any Requests for Revolving Credit
Advance, 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.
 
14.18 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.
 
14.19 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.
 

 
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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.
 
14.20 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.
 
14.21 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 Borrowers
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 13.7 and this Section 13.21, 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 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 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 Credit Parties 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.
 
14.22 Advertisements
 
.  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.
 
14.23 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,
 

 
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notwithstanding any investigation heretofore or hereafter made by any Lender or
on such Lender’s behalf, and those covenants and agreements of the Borrowers set
forth in Section 13.6 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.
 
14.24 Joint and Several Liability.
 
(a) Each of the Borrowers acknowledges and agrees that it is the intent of the
parties that each such Borrower be primarily liable for the obligations as a
joint and several obligor. It is the intention of the parties that with respect
to liability of any Borrower hereunder arising solely by reason of its being
jointly and severally liable for Advances and other extensions of credit taken
by Borrowers, the obligations of such Borrower shall be absolute, unconditional
and irrevocable irrespective of:
 
(i)  
any lack of validity, legality or enforceability of this Agreement or any Note
as to any Borrower, as the case may be;

 
(ii)  
the failure of any Lender or any holder of any Note:

 
 
(a)
to enforce any right or remedy against any Borrower, as the case may be, or any
other Person (including any Guarantor) under the provisions of this Agreement,
such Note, or otherwise, or

 
 
(b)
to exercise any right or remedy against any guarantor of, or collateral
securing, any obligations;

 
(iii)  
any change in the time, manner or place of payment of, or in any other term of,
all or any of the Indebtedness, or any other extension, compromise or renewal of
any Indebtedness;

 
(iv)  
any reduction, limitation, impairment or termination of any Indebtedness with
respect to any Borrower, as the case may be, for any reason, including any claim
of waiver, release, surrender, alteration or compromise, and shall not be
subject to (and each of the Borrowers hereby waives any right to or claim of)
any defense (other than the defense of payment in full of the Indebtedness) or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any
Indebtedness with respect to any Borrower, as the case may be;

 
(v)  
any addition, exchange, release, surrender or nonperfection of any collateral,
or any amendment to or waiver or release or addition of, or consent to departure
from, any guaranty, held by any Lender or any holder of the Notes securing any
of the Indebtedness; or

 

 
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(vi)  
any other circumstance which might otherwise constitute a defense (other than
the defense of payment in full of the Indebtedness) available to, or a legal or
equitable discharge of, any Borrower, as the case may be, any surety or any
guarantor.

 
(b) Each of the Borrowers agrees that its joint and several liability hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Indebtedness is rescinded
or must be restored by any Lender or any holder of any Note, upon the
insolvency, bankruptcy or reorganization of any Borrower, as the case may be, as
though such payment had not been made;
 
(c) Each of the Borrowers hereby expressly waives: (i) notice of the Lenders’
acceptance of this Agreement; (ii) notice of the existence or creation or non
payment of all or any of the Indebtedness other than notices expressly provided
for in this Agreement; (iii) presentment, demand, notice of dishonor, protest,
and all other notices whatsoever other than notices expressly provided for in
this Agreement; (iv) any claim or defense based on an election of remedies; and
(v) all diligence in collection or protection of or realization upon the
Indebtedness or any part thereof, any obligation hereunder, or any security for
or guaranty of any of the foregoing.
 
(d) No delay on any of the Lenders part in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by any of
the Lenders of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy. No action of any of the
Lenders permitted hereunder shall in any way affect or impair any such Lenders’
rights or any Borrower’s Indebtedness under this Agreement.
 
(e) Each of the Borrowers hereby represents and warrants to each of the Lenders
that it now has and will continue to have independent means of obtaining
information concerning such Borrower’s affairs, financial condition and
business. Lenders shall not have any duty or responsibility to provide any
Borrower with any credit or other information concerning such Borrower’s
affairs, financial condition or business which may come into the Lenders’
possession.
 
(f) Each of the Borrowers represents and warrants (i) that the business
operations of the Borrowers are interrelated and that the business operations of
the Borrowers complement one another, and such entities have a common business
purpose, and (ii) that, 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 that (iii) the proceeds
of advances under the Revolving Credit, and the other credit facilities extended
hereunder will directly or indirectly benefit the Borrowers hereunder, severally
and jointly, regardless of which Borrower receives part or all of the proceeds
of such Advances.
 
(g) Notwithstanding anything to the contrary contained herein, it is the
intention of the Borrowers, Agent and the Lenders that the amount of the
respective Borrowers’ 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
 

 
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(h) conveyances or other similar laws (collectively, “Applicable Insolvency
Laws”). To that end, but only in the event and to the extent that the Borrowers’
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 Borrowers’ respective
obligations hereunder shall be limited to the largest amount which, after giving
effect thereto, would not, under Applicable Insolvency Laws, render such
Borrower’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
13.26(g), then the amount of such excess shall, from and after the time of
payment by the Borrowers (or any of them), be reimbursed by the Lenders upon
demand by such Borrowers. The foregoing proviso is intended solely to preserve
the rights of the Agent and the Lenders hereunder against the Borrowers to the
maximum extent permitted by Applicable Insolvency Laws and neither any Borrower
nor any Guarantor nor any other Person shall have any right or claim under this
Section 13.26(g) that would not otherwise be available under Applicable
Insolvency Laws.
 
WITNESS the due execution hereof as of the day and year first above written.
 
[SIGNATURES FOLLOW ON SUCCEEDING PAGE]
 
 
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   COMERICA BANK,       OBAGI MEDICAL PRODUCTS, INC.      as Administrative
Agent          By:
/s/ Jennifer S. Seto
   By:
/s/ Preston S. Romm
   
Jennifer S. Seto
   
Preston S. Romm
   Its:
Vice President   
   Its:
CFO and EVP Finance, Operations and Administration
 

 

         OMP, INC.                
 
    By:
/s/ Preston S. Romm
   
 
   
Preston S. Romm
   
 
    Its:
CFO and EVP Finance, Operations and Administration
 

   COMERICA BANK,             as a Lender, and as Issuing Lender          By:
/s/ Jennifer S. Seto
   
 
   
Jennifer S. Seto
   
 
   Its:
Vice President   
   
 
 

 
 
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EXHIBIT A
 
FORM OF REQUEST FOR REVOLVING CREDIT ADVANCE
 
No.                                     Dated:  ________, 20__

TO:           Comerica Bank (“Agent”)

RE:
Revolving Credit Agreement (“Agreement”) made as of the 21st day of November,
2008 (as amended, restated or otherwise modified from time to time, the “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 Obagi Medical Products, Inc. and
OMP, Inc.  (each a “Borrower” and collectively,  the “Borrowers”).

 
Pursuant to the terms and conditions of the Credit Agreement, Borrowers hereby
request an Advance from Lenders, 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
  Eurodollar-based Advance

(D)  
Amount of Advance:

 
$_____________________
 
(E)  
Interest Period (applicable to Eurodollar-based Advances)

 
________ months
 
(F)  
Disbursement Instructions

 
  Comerica Bank Account No. _________________
  Other:                                                                           

 
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Each Borrower certifies to the matters specified in Section 2.3(f) of the Credit
Agreement.
 
Capitalized terms used herein, except as defined to the contrary, have the
meanings given them in the Credit Agreement.
 
OBAGI MEDICAL PRODUCTS, INC.

By:                                                                           
Preston S. Romm
 
Its:
CFO and EVP Finance, Operations and Administration

OMP, INC.

By:                                                                           
Preston S. Romm
 
Its:
CFO and EVP Finance, Operations and Administration

Agent
Approval:                                                                           

 
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EXHIBIT B
 
FORM OF REVOLVING CREDIT NOTE
 

$20,000,000.00 November 21, 2008

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED, OBAGI
MEDICAL PRODCUTS, INC. and OMP, INC. (each a “Borrower” and collectively the
“Borrowers”) jointly and severally promise to pay to the order of COMERICA BANK
(“Payee”) at San Jose, California, care of Agent, in lawful money of the United
States of America, so much of the sum of Twenty Million Dollars
($20,000,000.00), as may from time to time have been advanced by Payee and then
be outstanding hereunder pursuant to the Revolving Credit Agreement
(“Agreement”) made as of the 21st day of November, 2008, 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 Borrowers.  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 California.
 
Each Borrower hereby waives presentment for payment, demand, protest and notice
of dishonor and nonpayment of this Note and agrees 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]
 

 
 
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Nothing herein shall limit any right granted Payee by any other instrument or by
law.
 
OBAGI MEDICAL PRODUCTS, INC.

By:          /s/ Preston S.
Romm                                                                 
Preston S. Romm
 
Its:
CFO and EVP Finance, Operations and Administration

OMP, INC.

By:          /s/ Preston S.
Romm                                                                                                                                  
Preston S. Romm
 
Its:
CFO and EVP Finance, Operations and Administration

 
 
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EXHIBIT C
 
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
Agreement (“Agreement”) made as of the 21st day of November, 2008 (as amended,
restated or otherwise modified from time to time, the “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 Obagi Medical Products, Inc. and
OMP, Inc. (each a “Borrower” and collectively,  the “Borrowers”).

 
On
, 20__,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
.3  The face amount of such Letter of Credit is $. The amount of each Lender’s
participation in such Letter of Credit is as follows:4

 
____________[Lender]                                                                           $                                
____________[Lender]                                                                           $                                
____________[Lender]                                                                           $                                
____________[Lender]                                                                           $                                

This notification is delivered this _____ day of ____________, 20___ , 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 Name of applicable Borrower

 
 
 
4 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.]
 

 
 
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EXHIBIT D
 
FORM OF SECURITY AGREEMENT
 
THIS SECURITY AGREEMENT (the “Agreement”) dated as of November 21, 2008 is
entered into by and among Borrower (as defined below), such other entities which
from time to time become parties hereto (collectively, including Borrower, the
“Debtors” and each individually a “Debtor”) and Comerica Bank (“Comerica”), as
Administrative Agent for and on behalf of the Lenders (as defined below) (in
such capacity, the “Agent”).  The addresses for the Debtors and the Agent, as of
the date hereof, are set forth on the signature pages attached hereto.
 
R E C I T A L S:
 
2. OBAGI MEDICAL PRODUCTS, INC., a Delaware corporation and OMP, Inc., a
Delaware corporation (individually and collectively, the “Borrower”) entered
into that certain Revolving Credit Agreement dated as of November 21, 2008 (as
amended, supplemented, amended and restated or otherwise modified from time to
time the “Credit Agreement”) with each of the financial institutions party
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.
 
3. Pursuant to the Credit Agreement, the Lenders have required that each of the
Debtors grant (or cause to be granted) certain Liens to the Agent, for the
benefit of the Lenders, all to secure the obligations of Borrower or any Debtor
under the Credit Agreement or any related Loan Document (including any
Guaranty).
 
4. The 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.
 
5. The Agent is acting as Agent for the Lenders pursuant to the terms and
conditions Section 12 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:
 
(a)
 
Definitions
 
(i) 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
 

 
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other jurisdiction which may be applicable to the grant and perfection of the
Liens held by the Agent for the benefit of the 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.
 
“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.
 
“Copyright Collateral” shall mean all Copyrights and Copyright Licenses of the
Debtors.
 
“Copyright Licenses” shall mean all license agreements with any other Person in
connection with any of the Copyrights or such other Person’s copyrights, whether
a Debtor is a licensor or a licensee under any such license agreement,
including, without limitation, the license agreements listed on Schedule 1.1
hereto and made a part hereof, subject, in each case, to the terms of such
license agreements and the right to prepare for sale, sell and advertise for
sale, all inventory now or hereafter covered by such licenses.
 
“Copyrights” shall mean all copyrights and mask works, whether or not
registered, and all applications for registration of all copyrights and mask
works, including, but not limited to all copyrights and mask works, and all
applications for registration of all copyrights and mask works identified on
Schedule 1.1 attached hereto and made a part hereof, and including without
limitation (a) the right to sue or otherwise recover for any and all past,
present and future infringements and misappropriations thereof; (b) all income,
royalties, damages and other payments now and hereafter due and/or payable with
respect thereto (including, without limitation, payments under all Copyright
Licenses entered into in connection therewith, and damages and payments for past
or future infringements thereof); and (c) all rights corresponding thereto and
all modifications, adaptations, translations, enhancements and derivative works,
renewals thereof, and all other rights of any kind whatsoever of a Debtor
accruing thereunder or pertaining thereto.
 

 
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“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
Intellectual Property Collateral; (b) 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; (c) 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; (d) all rights of such Debtor to payment under chattel
paper, documents, instruments and similar agreements; (e) letters of credit,
letters of credit rights supporting obligations and rights to payment for money
or funds advanced or sold of such Debtor; (f) all tax refunds and tax refund
claims of such Debtor; (g) 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; (h) all
rights and claims of such Debtor under warranties and indemnities, (i) all
health care receivables; and (j) 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.
 

 
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“Insurance Proceeds” shall have the meaning set forth in Section 4.4 of this
Agreement.
 
“Intellectual Property Collateral” shall mean Patents, Patent Licenses,
Copyrights, Copyright Licenses, Trademarks, Trademark Licenses, trade secrets,
registrations, goodwill, franchises, permits, proprietary information, customer
lists, designs, inventions and all other intellectual property and proprietary
rights, including without limitation those described on Schedule 1.1 attached
hereto and incorporated herein by reference.
 
“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 the Securities Account, 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.
 
“Patent Collateral” shall mean all Patents and Patent Licenses of the Debtors.
 
“Patent Licenses” shall mean all license agreements with any other Person in
connection with any of the Patents or such other Person’s patents, whether a
Debtor is a licensor or a licensee under any such license agreement, including,
without limitation, the license agreements listed on Schedule 1.1 hereto and
made a part hereof, subject, in each case, to the terms of such license
agreements and the right to prepare for sale, sell and advertise for sale, all
inventory now or hereafter covered by such licenses.
 
“Patents” shall mean all letters patent, patent applications and patentable
inventions, including, without limitation, all patents and patent applications
identified on Schedule 1.1 attached hereto and made a part hereof, and including
without limitation, (a) all inventions and improvements described and claimed
therein, and patentable inventions, (b) the right to sue or otherwise recover
for any and all past, present and future infringements and misappropriations
thereof, (c) all income, royalties, damages and other payments now and hereafter
due and/or payable with respect thereto (including, without limitation, payments
under all Patent Licenses entered into in connection therewith, and damages and
payments for past or future infringements thereof), and (d) all rights
corresponding thereto and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof, all
improvements thereon, and all other rights of any kind whatsoever of a Debtor
accruing thereunder or pertaining thereto.
 

 
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“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.
 
“Securities Intermediary” means Comerica Securities, Inc.
 
“Securities Account” means securities account #BG5-0028339 in the name of OMP,
Inc., maintained at Securities Intermediary.
 
“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.
 
“Short Form Intellectual Property Security Agreements” means the Intellectual
Property Security Agreements executed and delivered by each Debtor on the
Effective Date pursuant to Section 4.1(f)(vi) hereof, and any such agreements
executed and delivered after the Effective Date, in the form of the Short Form
Intellectual Property Security Agreements attached hereto as Exhibit B-1
(Patents), Exhibit B-2 (Trademarks) and Exhibit B-3 (Copyrights).
 
“Trademark Collateral” shall mean all Trademarks and Trademark Licenses of the
Debtors.
 
“Trademark Licenses” shall mean all license agreements with any other Person in
connection with any of the Trademarks or such other Person’s names or
trademarks, whether a Debtor is a licensor or a licensee under any such license
agreement, including, without limitation, the license agreements listed on
Schedule 1.1 hereto and made a part hereof, subject, in each case, to the terms
of such license agreements, and the right to prepare for sale, and to sell and
advertise for sale, all inventory now or hereafter covered by such licenses.
 
“Trademarks” shall mean all trademarks, service marks, trade names, trade dress
or other indicia of trade origin, trademark and service mark registrations, and
applications for trademark or service mark registrations (except for “intent to
use” applications for trademark or service mark registrations filed pursuant to
Section 1(b) of the Lanham Act, unless and until an Amendment to Allege Use or a
Statement of Use under Sections 1(c) and 1(d) of said Act has been filed), and
any renewals thereof, including, without limitation, each registration and
 

 
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application identified on Schedule 1.1 attached hereto and made a part hereof,
and including without limitation (a) the right to sue or otherwise recover for
any and all past, present and future infringements and misappropriations
thereof, (b) all income, royalties, damages and other payments now and hereafter
due and/or payable with respect thereto (including, without limitation, payments
under all Trademark Licenses entered into in connection therewith, and damages
and payments for past or future infringements thereof) and (c) all rights
corresponding thereto and all other rights of any kind whatsoever of a Debtor
accruing thereunder or pertaining thereto, together in each case with the
goodwill of the business connected with the use of, and symbolized by, each such
trademark, service mark, trade name, trade dress or other indicia of trade
origin.
 
“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.
 
(b)
 
Security Interest
 
(i) 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 the
Agent as collateral, and grants the Agent a continuing Lien on and security
interest in, all of such Debtor’s right, title and interest in and to the
following, whether now owned or hereafter arising or acquired and wherever
located (collectively, the “Collateral”):
 
(1)  
all Accounts;

 
(2)  
all Chattel Paper;

 
(3)  
all General Intangibles;

 
(4)  
all Equipment;

 
(5)  
all Inventory;

 
(6)  
all Documents;

 
(7)  
all Instruments;

 
(8)  
all Deposit Accounts and any other cash collateral, deposit or investment
accounts, including all cash collateral, deposit or investment accounts
established

 

 
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(9)  
or maintained pursuant to the terms of this Agreement or the other Loan
Documents;

 
(10)  
all Computer Records and Software, whether relating to the foregoing Collateral
or otherwise, but in the case of such Software, subject to the rights of any
non-affiliated licensee of software;

 
(11)  
all Investment Property; and

 
(12)  
the Proceeds, in cash or otherwise, of any of the property described in the
foregoing clauses (a) through (j) and all Liens, security, rights, remedies and
claims of such Debtor with respect thereto (provided that the grant of a
security interest in Proceeds set forth is in this subsection (k) shall not be
deemed to give the applicable Debtor any right to dispose of any of the
Collateral, except as may otherwise be permitted pursuant to the terms of the
Credit Agreement);

 
provided, however, that “Collateral” shall not include rights under or with
respect to any General Intangible, license, permit or authorization to the
extent any such General Intangible, license, permit or authorization, by its
terms or by law, prohibits the assignment of, or the granting of a Lien over the
rights of a grantor thereunder or which would be invalid or unenforceable upon
any such assignment or grant (the “Restricted Assets”), provided that (A) the
Proceeds of any Restricted Asset shall continue to be deemed to be “Collateral”,
and (B) this provision shall not limit the grant of any Lien on or assignment of
any Restricted Asset to the extent that the UCC or any other applicable law
provides that such grant of Lien or assignment is effective irrespective of any
prohibitions to such grant provided in any Restricted Asset (or the underlying
documents related thereto).  Concurrently with any such Restricted Asset being
entered into or arising after the date hereof, the applicable Debtor shall be
obligated to use its commercially reasonable efforts to obtain any waiver or
consent (in form and substance acceptable to the Agent) necessary to allow such
Restricted Asset to constitute Collateral hereunder if the failure of such
Debtor to have such Restricted Asset would have a Material Adverse Effect.  The
failure of Debtor to obtain any such waiver or consent shall not constitute an
Event of Default under this Agreement or the Credit Agreement.
 
(ii) Debtors Remain Liable
 
.  Notwithstanding anything to the contrary contained herein, (a) the 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 the Agent or any Bank of any of their
respective rights or remedies hereunder shall not release the Debtors from any
of their duties or obligations under the contracts, agreements, documents and
instruments included in the Collateral, and (c) neither the Agent nor any of the
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 the Debtors
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
 

 
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Representations and Warranties
 
To induce the Agent to enter into this Agreement and the Agent and the Lenders
to enter into the Credit Agreement, each Debtor represents and warrants to the
Agent and to each Bank 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:
 
(iii) 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.
 
(iv) 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 (or other business organization) 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 (the “Records”) in
the office indicated on such Schedule 3.2.
 
(v) Representations and Warranties Regarding Certain Types of Collateral
 
.
 
(1)  
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).

 
(2)  
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 the Agent) are located at the Lenders 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.

 
(3)  
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).

 

 
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(4)  
Intellectual Property.  Set forth on Schedule 1.1 (the same may be amended from
time to time) is a true and correct list of the registered Patents, Patent
Licenses, registered Trademarks, Trademark Licenses, registered Copyrights and
Copyright Licenses owned by the Debtors (including, in the case of the Patents,
Trademarks and Copyrights, the applicable name, date of registration (or of
application if registration not completed) and application or registration
number).

 
(vi) Reserved.
 

 
(vii) Intellectual Property
 
.
 
(1)  
Filings and Recordation.  Each Debtor has made all necessary filings and
recordations to protect and maintain its interest in the Trademarks, Patents and
Copyrights set forth on Schedule 1.1 (as the same may be amended from time to
time), including, without limitation, all necessary filings and recordings, and
payments of all maintenance fees, in the United States Patent and Trademark
Office and United States Copyright Office to the extent such Trademarks, Patents
and Copyrights are material to such Debtor’s business. Also set forth on
Schedule 1.1 (as the same may be amended from time to time) is a complete and
accurate list of all of the material Trademark Licenses, Patent Licenses and
Copyright Licenses owned by the Debtors as of the date hereof.

 
(2)  
Trademarks and Trademark Licenses Valid.  (i) Each Trademark of the Debtors set
forth on Schedule 1.1 (as the same may be amended from time to time) is
subsisting and has not been adjudged invalid, unregisterable or unenforceable,
in whole or in part, and, to the Debtors’ knowledge, is valid, registrable and
enforceable, (ii) each of the Trademark Licenses set forth on Schedule 1.1 (as
the same may be amended from time to time) is validly subsisting and has not
been adjudged invalid or unenforceable, in whole or in part, and, to the
Debtors’ knowledge, is valid and enforceable, and (iii) the Debtors have
notified the Agent in writing of all uses of any material item of Trademark
Collateral of which any Debtor is aware which could reasonably be expected to
lead to such item becoming invalid or unenforceable, including unauthorized uses
by third parties and uses which were not supported by the goodwill of the
business connected with such Collateral.

 
(3)  
Patents and Patent Licenses Valid.  (i) Each Patent of the Debtors set forth on
Schedule 1.1 (as the same may be amended from time to time) is subsisting and
has not been adjudged invalid, unpatentable or unenforceable, in whole or in
part, and, to the Debtors’ knowledge, is valid, patentable and enforceable
except as otherwise set forth on Schedule 1.1 (as the same may be amended from
time to time), (ii) each of the Patent Licenses set forth on Schedule 1.1 (as
the same may be amended from time to time) is validly subsisting and has not
been adjudged invalid or unenforceable, in whole or in part, and, to the
Debtors’ knowledge, is valid and enforceable, and (iii) the Debtors have
notified the Agent in writing of all uses of any item of Patent Collateral
material to any Debtor’s business of

 

 
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(4)  
which any Debtor is aware which could reasonably be expected to lead to such
item becoming invalid or unenforceable.

 
(5)  
Copyright and Copyright Licenses Valid.  (i) Each Copyright of the Debtors set
forth on Schedule 1.1 (as the same may be amended from time to time) is
subsisting and has not been adjudged invalid, uncopyrightable or unenforceable,
in whole or in part, and, to the Debtors’ knowledge, is valid, copyrightable and
enforceable, (ii) each of the Copyright Licenses set forth on Schedule 1.1 (as
the same may be amended from time to time) is validly subsisting and has not
been adjudged invalid or unenforceable, in whole or in part, and, to the
Debtors’ knowledge, is valid and enforceable, and (iii) the Debtors have
notified the Agent in writing of all uses of any item of Copyright Collateral
material to any Debtor’s business of which any Debtor is aware which could
reasonably be expected to lead to such item becoming invalid or unenforceable.

 
(6)  
No Assignment.  The Debtors have not made a previous assignment, sale, transfer
or agreement constituting a present or future assignment, sale, transfer or
encumbrance of any of the Intellectual Property Collateral, except with respect
to non-exclusive licenses granted in the ordinary course of business or as
permitted by this Agreement or the Loan Documents.  No Debtor has granted any
license, shop right, release, covenant not to sue, or non-assertion assurance to
any Person with respect to any part of the Intellectual Property Collateral,
except as set forth on Schedule 1.1 or as otherwise disclosed to the Agent in
writing.

 
(7)  
Products Marked.  Each Debtor has marked its products with the trademark
registration symbol, copyright notices, the numbers of all appropriate patents,
the common law trademark symbol or the designation “patent pending,” as the case
may be, to the extent that Debtor, in good faith, believes is reasonably and
commercially practicable.

 
(8)  
Other Rights.  Except for the Trademark Licenses, Patent Licenses and Copyright
Licenses listed on Schedule 1.1 hereto under which a Debtor is a licensee, no
Debtor has knowledge of the existence of any right or any claim (other than as
provided by this Agreement) that is likely to be made under or against any item
of Intellectual Property Collateral contained on Schedule 1.1 to the extent such
claim could reasonably be expected to have a Material Adverse Effect.

 
(9)  
No Claims.  Except as set forth on Schedule 1.1 or as otherwise disclosed to the
Agent in writing, no claim has been made and is continuing or, to any Debtor’s
knowledge, threatened that the use by any Debtor of any item of Intellectual
Property Collateral is invalid or unenforceable or that the use by any Debtor of
any Intellectual Property Collateral does or may violate the rights of any
Person. To the Debtors’ knowledge, there is no infringement or unauthorized use
of any item of Intellectual Property Collateral contained on Schedule 1.1 or as
otherwise disclosed to the Agent in writing.

 

 
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(10)  
No Consent.  No consent of any party (other than such Debtor) to any Patent
License, Copyright License or Trademark License constituting Intellectual
Property Collateral is required, or purports to be required, to be obtained by
or on behalf of such Debtor in connection with the execution, delivery and
performance of this Agreement that has not been obtained. Each Patent License,
Copyright License and Trademark License constituting Intellectual Property
Collateral is in full force and effect and constitutes a valid and legally
enforceable obligation of the applicable Debtor and (to the knowledge of the
Debtors) each other party thereto except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor’s rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law). No consent
or authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the execution, delivery,
performance, validity or enforceability of any of the Patent Licenses, Copyright
Licenses or Trademark Licenses by any party thereto other than those which have
been duly obtained, made or performed and are in full force and effect. Neither
the Debtors nor (to the knowledge of any Debtor) any other party to any Patent
License, Copyright License or Trademark License constituting Collateral is in
default in the performance or observance of any of the terms thereof, except for
such defaults as would not reasonably be expected, in the aggregate, to have a
material adverse effect on the value of the Intellectual Property Collateral. To
the knowledge of such Debtor, the right, title and interest of the applicable
Debtor in, to and under each Patent License, Copyright License and Trademark
License constituting Intellectual Property Collateral is not subject to any
defense, offset, counterclaim or claim.

 

 
(viii) Priority
 
.  Other than the security interest in the Collateral currently held by GE
Business Financial Services Inc., 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 the Agent pursuant to this
Agreement and the other Loan Documents and (ii) financing statements filed to
perfect Permitted Liens.
 
(ix) Perfection
 
.  Upon (a) the filing of Uniform Commercial Code financing statements in the
jurisdictions listed on Schedule 3.7 attached hereto, (b) the recording of this
Agreement or the Short Form Intellectual Property Agreements in the United
States Patent and Trademark Office and the United States Copyright Office, and
(c) the release by GE Business Financial Services Inc. of any security interest
in the Intellectual Property Collateral and any other Collateral, the security
interest in favor of the Agent created herein will constitute a valid and
perfected Lien upon and security interest in the Collateral which may be created
and perfected either under the UCC by filing financing statements or by a filing
with the United States Patent and Trademark Office and the United States
Copyright Office.
 

 
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Covenants
Each Debtor covenants and agrees with the Agent, until termination of this
Agreement in accordance with the provisions of Section 7.12 hereof, as follows:
 
(x) Covenants Regarding Certain Kinds of Collateral
 
.
 
(1)  
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 $100,000.00, the applicable Debtors shall promptly notify the Agent in
writing thereof and forthwith endorse, assign and deliver the same to the Agent,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Agent may from time to time reasonably specify, and cause all such
Chattel Paper to bear a legend reasonably acceptable to the Agent indicating
that the Agent has a security interest in such Chattel Paper.
 
(2)  
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 $100,000.00, the
applicable Debtors shall promptly notify the Agent thereof and, at the request
and option of the Agent, shall take such action as the Agent may reasonably
request to vest in the 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.
 
(3)  
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 $100,000.00, the applicable Debtors shall promptly notify the Agent thereof
and, at the request of the Agent, the applicable Debtors shall, pursuant to an
agreement in form and substance reasonably satisfactory to the Agent either
arrange (i) for the issuer and any confirmer of such letters of credit to
consent to an assignment to the Agent of the proceeds of the letters of credit
or (ii) for the Agent to become the transferee beneficiary of the letters of
credit, together with, in each case, any such other actions as reasonably
requested by the 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 the Agent and
applied as set forth in the Credit Agreement.
 
(4)  
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 $100,000.00, the applicable Debtors shall immediately notify
the Agent in a writing signed by such Debtors of the particulars thereof and
grant to the 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 the Agent.
 

 
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Equipment and Inventory
 
.
 
(A)  
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 the Agent from time to time, subject to compliance with the other
provisions of this Agreement, including subsection (ii) below.

 
(B)  
Maintenance.  Each Debtor shall maintain the Equipment and Inventory in such
condition as may be specified by the terms of the Credit Agreement.

 
(5)  
Intellectual Property

 
(A)  
Trademarks.  Each Debtor agrees to take all necessary steps, including, without
limitation, in the United States Patent and Trademark Office or in any court, to
(x) defend, enforce, preserve the validity and ownership of, and maintain each
Trademark registration and each Trademark License identified on Schedule 1.1
hereto, and (y) pursue each trademark application now or hereafter identified on
Schedule 1.1 hereto, including, without limitation, the filing of responses to
office actions issued by the United States Patent and Trademark Office, the
filing of applications for renewal, the filing of affidavits under Sections 8
and 15 of the United States Trademark Act, and the participation in opposition,
cancellation, infringement and misappropriation proceedings, except, in each
case in which the Debtors have determined, using their commercially reasonable
judgment, that any of the foregoing is not of material economic value to them.
Each Debtor agrees to take corresponding steps with respect to each new or
acquired Trademark registration, Trademark application or any rights obtained
under any Trademark License, in each case, which it is now or later becomes
entitled, except in each case in which such Debtor has determined, using its
commercially reasonable judgment, that any of the foregoing is not of material
economic value to it. Each Debtor agrees to give Agent written notice, as soon
as possible, but in any event within seven (7) days after the end of each month,
of any Trademark applications or Trademark registrations of intellectual
property rights filed with the United States Patent and Trademark Office, during
the month the immediately preceding month then ended, including the date of such
filing and the registration or application numbers, if any. Any expenses
incurred in connection with such activities shall be borne by the Debtors.

 
(B)  
Patents.  Each Debtor to take all necessary steps, including, without
limitation, in the United States Patent and Trademark Office or in any court, to
(x) defend, enforce, preserve the validity and ownership of, and maintain each
Patent and each Patent License identified on Schedule 1.1

 

 
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(C)  
hereto, and (y) pursue each patent application, now or hereafter identified on
Schedule 1.1 hereto, including, without limitation, the filing of divisional,
continuation, continuation-in-part and substitute applications, the filing of
applications for reissue, renewal or extensions, the payment of maintenance
fees, and the participation in interference, reexamination, opposition,
infringement and misappropriation proceedings, except in each case in which the
Debtors have determined, using their commercially reasonable judgment, that any
of the foregoing is not of material economic value to them. Each Debtor agrees
to take corresponding steps with respect to each new or acquired Patent, patent
application, or any rights obtained under any Patent License, in each case,
which it is now or later becomes entitled, except in each case in which the
Debtors have determined, using their commercially reasonable judgment, that any
of the foregoing is not of material economic value to them. Each Debtor agrees
to give Agent written notice, as soon as possible, but in any event within seven
(7) days after the end of each month, of any Patent applications or Patent
registrations of intellectual property rights filed with the United States
Patent and Trademark Office, during the month the immediately preceding month
then ended, including the date of such filing and the registration or
application numbers, if any. Any expenses incurred in connection with such
activities shall be borne by the Debtors

 
(D)  
Copyrights.  Each Debtor agrees to take all necessary steps, including, without
limitation, in the United States Copyright Office or in any court, to (x)
defend, enforce, and preserve the validity and ownership of each Copyright and
each Copyright License identified on Schedule 1.1 hereto, and (y) pursue each
Copyright and mask work application, now or hereafter identified on Schedule 1.1
hereto, including, without limitation, the payment of applicable fees, and the
participation in infringement and misappropriation proceedings, except in each
case in which the Debtors have determined, using their commercially reasonable
judgment, that any of the foregoing is not of material economic value to them.
Each Debtor agrees to take corresponding steps with respect to each new or
acquired Copyright, Copyright and mask work application, or any rights obtained
under any Copyright License, in each case, which it is now or later becomes
entitled, except in each case in which the Debtors have determined, using their
commercially reasonable judgment, that any of the foregoing is not of material
economic value to them. Each Debtor agrees to (a) give Agent not less than 30
days prior written notice of the filing of any applications or registrations
with the United States Copyright Office, 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; (b) prior to the filing of any such applications or
registrations, execute such documents as Agent may reasonably request for Agent
and Lenders to maintain their perfection in such intellectual property rights to
be registered by such Debtor; (c) upon the request of Agent, either deliver to
Agent or file such documents

 

 
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(E)  
simultaneously with the filing of any such applications or registrations; and
(d) upon filing any such applications or registrations, promptly provide Agent
with a copy of such applications or registrations together with any exhibits,
evidence of the filing of any documents requested by Agent to be filed for Agent
to maintain the perfection and priority of their security interest in such
intellectual property rights, and the date of such filing.  Any expenses
incurred in connection with such activities shall be borne by the Debtors.

 
(F)  
No Abandonment.  The Debtors shall not abandon, forfeit or dedicate to the
public any Trademark, Patent, Copyright or any pending Trademark, Copyright,
mask work or Patent application, without the written consent of the Agent,
unless the Debtors shall have previously determined, using their commercially
reasonable judgment, that such use or the pursuit or maintenance of such
Trademark registration, Patent, Copyright registration or pending Trademark,
Copyright, mask work or Patent application is not of material economic value to
it, in which case, the Debtors shall give notice of any such abandonment to the
Agent promptly in writing after the determination to abandon such Intellectual
Property Collateral is made.

 
(G)  
No Infringement.  The Debtors shall use commercially reasonable efforts to
detect infringements of the Intellectual Property Collateral.  In the event that
a Debtor becomes aware that any item of the Intellectual Property Collateral
which such Debtor has determined, to be material to its business is infringed or
misappropriated by a third party, such Debtor shall promptly notify the Agent
promptly and in writing, in reasonable detail, and shall take such actions as
such Debtor or the Agent deems reasonably appropriate under the circumstances to
protect such Intellectual Property Collateral, including, without limitation,
suing for infringement or misappropriation and for an injunction against such
infringement or misappropriation. Any expense incurred in connection with such
activities shall be borne by the Debtors. Each Debtor will advise the Agent
promptly and in writing, in reasonable detail, of any adverse determination or
the institution of any proceeding (including, without limitation, the
institution of any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any court) regarding any material item of
the Intellectual Property Collateral.

 
(H)  
Short Form Intellectual Property Security Agreement.  Each Debtor shall,
concurrently with the execution of this Agreement, execute Short Form
Intellectual Property Security Agreements for recording with the United States
Patent and Trademark Office and the United States Copyright Office.  Each Debtor
hereby irrevocably appoints Agent (and any of Agent’s designated officers, or
employees) as such Debtor’s true and lawful attorney (i) to record the Short
Form Intellectual Property Security Agreements with the United States Patent and
Trademark Office

 

 
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(I)  
and the United States Copyright Office, as appropriate, and (ii) to modify, in
its sole discretion, any Short Form Intellectual Property Security Agreement
entered into between Debtor and Agent without first obtaining Debtor’s approval
of or signature to such modification by amending Schedule 1.1 thereof, as
appropriate, to include reference to any right, title or interest in any
Intellectual Property Collateral acquired by such Debtor after the execution
hereof or to delete any reference to any right, title or interest in any
Intellectual Property Collateral in which such Debtor no longer has or claims to
have any right, title or interest.

 
(J)  
Intellectual Property Report.  Each Debtor agrees to furnish, or cause to be
furnished to Agent, within forty five (45) days of the last day of each fiscal
quarter, a report signed by Debtor, in form reasonably acceptable to Agent,
listing any applications or registrations that such Debtor has made or filed in
respect of any Intellectual Property Collateral and the status of any
outstanding applications or registrations, as well as any material change in
Debtor’s Intellectual Property Collateral, including but not limited to any
subsequent ownership right of Debtor in or to any Trademark, Patent or Copyright
not specified in Schedule 1.1 of any Short Form Intellectual Property Security
Agreement delivered to Agent by Debtor in connection with this Agreement.

 
(K)  
Further Assurances.  Each Debtor shall execute and deliver such additional
instruments and documents from time to time as Agent and/or Lenders shall
reasonably request to perfect and maintain the perfection and priority of Agent
and Lenders’ security interest in the Intellectual Property Collateral.

 
(L)  
Audit.  Agent may audit the Intellectual Property Collateral to confirm each
Debtor’s compliance with this Section 4.1, provided such audit may not occur
more often than once per year, unless an Event of Default has occurred and is
continuing.  Agent shall have the right, but not the obligation, to take, at
Debtors’ sole expense, any actions that each Debtor is required under this
Section 4.1 to take but which a Debtor fails to take, after 15 days’ notice to
Debtors.  Any expenses incurred in connection with such activities shall be
borne by the Debtors.

 
(6)  
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.

 

 
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(7)  
(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 the Agent’s Lien on its Vehicles, aircraft and
vessels, unless (i) a Default or an Event of Default has occurred and is
continuing, whereupon the 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 the vehicle fleet for sales personnel) which have a fair
market value of at least $100,000.00, in aggregate amount, whereupon the
applicable Debtors shall provide prompt notice to the Agent, and the Agent, at
its option, may require the applicable Debtors to execute such agreements and
make such filings as may be necessary to perfect the Agent’s Lien for the
benefit of the Lenders and ensure the priority thereof on the applicable
Vehicles, aircraft and vessels.

 

 
(j)
Life Insurance Policies.  If any Debtor, now or any time hereafter, is the
beneficiary of a “key man life insurance policy”, it shall promptly notify the
Agent thereof, provide the Agent with a true and correct list of the Persons
insured, the name and address of the insurance company providing the coverage,
the amount of such insurance and the policy number, and, unless otherwise waived
by the Agent in writing, take such actions as Agent may deem necessary or the
Agent shall deem reasonably desirable to collaterally assign policy to the Agent
for the benefit of the Lenders.

 
(k)
Deposit Accounts.  Each Debtor agrees to promptly notify the 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 may be necessary or deemed desirable by the Agent (including the
execution and delivery of an account control agreement in form and substance
satisfactory to the Agent) to grant the Agent a perfected, first priority Lien
over each of the Deposit Accounts, cash collateral accounts or investment
accounts disclosed on Schedule 3.3(b) and over each of the additional accounts
disclosed pursuant to this Section 4.1(k).

 
(l)
Securities Account.

(A)  
Each Debtor agrees to promptly notify the Agent in writing of all securities
accounts opened after the date hereof, and such Debtor shall take such actions
as may be necessary or deemed desirable by the Agent (including the execution
and delivery of an account control agreement in form and substance satisfactory
to the Agent) to grant the Agent a perfected, first priority Lien over the
Securities Account and over each of the additional accounts disclosed pursuant
to this Section 4.1(l).

 
(B)  
This Agreement is subject to the terms of that certain Account Control Agreement
dated November 21, 2008, among OMP, Inc., Comerica and Securities Intermediary
(as may be amended, “Account Control

 

 
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(C)  
Agreement”).  In the event of any conflict between the terms of this Section
4.1(l) and the terms of the Account Control Agreement, the terms of the Account
Control Agreement shall govern and control.

 
(D)  
In the exercise of its remedies set forth in Section 6.1 below, or as otherwise
provided by law, upon the occurrence of an Event of Default Comerica may, at its
discretion and without prior notice to or consent of either Debtor, issue
entitlement orders to Securities Intermediary with respect to all or any part of
the Collateral and/or deliver a Notice of Exclusive Control (as defined in the
Account Control Agreement) to Securities Intermediary.

 
(E)  
So long as no Event of Default has occurred and is continuing hereunder, Debtors
may trade and sell assets in the Securities Account without the prior written
consent of Comerica, provided that the proceeds of any assets sold or traded are
deposited in or credited to the Securities Account contemporaneously with such
sale or trade.

 
(F)  
Each Debtor represents and warrants  that the Securities Account is a cash
account and not a margin account and agrees that it shall not, in connection
with the Securities Account, accept any margin or other credit advanced or
offered by the Securities Intermediary. In the event Securities Intermediary
provides check writing, line of credit or credit card privileges under the
Securities Account (“Credit Options”), each Debtor covenants and agrees that it
shall not utilize the Credit Options.

 
(G)  
Each Debtor covenants and agrees that it will not permit Securities Intermediary
to enter into an Account Control Agreement with respect to the Securities
Account with any party, other than Comerica, or otherwise authorize or permit
Securities Intermediary to agree with any other party to comply with entitlement
orders concerning the Securities Account originated by such party.

 
(H)  
Each Debtor covenants and agrees that it shall cause Securities Intermediary to
report all items of income, gain, expense or loss relating to the Securities
Account to the applicable taxing authorities under the applicable Debtor’s tax
identification number.  In the event any item of income, gain, expense or loss
with respect to the Securities Account or any of the other Collateral is
mistakenly reported to the Internal Revenue Service or any state or local taxing
authority under the name or tax identification number of Comerica, Debtors shall
assist Comerica in having such income, gain, expense or loss properly attributed
under the name and taxpayer identification of the applicable Debtor and Debtors
shall reimburse Comerica for all costs and expenses incurred by Comerica in
connection with any corrections related to such mistaken reporting.

 

 
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(I)  
Encumbrances

 
.  Each Debtor shall not create, permit or suffer to exist, and shall defend the
Collateral against any Lien (other than the Permitted Liens, provided that no
Lien, other than the Lien created hereunder, shall exist over any Investment
Property) 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 the 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 the Agent in the Collateral.
 
(xi) 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.
 
(xii) Insurance
 
.  The Collateral pledged by such Debtor or the 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 the Agent, as
mortgagee or lender loss payee and such policies shall provide that any loss be
payable to the Agent, as mortgagee or lender loss payee, as its interests may
appear. Further, upon the request of the Agent, each such Debtor shall deliver
certificates evidencing such policies, including all endorsements thereon and
those required hereunder, to the Agent; and each such Debtor assigns to the
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 the Agent of such cancellation. Each Debtor further shall provide the Agent
upon request with evidence reasonably satisfactory to the 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, the 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, the 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 disposition of proceeds payable to such Debtor of any
insurance on the Collateral (the “Insurance Proceeds”) shall be governed by the
following:
 
(1)  
provided that no Default or Event of Default has occurred and is continuing
hereunder, (i) if the amount of Insurance Proceeds in respect of any loss or
casualty does not exceed Two Hundred Fifty Thousand Dollars ($250,000.00), such
Debtor shall be entitled, in the event of such loss or casualty, to receive all
such Insurance Proceeds and to apply the same toward the replacement of the
Collateral affected thereby or to the purchase of other assets to be used in
such Debtor’s business (provided that such assets shall be subjected to a first
priority Lien in favor of the Agent and such repurchase of assets shall occur
within thirty (30) days of such Debtor receiving the Insurance Proceeds); and
(ii) if the amount of Insurance Proceeds in respect of any loss or casualty
exceeds Two Hundred

 

 
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(2)  
Fifty Thousand Dollars ($250,000.00), such Insurance Proceeds shall be paid to
and received by the Agent and applied to prepay the Indebtedness in the manner
specified in the Credit Agreement; and

 
(3)  
if a Default or Event of Default has occurred or is continuing and is not waived
as provided in the Credit Agreement, all Insurance Proceeds in respect of any
loss or casualty shall be paid to and received by the Agent, to be applied by
the Agent against the Indebtedness in the manner specified in the Credit
Agreement and/or to be held by the Agent as cash collateral for the
Indebtedness, as the Agent may direct in its sole discretion.

 
(xiii) 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 the 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 the 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 the Agent and (c) the
Debtors shall permit the Agent, the 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.
 
(xiv) Notification of Lien; Continuing Disclosure
 
.  Each Debtor shall promptly notify the Agent in writing of any Lien,
encumbrance or claim (other than a Permitted Lien, to the extent not otherwise
subject to any notice requirements under the Credit Agreement) that has attached
to or been made or asserted against any of the Collateral upon becoming aware of
the existence of such Lien, encumbrance or claim.
 
(xv) Reserved.
 
(xvi) New Subsidiaries; Additional Collateral
 
(1)  
With respect to any Intellectual Property Collateral owned, licensed or
otherwise acquired by any Debtor after the date hereof, and with respect to any
Patent, Trademark or Copyright which is not registered or filed with the U.S.
Patent and Trademark Office and/or the U.S. Copyright Office at the time such
Collateral is pledged by a Debtor to the Agent pursuant to this Security
Agreement, and which is subsequently registered or filed by such Debtor in the
appropriate office, such Debtor shall promptly after the acquisition or
registration thereof execute or cause to be executed and delivered to the Agent,
(i) an amendment, duly executed by such Debtor, in substantially the form of
Exhibit A hereto, in respect of such additional or newly registered collateral
or (ii) at the Agent’s option, a new security agreement, duly executed by the
applicable Debtor, in substantially the form of this Agreement, in respect of
such additional or newly registered

 

 
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(2)  
collateral, granting to the Agent, for the benefit of the Lenders, a first
priority security interest, pledge and Lien thereon (subject only to the
Permitted Liens), together in each case with all certificates, notes or other
instruments representing or evidencing the same, and shall, upon the Agent’s
request, execute or cause to be executed any financing statement or other
document (including without limitation, filings required by the U.S. Patent and
Trademark Office and/or the U.S. Copyright Office in connection with any such
additional or newly registered collateral) granting or otherwise evidencing a
Lien over such new Intellectual Property Collateral.  Each Debtor hereby (x)
authorizes the Agent to attach each amendment to this Agreement, (y) agrees that
all such additional collateral listed in any amendment delivered to the Agent
shall for all purposes hereunder constitute Collateral, and (z) is deemed to
have made, upon the delivery of each such Amendment, the representations and
warranties contained in Section 3.3(d) and Section 3.5 of this Agreement with
respect to the Collateral covered thereby.

 

 
(xvii) Further Assurances
 
    (a)  At any time and from time to time, upon the request of the Agent, and
at the sole expense of the Debtors, each Debtor shall promptly execute and
deliver all such further agreements, documents and instruments and take such
further action as the Agent may reasonably deem necessary or appropriate to (i)
preserve, ensure the priority, effectiveness and validity of and perfect the
Agent’s security interest in and pledge and collateral assignment of the
Collateral (including causing the 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
the 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 the 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 (except for Investment Property, over
which the only Lien shall be that Lien established under this Agreement), each
Debtor agrees to maintain and preserve the Agent’s security interest in and
pledge and collateral assignment of the Collateral hereunder and the priority
thereof.
 
(b)          Each Debtor hereby irrevocably authorizes the 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 the 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 the Agent promptly upon request.
 

 
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Rights of the Agent
(xviii) Power of Attorney
 
.  Each Debtor 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 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 the 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 the 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:
 
(1)  
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;

 
(2)  
to pay or discharge taxes, Liens (other than Permitted Liens) or other
encumbrances levied or placed on or threatened against the Collateral;

 
(3)  
(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 the Agent or as the 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 the
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, registrar
or other designated agency upon such terms as the 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); (xi) subject to any pre-existing rights or licenses,

 

 
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(4)  
to assign any Patent, Copyright or Trademark constituting Intellectual Property
Collateral (along with the goodwill of the business to which any such Patent,
Copyright or Trademark pertains), for such term or terms, on such conditions and
in such manner, as the Agent shall in its sole discretion determine, and (xii)
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 the
Agent were the absolute owner thereof for all purposes, and to do, at the
Agent’s option and such Debtor’s expense, at any time, or from time to time, all
acts and things which the Agent deems necessary to protect, preserve, maintain,
or realize upon the Collateral and the Agent’s security interest therein.

 
This power of attorney is a power coupled with an interest and shall be
irrevocable.  The 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 the 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 the Agent solely to protect, preserve, maintain and realize upon
its security interest in the Collateral.  The 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.
 
(xix) Setoff
 
.  In addition to and not in limitation of any rights of any Lenders under
applicable law, the Agent and each Bank shall, upon the occurrence and during
the continuance of an Event of Default, without notice or demand to the Debtor
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
Bank on any of the Indebtedness owing to it shall be subject to the provisions
of the Credit Agreement.
 
(xx) Assignment by the Agent
 
.  The 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 the Agent herein or otherwise.
 
(xxi) Performance by the Agent
 
. If any Debtor shall fail to perform any covenant or agreement contained in
this Agreement, the Agent may (but shall not be obligated to) perform or attempt
to perform such covenant or agreement on behalf of the 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, the Debtors shall, at the request of the Agent, promptly pay any
reasonable amount expended by the Agent in connection with such performance or
attempted performance to the 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 the Agent
shall not have any liability
 

 
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or responsibility for the performance (or non-performance) of any obligation of
the Debtors under this Agreement.
 
(xxii) Certain Costs and Expenses
 
.  The Debtors shall pay or reimburse the 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 the Lenders shall be governed by the terms and conditions
of the applicable Credit Agreement.
 
(xxiii) Indemnification
 
.  The Debtors shall indemnify, defend and hold the Agent, and each Bank 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 the Agent or
replacement of any Bank) be imposed on, incurred by or 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 the 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.
 
(c)
 
Default
 
(i) Rights and Remedies
 
.  If an Event of Default shall have occurred and be continuing, the Agent shall
have the following rights and remedies subject to the direction and/or consent
of the Lenders as required under the Credit Agreement:
 
(1)  
The 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.

 

 
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(2)  
In addition to all other rights and remedies granted to the Agent in this
Agreement, the Credit Agreement or by applicable law, the 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 the Agent may also, without previous
demand or notice to the Debtor 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 the Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Agent may, in its reasonable discretion, deem commercially
reasonable or otherwise as may be permitted by law.  Without limiting the
generality of the foregoing, the Agent may (i) without demand or notice to the
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 the 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 the Agent’s offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as the
Agent may, in its reasonable discretion, deem commercially reasonable or
otherwise as may be permitted by law.  The Agent and, subject to the terms of
the Credit Agreement, each of the 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 the Debtors, which
right of redemption is hereby expressly waived and released by the Debtors to
the extent permitted by applicable law.  The Agent may require the Debtors to
assemble the Collateral and make it available to the Agent at any place
designated by the Agent to allow the Agent to take possession or dispose of such
Collateral.  The Debtors agree that the Agent shall not be obligated to give
more than five (5) business 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.  The
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.  The 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.  The Debtors shall be liable for all reasonable expenses of retaking,
holding, preparing for sale or the like, and all reasonable attorneys’ fees,
legal expenses and other costs and expenses incurred by the Agent in connection
with the collection of the Indebtedness and the enforcement of the Agent’s
rights under this Agreement and the Credit Agreement.  The Debtors shall, to the
extent permitted by applicable law, remain

 

 
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(3)  
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.  The 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.

 
(4)  
The Agent may cause any or all of the Collateral held by it to be transferred
into the name of the Agent or the name or names of the Agent’s nominee or
nominees.

 
(5)  
The Agent may exercise any and all rights and remedies of the Debtors under or
in respect of the Collateral, including, without limitation, any and all rights
of the 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.

 
(6)  
On any sale of the Collateral, the Agent is hereby authorized to comply with any
limitation or restriction with which compliance is necessary (based on a
reasoned opinion of the 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.

 
(7)  
The 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 the Agent or as the Agent shall direct.

 
(8)  
In the event of any sale, assignment or other disposition of the Intellectual
Property Collateral, the goodwill of the business connected with and symbolized
by any Collateral subject to such disposition shall be included, and the Debtors
shall supply to the Agent or its designee the Debtors’ know-how and expertise
related to the Intellectual Property Collateral subject to such disposition, and
the Debtors’ notebooks, studies, reports, records, documents and things
embodying the same or relating to the inventions, processes or ideas covered by
and to the manufacture of any products under or in connection with the
Intellectual Property Collateral subject to such disposition.

 
(9)  
For purposes of enabling the Agent to exercise its rights and remedies under
this Section 6.1 and enabling the Agent and its successors and assigns to enjoy
the full benefits of the Collateral, the Debtors hereby grant to the Agent an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to the Debtors) to use, assign, license or sublicense any of
the Intellectual Property Collateral that is assignable in accordance with the
terms of the Credit Agreement, 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),

 

 
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(10)  
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 the Agent.

 
(ii) Private Sales.
 
(1)  
The Debtors agree to do or cause to be done, to the extent that the Debtors may
do so under applicable law, all such other reasonable acts and things as may be
necessary to make such sales or resales of any portion or all of the Collateral
valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at the Debtors’ expense.

 
(iii) Establishment of Cash Collateral Account; and Lock Box.
 
(1)  
Immediately upon the occurrence and during the continuance of an Event of
Default (without the necessity of any notice hereunder), there shall be
established by each Debtor with the Agent, for the benefit of the Lenders in the
name of the 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 the Agent and the
Lenders; provided, however, that the Cash Collateral Account may be an
interest-bearing account with a commercial bank (including Comerica or any other
Bank which is a commercial bank) if determined by the Agent, in its reasonable
discretion, to be practicable, invested by the 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 the Agent, acting at the request of the Lenders,
may establish and maintain) at Debtor’s sole expense a United States Post Office
lock box (the “Lock Box”), to which the Agent shall have exclusive access and
control.  Each Debtor expressly authorizes the 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 the 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 the Agent may be used, subject to the terms hereof, to satisfy the
requirements set forth in the first sentence of this Section 6.3.

 

 
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(2)  
Immediately upon the occurrence and during the continuance of an Event of
Default, 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 the Agent, properly endorsed, where required, so
that such items may be collected by the 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 the Agent until
delivery is made to the Agent.  All items or amounts which are remitted to a
Lock Box or otherwise delivered by or for the benefit of a Debtor to the Agent
on account of partial or full payment of, or any other amount payable with
respect to, any of the Collateral shall, at the 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 the Agent a first
security interest in and Lien on all funds on deposit in such account. Each
Debtor hereby irrevocably authorizes and directs the 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.

 
(iv) 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.
 
(d)
 
Miscellaneous
 
(i) No Waiver; Cumulative Remedies
 
.  No failure on the part of the 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.
 
(ii) 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 the Debtors and the Agent and
their respective heirs, successors and assigns, except that the Debtors may not
assign any of their rights or obligations under this Agreement without the prior
written consent of the Agent.
 
(iii) AMENDMENT; ENTIRE AGREEMENT
 
.  THIS AGREEMENT AND THE CREDIT AGREEMENT REFERRED TO HEREIN EMBODY THE FINAL,
ENTIRE
 

 
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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.
 
(iv) 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
signature pages hereto; or, as directed to the Debtors 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.
 
(v) GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.
 
(1)  
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA.

 
(2)  
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
SANTA CLARA, STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE DEBTOR AND THE AGENT CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  EACH OF THE
DEBTOR AND THE AGENT IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY LOAN DOCUMENT.

 
(vi) Headings
 
.  The headings, captions, and arrangements used in this Agreement are for
convenience only and shall not affect the interpretation of this Agreement.
 
(vii) Survival of Representations and Warranties
 
.  All representations and warranties made in this Agreement or in any
certificate delivered pursuant hereto shall survive
 

 
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the execution and delivery of this Agreement, and no investigation by the Agent
shall affect the representations and warranties or the right of the Agent or the
Lenders to rely upon them.
 
(viii) 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.
 
(ix) Waiver of Bond
 
.  In the event the Agent seeks to take possession of any or all of the
Collateral by judicial process, the 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.
 
(x) 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.
 
(xi) Construction
 
.  Each Debtor and the 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 the Debtors and the Agent.
 
(xii) Termination
 
.  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 indefeasibly paid and performed in full (in cash) and all commitments to
extend credit or other credit accommodations under the Credit Agreement have
been terminated, the Agent shall, upon the written request of the Debtors,
execute and deliver to the 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 the Debtors (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Agent and has not previously been sold or
otherwise applied pursuant to this Agreement.
 
(xiii) Release of Collateral
 
. The Agent shall, upon the written request of the Debtors, execute and deliver
to the 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 the Credit Agreement.
 

 
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Waiver of Jury Trial
 
.  EACH DEBTOR 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 DEBTOR AND THE AGENT, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS CHOICE, KNOWINGLY AND
VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO
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 THE 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.
 
(xiv) Judicial Reference Provision.
 
(1) In the event the Jury Trial Waiver set forth above is not enforceable, the
parties elect to proceed under this Judicial Reference Provision.
 
(2) 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 Agreement or any other document, instrument or agreement
between the undersigned parties (collectively in this Section, the “Comerica
Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 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
Comerica Documents, venue for the reference proceeding will be in the state or
federal court in the county or district where the real property involved in the
action, if any, is located or in the state or federal court in the county or
district where venue is otherwise appropriate under applicable law (the
“Court”).
 
(3) The matters that shall not be subject to a reference are the following: (i)
nonjudicial 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
reference provision 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 reference
provision as provided herein.
 

 
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(4) 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).
 
(5) 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.
 
(6) 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 based upon good cause shown, 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.
 
(7) Except as expressly set forth herein, 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.
 
(8) 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 court
proceeding, 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
 

 
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(9) 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.
 
(10) 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.
 
(11) THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS
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 ITS 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 ARISING OUT OF OR IN ANY WAY
RELATED TO, THIS AGREEMENT OR THE OTHER COMERICA DOCUMENTS.
 
(xv) 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.
 
(xvi) Continuing Lien
 
.  The security interest granted under this Security 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 the 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 intentionally left blank]
 

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first written above.
 
 
                          DEBTORS:
 
OBAGI MEDICAL PRODUCTS, INC.
 
 
 
By:                         /s/ Preston S.
Romm                                                
Name:                    Preston S. Romm
Title:                      CFO and EVP Finance, Operations andAdministration
 
Address for Notices:
 
Corporate Headquarters
3760 Kilroy Airport Way
Suite 500
Long Beach, California U.S.A. 90806
Fax No.: (562) 628-                                                      
Telephone No.: (562) 628-1007
Attention: General Counsel
 
OMP, INC.
 
 
 
By:                         /s/ Preston S.
Romm                                                                                               
Name:                    Preston S. Romm
Title:                      CFO and EVP Finance, Operations andAdministration
 
Address for Notices:
 
Corporate Headquarters
3760 Kilroy Airport Way
Suite 500
Long Beach, California U.S.A. 90806
Fax No.: (562) 628-                                                      
Telephone No.: (562) 628-1007
Attention: General Counsel
 

[SIGNATURE PAGE TO SECURITY AGREEMENT]
AGENT:

COMERICA BANK, as Agent
 
 
By:                         /s/ Jennifer
S. Seto                                                
Name:                    Jennifer S. Seto
Title:                      Vice President
 
Address for Notices:
 
M/C 4770
75 E Trimble Road
San Jose, California 95131
Fax No.: (408) 556-5091
Attention: Manager
 
 
 

[SIGNATURE PAGE TO SECURITY AGREEMENT]

 
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EXHIBIT A
 
TO
 
SECURITY AGREEMENT
 
FORM OF AMENDMENT
 
This Amendment, dated________________, 20__, is delivered pursuant to Section
4.8(a) of the Security Agreement referred to below.  The undersigned hereby
agrees that this Amendment may be attached to the Security Agreement dated as of
November 21, 2008 between the undersigned and Comerica Bank, as the Agent for
the benefit of the Lenders referred to therein (the “Security Agreement”), and
(a) that the intellectual property listed on Schedule A annexed hereto shall be
and become part of the Collateral referred to in the Security Agreement and
shall secure payment and performance of all Indebtedness as provided in the
Security Agreement and (b) that Schedule A shall be deemed to amend Schedule 1.1
by supplementing the information provided on such Schedule with the information
set forth on Schedule A.
 
Capitalized terms used herein but not defined herein shall have the meanings
therefor provided in the Security Agreement.
 
DEBTORS:

OBAGI MEDICAL PRODUCTS, INC.

By:                                                                           
Name:                                                                           
Title:

OMP, INC.

By:                                                                           
Name:                                                                           
Title:

AGENT:

COMERICA BANK, as Agent

By:                                                                           
Name:                                                                           
Title:

 

 
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EXHIBIT B-1
FORM AGREEMENT (PATENT)

Intellectual Property Security Agreement
 
(Patent)
 
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (PATENT) (this “Agreement”), dated
as of November 21, 2008, between the undersigned (individually each a “Debtor”
and collectively the “Debtors”) and Comerica Bank, as Agent for the Lenders (as
defined below) (“Secured Party”).
 

WITNESSETH

WHEREAS, pursuant to that certain Revolving Credit Agreement dated as of
November 21, 2008 (as amended, restated or otherwise modified from time to time,
the “Credit Agreement”) by and among Debtors, the financial institutions from
time to time signatory thereto (individually a “Lender”, and any and all such
financial institutions collectively the “Lenders”) and Secured Party, the
Secured Party has agreed, subject to the satisfaction of certain terms and
conditions, to make Advances to the Debtors and to provide for the issuance of
Letters of Credit for the account of the Debtors jointly and severally, as
provided therein; and
 
WHEREAS, in connection with the Credit Agreement, the Debtors have executed and
delivered that certain Security Agreement, dated as of November 21, 2008, to the
Secured Party (as amended or otherwise modified from time to time, the “Security
Agreement”); and
 
WHEREAS, as a condition precedent to the making of the Advances under the Credit
Agreement, the Debtors are required to execute and deliver this Agreement and to
further confirm the grant to the Secured Party for the benefit of the Secured
Party a continuing security interest in all of the Patent Collateral (as defined
below) to secure all Indebtedness (as defined in the Credit Agreement).
 
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Secured Party to make Advances
(including the initial Advance) to the Debtors pursuant to the Credit Agreement,
Debtors agree, for the benefit of the Secured Party, as follows:
 
SECTION 1.  Definitions.  Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
 
SECTION 2.  Grant of Security Interest.  For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure the
prompt and complete payment and performance when due of all of the Indebtedness,
each Debtor does hereby mortgage, pledge and hypothecate to the Secured Party,
and grant to the Secured Party a security interest in, all of the following
property of such Debtor (the “Patent Collateral”), whether now owned or
hereafter acquired or existing:
 

 

 
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(a)           all license agreements with any other Person in connection with
any of the Patents or such other Person’s patents, whether a Debtor is a
licensor or a licensee under any such license agreement, including, without
limitation, the license agreements listed on Schedule 1.1 hereto and made a part
hereof, subject, in each case, to the terms of such license agreements and the
right to prepare for sale, sell and advertise for sale, all inventory now or
hereafter covered by such licenses.
 
(b)           all letters patent, patent applications and patentable inventions,
including, without limitation, all patents and patent applications identified on
Schedule 1.1 attached hereto and made a part hereof, and including without
limitation, (a) all inventions and improvements described and claimed therein,
and patentable inventions, (b) the right to sue or otherwise recover for any and
all past, present and future infringements and misappropriations thereof, (c)
all income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments under all
Patent Licenses entered into in connection therewith, and damages and payments
for past or future infringements thereof), and (d) all rights corresponding
thereto and all other rights of any kind whatsoever of a Debtor accruing
thereunder or pertaining thereto.
 
(c)           all reissues, divisions, continuations, continuations in part,
extensions, renewals, improvements and re-examinations of any of the items
described in clauses (a) and (b); and
 
(d)           all proceeds of, and rights associated with, the foregoing,
including any right to sue or claim by the Debtors against third parties for
past, present, or future infringement of any patent, patent applications, or
Patent Licenses, including any patents, patent applications or Patent License
including any Patent License referred to in Schedule 1.1 and all rights
corresponding thereto throughout the world referred to in Schedule 1.1 attached
hereto, or for breach or enforcement of any Patent License.
 
SECTION 3.  Security Agreement.  This Agreement has been executed and delivered
by the Debtors for the purpose of registering the security interest of the
Secured Party in the Patent Collateral with the United States Patent and
Trademark Office and corresponding offices in other countries of the world.  The
security interest granted hereby has been granted as a supplement to, and not in
limitation of, the security interest granted to the Secured Party under the
Security Agreement as security for the discharge and performance of the
Indebtedness.  The Security Agreement (and all rights and remedies of the
Secured Party thereunder) shall remain in full force and effect in accordance
with its terms.
 
SECTION 4.  Release of Security Interest.  The Agent shall, upon the written
request of the Debtors, execute and deliver to the Debtors a proper instrument
or instruments acknowledging the release of the security interest and Liens
established hereby on any Patent Collateral: (a) provided that all Indebtedness
is paid in full and no Lender has a commitment to lend to any Debtor, upon
expiration or termination of the Credit Agreement, (b) if the sale or other
disposition of such Patent 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, or (c) if the sale or other disposition of such Patent 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.
 

 

 
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SECTION 5.  Acknowledgment.  The Debtors do hereby further acknowledge and
affirm that the rights and remedies of the Secured Party with respect to the
security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
 
SECTION 6.  Loan Documents, etc.  This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
 
SECTION 7.  Counterparts.  This Agreement may be executed by the parties hereto
in several counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement.
 

 
[remainder of page intentionally left blank]
 

 

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the day and year first above written.
 

DEBTORS:

OBAGI MEDICAL PRODUCTS, INC.

By:                         /s/ Preston S.
Romm                                                                                                                   
Name:                    Preston S. Romm
Title:                      CFO and EVP Finance, Operations andAdministration

OMP, INC.

By:                         /s/ Preston S.
Romm                                                                                                                 
Name:                    Preston S. Romm
Title:                      CFO and EVP Finance, Operations andAdministration

SECURED PARTY:

COMERICA BANK, as Agent

By:                         /s/  Jennifer S.
Seto                                                 
Name:                    Jennifer S. Seto
Title:                      Vice President

[SIGNATURE PAGE TO INTELLECTUAL PROPERTY SECURITY AGREEMENT (PATENT)]

 
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EXHIBIT B-2
FORM AGREEMENT (TRADEMARK)

Intellectual Property Security Agreement
 

 
(Trademark)
 
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (TRADEMARK) (this “Agreement”),
dated as of November 21, 2008, between the undersigned (individually each a
“Debtor” and collectively the “Debtors”) and Comerica Bank, as Agent for the
Lenders (as defined below) (“Secured Party”).
 

WITNESSETH

WHEREAS, pursuant to that certain Revolving Credit Agreement dated as of
November 21, 2008 (as amended, restated or otherwise modified from time to time,
the “Credit Agreement”) by and among Debtors, the financial institutions from
time to time signatory thereto (individually a “Lender”, and any and all such
financial institutions collectively the “Lenders”) and Secured Party, the
Secured Party has agreed, subject to the satisfaction of certain terms and
conditions, to make Advances to the Debtors and to provide for the issuance of
Letters of Credit for the account of the Debtors jointly and severally, as
provided therein; and
 
WHEREAS, in connection with the Credit Agreement, the Debtors have executed and
delivered that certain Security Agreement, dated as of November 21, 2008, to the
Secured Party (as amended or otherwise modified from time to time, the “Security
Agreement”); and
 
WHEREAS, as a condition precedent to the making of the Advances under the Credit
Agreement, the Debtors are required to execute and deliver this Agreement and to
further confirm the grant to the Secured Party for the benefit of the Secured
Party a continuing security interest in all of the Trademark Collateral (as
defined below) to secure all Indebtedness (as defined in the Credit Agreement).
 
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Secured Party to make Advances
(including the initial Advance) to the Debtors pursuant to the Credit Agreement,
Debtors agree, for the benefit of the Secured Party, as follows:
 
SECTION 1.  Definitions.  Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
 
SECTION 2.  Grant of Security Interest.  For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure the
prompt and complete payment and performance when due of all of the Indebtedness,
each Debtor does hereby mortgage, pledge and hypothecate to the Secured Party,
and grant to the Secured Party a security interest in, all of
 

 

 
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the following property of such Debtor (the “Trademark Collateral”), whether now
owned or hereafter acquired or existing:
 
(a)           all license agreements with any other Person in connection with
any of the Trademarks or such other Person’s names or trademarks, whether a
Debtor is a licensor or a licensee under any such license agreement, including,
without limitation, the license agreements listed on Schedule 1.1 hereto and
made a part hereof, subject, in each case, to the terms of such license
agreements, and the right to prepare for sale, and to sell and advertise for
sale, all inventory now or hereafter covered by such licenses;
 
(b)           all trademarks, service marks, trade names, trade dress or other
indicia of trade origin, trademark and service mark registrations, and
applications for trademark or service mark registrations (except for “intent to
use” applications for trademark or service mark registrations filed pursuant to
Section 1(b) of the Lanham Act, unless and until an Amendment to Allege Use or a
Statement of Use under Sections 1(c) and 1(d) of said Act has been filed), and
any renewals thereof, including, without limitation, each registration and
application identified on Schedule 1.1 attached hereto and made a part hereof,
and including without limitation (a) the right to sue or otherwise recover for
any and all past, present and future infringements and misappropriations
thereof, (b) all income, royalties, damages and other payments now and hereafter
due and/or payable with respect thereto (including, without limitation, payments
under all Trademark Licenses entered into in connection therewith, and damages
and payments for past or future infringements thereof) and (c) all rights
corresponding thereto and all other rights of any kind whatsoever of a Debtor
accruing thereunder or pertaining thereto, together in each case with the
goodwill of the business connected with the use of, and symbolized by, each such
trademark, service mark, trade name, trade dress or other indicia of trade
origin;
 
(c)           all renewals of any of the items described in clauses (a) and (b);
 
(d)           all of the goodwill of the business connected with the use of, and
symbolized by each of the items described in, clauses (a), (b) and (c); and
 
(e)           all proceeds of, and rights associated with, the foregoing,
including any right to sue or claim by the Debtors against third parties for
past, present, or future infringement or dilution of any Trademark, Trademark
registration, or Trademark license, including any Trademark, Trademark
registration or Trademark license referred to in Schedule 1.1 attached hereto,
or for any injury to the goodwill associated with the use of any Trademark or
for breach or enforcement of any Trademark license.
 
SECTION 3.  Security Agreement.  This Agreement has been executed and delivered
by the Debtors for the purpose of registering the security interest of the
Secured Party in the Trademark Collateral with the United States Patent and
Trademark Office.  The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Secured Party under the Security Agreement as security for the discharge and
performance of the Indebtedness.  The Security Agreement (and all rights and
remedies of the Secured Party thereunder) shall remain in full force and effect
in accordance with its terms.
 
SECTION 4.  Release of Security Interest.  The Agent shall, upon the written
request of the Debtors, execute and deliver to the Debtors a proper instrument
or instruments acknowledging the release of the security interest and Liens
established hereby on any Trademark Collateral: (a) provided that all
Indebtedness is paid in full and no Lender has a
 

 

 
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commitment to lend to any Debtor, upon expiration or termination of the Credit
Agreement, (b) if the sale or other disposition of such Trademark 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, or (c) if the sale or other
disposition of such Trademark 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.
 
SECTION 5.  Acknowledgment.  The Debtors do hereby further acknowledge and
affirm that the rights and remedies of the Secured Party with respect to the
security interest in the Trademark Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
 
SECTION 6.  Loan Documents, etc.  This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
 
SECTION 7.  Counterparts.  This Agreement may be executed by the parties hereto
in several counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement.
 

 
[remainder of page intentionally left blank]
 

 

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the day and year first above written.
 
                                DEBTORS: 
 
OBAGI MEDICAL PRODUCTS, INC.
 
 
 
By:                         /s/ Preston S.
Romm                                                
Name:                    Preston S. Romm
Title:                      CFO and EVP Finance, Operations andAdministration
 
 
OMP, INC.
 
 
 
By:                         /s/ Preston S.
Romm                                                                                               
Name:                    Preston S. Romm
Title:                      CFO and EVP Finance, Operations andAdministration
 
 
SECURED PARTY:
 
COMERICA BANK, as Agent
 
 
 
By:                         /s/ Jennifer S.
Seto                                                
Name:                    Jennifer S. Seto
Title:                      Vice President
 
 
 
 

 

 
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EXHIBIT B-3
FORM AGREEMENT (COPYRIGHT)

Intellectual Property Security Agreement
 
(Copyright)
 
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (COPYRIGHT) (this “Agreement”),
dated as of November 21, 2008, between the undersigned (individually each a
“Debtor” and collectively the “Debtors”) and Comerica Bank, as Agent for the
Lenders (as defined below) (“Secured Party”).
 

WITNESSETH

WHEREAS, pursuant to that certain Revolving Credit Agreement dated as of
November 21, 2008 (as amended, restated or otherwise modified from time to time,
the “Credit Agreement”) by and among Debtors, the financial institutions from
time to time signatory thereto (individually a “Lender”, and any and all such
financial institutions collectively the “Lenders”) and Secured Party, the
Secured Party has agreed, subject to the satisfaction of certain terms and
conditions, to make Advances to the Debtors and to provide for the issuance of
Letters of Credit for the account of the Debtors jointly and severally, as
provided therein; and
 
WHEREAS, in connection with the Credit Agreement, the Debtors have executed and
delivered that certain Security Agreement, dated as of November 21, 2008, to the
Secured Party (as amended or otherwise modified from time to time, the “Security
Agreement”); and
 
WHEREAS, as a condition precedent to the making of the Advances under the Credit
Agreement, the Debtors are required to execute and deliver this Agreement and to
further confirm the grant to the Secured Party for the benefit of the Secured
Party a continuing security interest in all of the Copyright Collateral (as
defined below) to secure all Indebtedness (as defined in the Credit Agreement).
 
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Secured Party to make Advances
(including the initial Advance) to the Debtors pursuant to the Credit Agreement,
Debtors agree, for the benefit of the Secured Party, as follows:
 
SECTION 1.  Definitions.  Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
 
SECTION 2.  Grant of Security Interest.  For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure the
prompt and complete payment and performance when due of all of the Indebtedness,
each Debtor does hereby mortgage, pledge and hypothecate to the Secured Party,
and grant to the Secured Party a security interest in, all of
 

 

 
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the following property of such Debtor (the “Copyright Collateral”), whether now
owned or hereafter acquired or existing:
 
(a)            all license agreements with any other Person in connection with
any of the Copyrights or such other Person’s copyrights, whether a Debtor is a
licensor or a licensee under any such license agreement, including, without
limitation, the license agreements listed on Schedule 1.1 hereto and made a part
hereof, subject, in each case, to the terms of such license agreements and the
right to prepare for sale, sell and advertise for sale, all inventory now or
hereafter covered by such licenses;

(b)           all copyrights and mask works, whether or not registered, and all
applications for registration of all copyrights and mask works, including, but
not limited to all copyrights and mask works, and all applications for
registration of all copyrights and mask works identified on Schedule 1.1
attached hereto and made a part hereof, and including without limitation (a) the
right to sue or otherwise recover for any and all past, present and future
infringements and misappropriations thereof; (b) all income, royalties, damages
and other payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all Copyright Licenses entered
into in connection therewith, and damages and payments for past or future
infringements thereof); and (c) all rights corresponding thereto and all
modifications, adaptations, translations, enhancements and derivative works,
renewals thereof, and all other rights of any kind whatsoever of a Debtor
accruing thereunder or pertaining thereto;

(c)           all renewals, certifications, or extensions of any of the items
described in clauses (a) and (b); and

(d)           all proceeds of, and rights associated with, the foregoing,
including any right to sue or claim by the Debtors against third parties for
past, present, or future infringement or dilution of any Copyright, Copyright
registration, or Copyright license, including any Copyright, Copyright
registration or Copyright license referred to in Schedule 1.1 attached hereto,
or for any injury to the goodwill associated with the use of any Copyright or
for breach or enforcement of any Copyright license.

SECTION 3.  Security Agreement.  This Agreement has been executed and delivered
by the Debtors for the purpose of registering the security interest of the
Secured Party in the Copyright Collateral with the United States Patent and
Trademark Office.  The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Secured Party under the Security Agreement as security for the discharge and
performance of the Indebtedness.  The Security Agreement (and all rights and
remedies of the Secured Party thereunder) shall remain in full force and effect
in accordance with its terms.
 
SECTION 4.  Release of Security Interest.  The Agent shall, upon the written
request of the Debtors, execute and deliver to the Debtors a proper instrument
or instruments acknowledging the release of the security interest and Liens
established hereby on any Copyright Collateral: (a) provided that all
Indebtedness is paid in full and no Lender has a commitment to lend to any
Debtor, upon expiration or termination of the Credit Agreement, (b) if the sale
or other disposition of such Copyright Collateral is permitted under the terms
of the Credit Agreement and, at the time of such proposed release, both before
and after giving effect
 

 

 
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thereto, no Default or Event of Default has occurred and is continuing, or (c)
if the sale or other disposition of such Copyright 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.
 
SECTION 5.  Acknowledgment.  The Debtors do hereby further acknowledge and
affirm that the rights and remedies of the Secured Party with respect to the
security interest in the Copyright Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
 
SECTION 6.  Loan Documents, etc.  This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
 
SECTION 7.  Counterparts.  This Agreement may be executed by the parties hereto
in several counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement.
 

 
[remainder of page intentionally left blank]
 

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the day and year first above written.
 
                                DEBTORS:
                                    
OBAGI MEDICAL PRODUCTS, INC.
 
 
 
By:                         /s/ Preston S.
Romm                                                                                                 
Name:                    Preston S. Romm
Title:                      CFO and EVP Finance, Operations andAdministration
 
 
OMP, INC.
 
 
 
By:                         /s/ Preston S.
Romm                                                                                                 
Name:                    Preston S. Romm
Title:                      CFO and EVP Finance, Operations andAdministration
 
 
SECURED PARTY:
 
COMERICA BANK, as Agent
 
 
 
By:                           /s/ Jennifer S.
Soto                                                
Name:                      Jennifer S. Seto
Title:                      Vice President

[SIGNATURE PAGE TO INTELLECTUAL PROPERTY SECURITY AGREEMENT (COPYRIGHTS)]

 
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EXHIBIT E
 
FORM OF ASSIGNMENT AGREEMENT
 

 
Date:                                           

To:           Obagi Medical Products, Inc.
OMP, Inc.
Corporate Headquarters
3760 Kilroy Airport Way
Suite 500
Long Beach, California U.S.A. 90806

and

Comerica Bank (“Agent”)
M/C 4770
75 E Trimble Road
San Jose, California 95131

Re:
Revolving Credit Agreement (“Agreement”) made as of the 21st day of November,
2008 (as amended, restated or otherwise modified from time to time, the “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 Obagi Medical Products, Inc. and
OMP, Inc. (each a “Borrower” and collectively,  the “Borrowers”).

 
 
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
 

 
 
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in any outstanding Letters of Credit) 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 Borrowers
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 Borrowers 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.
 
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:
 
(e)  
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

 
(f)  
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.

 

 
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(g)  
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)(1)
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 Borrowers, 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.
 
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.
 
* * *
 

 
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Signatures Follow on Succeeding Pages
 

 
147

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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:                                                                           

 
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ASSIGNMENT AGREEMENT ACCEPTED AND CONSENTED TO
this   day of  , 20__ BY:

COMERICA BANK, as Agent

By:                                                                

Its:                                                                

OBAGI MEDICAL PRODUCTS, INC.*

By:                                                                           
Preston S. Romm
Its:           CFO and EVP Finance, Operations and Administration

OMP, INC.*

By:                                                                           
Preston S. Romm
Its:           CFO and EVP Finance, Operations and Administration

[*Each Borrower’s consent will be required except as specified in Section 13.9
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.]
 

 
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EXHIBIT F
 
FORM OF GUARANTY
 

 
This GUARANTY is made as of _______________ by the undersigned guarantors (each
a “Guarantor” and any and all collectively, the “Guarantors”) to Comerica Bank,
as the Agent (“Agent”) for and on behalf of the Lenders (as defined below).
 
 
R E C I T A L S:
 
6. Obagi Medical Products, Inc. and OMP, Inc. (each a “Borrower” and
collectively, the “Borrowers”) have entered into that certain Revolving Credit
Agreement dated as of November 21, 2008 (as amended, supplemented, amended and
restated or otherwise modified from time to time the “Credit Agreement”) with
each of the financial institutions party 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 the
Borrowers, as provided therein.
 
7. 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.
 
8. Each of the Guarantors desires to see the success of the Borrowers and
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 the Borrowers.
 
9. The business operations of the Borrowers and the Guarantors are interrelated
and complement one another, and such entities have a common business purpose;
and (i) 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 (ii) the proceeds of advances
under the credit facilities extended under the Credit Agreement will directly or
indirectly benefit the Borrowers and the Guarantors hereunder, severally and
jointly.
 
10. 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 (as amended and otherwise modified from time to time,
the “Guaranty”).
 
(a) Definitions. Unless otherwise provided herein, all capitalized terms in this
Guaranty shall have the meanings specified 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:
 

 
 
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(b) “Guaranteed Obligations” shall mean, collectively, all indebtedness,
liabilities and obligations of the Borrowers to the Lenders of every kind,
nature or description under the Credit Agreement or any other Loan Document,
including, without limitation, principal, interest (including interest accruing
on or after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding by or against either Borrower,
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), reimbursement obligations, fees,
indemnities, and reasonable costs and expenses (including without limitation,
all reasonable fees and disbursements of counsel to the Agent or any Lender) or
otherwise, and any liabilities of any Credit Party to Agent or any Lender
arising in connection with any Lender Products and payment obligations of any
Credit Party to Agent or any Lender arising under Hedging Transactions evidenced
by Hedging Agreements, and any and all other liabilities and obligations, 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 and the other Loan Documents, whether such indebtedness is now
existing or hereafter arising.
 
(c) 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, of the Guaranteed Obligations. Each of such
Guarantors further jointly and severally agree 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.
 
(d) 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 the Borrowers 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
either Borrower or against any other Guarantor or other Person providing
collateral, or to exhaust any security for the performance of the obligations of
the Borrowers, 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 16 hereof, final payment in
full of all of the Guaranteed Obligations due and to become due from the
Borrowers, no Letters of Credit shall be outstanding and the termination of any
and all commitments 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
 

 
 
 
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(e) 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 either 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 either Borrower 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 Section 364 of 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.
 
(f) Waivers.  Each of the Guarantors hereby waives to the fullest extent
possible under applicable law:
 
(i) any defense based upon or arising by reason of:
 
(1) 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;
 
(2) 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;
 
(3) any disability or other defense of either Borrower or any other Person;
 

 
 
 
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(4) the cessation or limitation from any cause whatsoever, other than final and
irrevocable payment in full, of the Guaranteed Obligations;
 
(5) any lack of authority of any officer, director, partner, agent or any other
person acting or purporting to act on behalf of either Borrower, or any defect
in the formation of either Borrower;
 
(6) the application by either Borrower of the proceeds of any Guaranteed
Obligations for purposes other than the purposes represented by the Borrowers to
the Lenders or intended or understood by the Lenders or the Guarantors;
 
(7) any act or omission by the Lenders which directly or indirectly results in
or aids the discharge of either Borrower or any Guaranteed Obligations by
operation of law or otherwise; or
 
(8) 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;
 
(ii) 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 either
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;
 
(iii) 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
 
(iv) 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 Borrowers 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 either 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 either Borrower or any
Guarantor to collect any of the Guaranteed Obligations owing by either Borrower
or any Guarantor to Lenders; (ii) may entitle either Borrower or any Guarantor
to a judicial or nonjudicial determination of any deficiency owed by either
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 either 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:
 
1.           The Agent, on behalf of the Lenders, may collect from any Guarantor
without first foreclosing on any real or personal property collateral pledged by
either Borrower to secure the Guaranteed Obligations.
 
2.           If the Agent, on behalf of the Lenders, forecloses on any real
property collateral pledged by either Borrower to secure the Guaranteed
Obligations:
 
(a)           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.
 
(b)           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 either 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.
 
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
 

 
 
 
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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 the
Borrowers.
 
(g) 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 either 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 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 the
Borrowers.
 
(h) Other Transactions.  The Agent and each of the Lenders may deal with the
Borrowers and any security held by them for the obligations of the Borrowers 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 the Borrowers 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 the
Borrowers 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.
 
(i) 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.
 

 
 
 
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(j) 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 either 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 either 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.
 
(k) Right to Cure.  Each of the Guarantors shall have the right to cure any
Event of Default under the Credit Agreement or the other Loan Documents with
respect to obligations of the other Guarantors thereunder; provided that such
cure is effected within the applicable grace period or period for cure
thereunder, if any; and provided further that such cure can be effected in
compliance with the Credit Agreement.  Except to the extent of payments of
principal, interest and/or other sums actually received by the Agent or the
Lenders pursuant to such cure, the exercise of such right to cure by any
Guarantor shall not reduce or otherwise affect the liability of any other
Guarantor under this Guaranty.
 
(l) Borrowers’ Financial Condition.  Each Guarantor delivers this Guaranty based
solely on its own independent investigation of (or decision not to investigate)
the financial condition of the Borrowers 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 the Borrowers and
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligation, the status of the Guaranteed Obligations or any other matter which
such Guarantor may deem necessary or appropriate, now or later.
 
(m) 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 Articles 7 and 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.
 
(n) Governing Law; Severability.  This Guaranty has been delivered in California
and shall be interpreted and the rights of the parties hereunder shall be
determined under the laws of, and be enforceable in, 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
 

 
 
 
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(o) 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.
 
(p) Notice.  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 Schedule 1 hereto; or, 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, respectively, or if mailed,
upon the third Business Day (as defined in the Credit Agreement) 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.
 
(q) 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 and the Guarantors.  In
accordance with the Credit Agreement, future Domestic Subsidiary of either
Borrower 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.
 
(r) 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.
 
(s) 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 the Borrowers
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.
 
(t) Release; Reinstatement.  Upon the satisfaction of the obligations of the
Guarantors hereunder, and when none of the Guarantors is subject to any
obligation hereunder or
 

 
 
 
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(u) under the Credit Agreement or any of the other Loan Documents, 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 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,
either Borrower or any 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 the Borrowers,
the Subsidiaries, or Affiliates of the Borrowers 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 the Borrowers are 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.
 
(v) 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 Santa Clara, 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 specified in Schedule 1 hereof in the manner set
forth therein.
 
(w) Headings.  The headings, captions, and arrangements used in this Guaranty
are for convenience only and shall not affect the interpretation of this
Guaranty.
 
(x) 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.
 

 
 
 
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(y) 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
20 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 Agreement 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 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”).
 
(c)           The matters that shall not be subject to a reference are the
following: (i) non-judicial 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 16, 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.
 
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
 

 
 
 
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CLAIM BETWEEN OR AMONG THEM WHICH ARISES OUT OF OR IS RELATED TO THIS AGREEMENT.
 
(z) 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 21, 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 the Borrowers nor any Guarantor nor any other Person shall have
any right or claim under this Section 21 that would not otherwise be available
under Applicable Insolvency Laws.
 

 
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IN WITNESS WHEREOF, each of the undersigned Guarantors has executed this
Guaranty as of the date first above written.
 

____________________________________

By:_________________________________

Its:_________________________________

 

 
____________________________________

By:_________________________________

Its:_________________________________

 
 
 
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EXHIBIT A
TO FORM OF GUARANTY

Joinder Agreement to Guaranty
 

THIS JOINDER AGREEMENT is dated as of _________________, ____ by
_______________________________ (“New Guarantor”).
 
WHEREAS, pursuant to Section 7.14 of that certain Revolving Credit Agreement
dated as of November 21, 2008 (as amended or otherwise modified from time to
time, the “Credit Agreement”; capitalized terms not otherwise defined herein
shall have the meanings set forth in the Credit Agreement) by and among Obagi
Medical Products, Inc. and OMP, Inc. (each a “Borrower” and collectively, the
“Borrowers”), Comerica Bank, as agent for the Lenders (the “Agent”) and the
financial institutions which are parties thereto from time to time (“Lenders”),
the Lenders have agreed to extend credit to the Borrowers on the terms set forth
in the Credit Agreement and pursuant to Section 13 of that certain Guaranty
dated as of ___________________ (as amended 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 the Borrowers, 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 13 of the Guaranty and
does so in consideration of the extension of the Guaranteed Obligations, 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 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: ________________________________

 

 
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EXHIBIT G
 
FORM OF COVENANT COMPLIANCE REPORT
 
TO:           Comerica Bank, as Agent
611 Anton Boulevard
Costa Mesa, CA 92649
Attn: Jennifer S. Seto

Re:
Revolving Credit Agreement (“Agreement”) made as of the 21st day of November,
2008 (as amended, restated or otherwise modified from time to time, the “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 Obagi Medical Products, Inc. and
OMP, Inc. (each a “Borrower” and collectively,  the “Borrowers”).

 

 
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”).
 

Reporting Covenants:

Please indicate compliance status by circling Yes/No/Not Applicable (“N/A”)
under the “Complies” column.

REPORTING COVENANTS
REQUIRED
COMPLIES
 
Audited Consolidated F/S
Annually, within 90 days
YES
NO
N/A
Unaudited Consolidating F/S, if applicable
Annually, within 90 days
YES
NO
N/A
Company Prepared F/S
Quarterly, within 45 days
YES
NO
N/A
Compliance Report
Quarterly: (i) within 45 days for FQ1, FQ2 and FQ3; and (ii) within 90 days for
FQ4
YES
NO
N/A
Annual Projections
Annually, within 90 days after FYE
YES
NO
N/A
IP Report
Quarterly, within 30 days
YES
NO
N/A
List of IP filings
Monthly, within 7 days
YES
NO
N/A
A/R and A/P Aging
Quarterly, within 45 days
YES
NO
N/A
Major Contract Report
Quarterly, within 45 days
YES
NO
N/A

 
 
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Financial Covenants:
1.  
Minimum Quick Ratio (Section 7.9(a)).  On the Computation Date, the Minimum
Quick Ratio, which is required to be not less than 1.00 to 1.00 was ______ to
1.00, as computed in the supporting documents attached hereto as Schedule 1.

 
2.  
Maximum Total Liabilities to Tangible Effective Net Worth (Section 7.9(b)).  On
the Computation Date, the Maximum Total Liabilities to Tangible Effective Net
Worth, which is required to be not more than 1.75 to 1.00 was ______ to 1.00, as
computed in the supporting documents attached hereto as Schedule 2.

 
3.  
Minimum Profitability (Section 7.9(c)).

 
(a)  
As of December 31, 20_____, the Net Income of Borrowers, on a consolidated
basis, which is required to be not less than $1,000,000.00 was $__________, as
computed in the supporting documents attached hereto as Schedule 3.

 
(b)  
On the Computation Date, the Net Income of Borrowers, on a consolidated basis,
which is required to be not less than $0 for more than two consecutive fiscal
quarters (circle one) was / was not less than $0 for the last three consecutive
fiscal quarters, ending on the Computation Date.

 
4.  
Maximum Annual Capital Expenditures (Section 8.6).  As of the Computation Date,
the aggregate Capital Expenditures of Borrowers during the current Fiscal Year,
which are required to be not more than (i) $6,000,000 in the aggregate per
Fiscal Year for the Fiscal Years ending December 31, 2008 and December 31, 2009
and (ii) $3,000,000 in the aggregate per Fiscal Year for each Fiscal Year ending
December 31, 2010 and thereafter, totaled $______________, as computed in the
supporting documents attached hereto as Schedule 4.

 
5.  
Thomas Weisal Partners Account (Section 7.14).  On the Computation Date, the
outstanding Cash balance of the TWP Account, which is required to be $0 was
$______________, as evidenced by the brokerage statements attached as Schedule
5, and since Borrowers last furnished Agent a Covenant Compliance Report, the
TWP Account (circle one) has / has not at any time carried a Cash balance in
excess of $0 for greater than twenty four (24) consecutive hours.

 
6.  
Stock Repurchases (Section 8.5(a)).  On the Computation Date, the aggregate
purchase or redemption price of Equity Interests repurchased by OMP was
$________________, which may not exceed $10,000,000 in aggregate. A Default or
Event of Default (circle one) was / was not continuing at the time of any such
repurchases and a Default or Event of Default (circle one) did / did not result
from any such repurchases.

 
7.  
Maximum Dividend Distribution (Section 8.5(b)) On December 31, 20____, the
aggregate Cash distributions and dividends paid by Borrowers during such fiscal
year then ended was $_____________________, which is required to be not more
than 25% of $____________________ (the aggregate Net Income of Borrowers for the
fiscal year then ended).

 

 
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8.  
Joint Venture Investment (Section 8.7(g)).  On the Computation Date, the
aggregate Cash amount of all outstanding joint venture Investments made during
the current Fiscal Year was $______________, which Cash amounts may not exceed
$2,000,000 in aggregate during any Fiscal Year. A Default or Event of Default
(circle one) was / was not continuing at the time a Borrower made any joint
venture Investment and a Default or Event of Default (circle one) did / did not
result from the making of any such joint venture Investments. The aggregate
Equity Interest given by a Borrower in connection with any joint venture
Investment (circle one) did / did not exceed twenty percent (20%) of the
aggregate amount of such Borrower’s Equity Interest.

 
Each Borrower hereby certifies that:
 
A.           To the best of its 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 its 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.
 
C.           It has 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 its 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 such Borrower 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.
 
[remainder of page intentionally left blank]
 

 
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IN WITNESS WHEREOF, Borrowers have caused this Report to be executed and
delivered this ______ day of __________________, 20____.
 
OBAGI MEDICAL PRODUCTS, INC.

By:                                                                             
Preston S. Romm
Its:              CFO and EVP Finance, Operations and
Administration

OMP, INC.

By:                                                                             
Preston S. Romm
Its:              CFO and EVP Finance, Operations and
Administration

 

 

 
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EXHIBIT H
 
FORM OF INTELLECTUAL PROPERTY REPORT
 
To:           Comerica Bank, as Agent
M/C 4770
75 E Trimble Road
San Jose, California 95131

Re:
Revolving Credit Agreement (“Agreement”) made as of the 21st day of November,
2008 (as amended, restated or otherwise modified from time to time, the “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 Obagi Medical Products, Inc. and
OMP, Inc. (each a “Borrower” and collectively,  the “Borrowers”).

 
This Intellectual Property Report (“Report”) is furnished pursuant to Section
7.2(f) of the Credit Agreement and sets forth various information as of
______________, 20___ (the “Determination Date”).
 
1.  
As of the Determination Date, and since Borrowers last furnished Agent an
Intellectual Property Report, no Borrower has made or filed any applications or
registrations in respect of any Intellectual Property Collateral, except as
stated in Schedule 1 hereto.

 
2.  
As of the Determination Date, and since Borrowers last furnished Agent an
Intellectual Property Report, there has been no material change in any
Borrower’s Intellectual Property Collateral, including but not limited to any
subsequent ownership right of a Borrower in or to any Intellectual Property
Collateral, except as stated in Schedule 1 hereto.

 
Each Borrower hereby certifies that:
 
A.           To the best of its knowledge, all of the information set forth in
this Report (and in any Schedule attached hereto) is true and correct in all
material respects.
 
C.           It has reviewed the Credit Agreement and this Report is based on an
examination sufficient to assure that this Report is accurate.
 
Capitalized terms used in this Report and in the Schedule hereto, unless
specifically defined to the contrary, have the meanings given to them in the
Credit Agreement.
 

 
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IN WITNESS WHEREOF, Borrowers have caused this Report to be executed and
delivered this ______ day of __________________, 20____.
 

OBAGI MEDICAL PRODUCTS, INC.

By:                                                                             
Preston S. Romm
Its:              CFO and EVP Finance, Operations and
Administration

OMP, INC.

By:                                                                             
Preston S. Romm
Its:              CFO and EVP Finance, Operations and
Administration

 
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EXHIBIT I
comerica graphic [comericagraphic.jpg]
Lessor's Acknowledgment and Subordination
   

As of                                                       the
undersigned,                                                                                     
Lessor, under the terms of a Lease dated, a copy of which is attached hereto (as
amended, "Lease"), acknowledges that OMP, INC., Lessee, has or will receive
certain credit accommodations from Comerica Bank and the other lenders party to
that certain Revolving Credit Agreement dated November 21, 2008, by and among
Comerica Bank, as Agent ("Agent"), the lenders party thereto, Lessee and Obagi
Medical Products, Inc. The Lease relates to the real estate commonly known as .
 
Notice — Lessor agrees to notify Agent in writing (at the address specified
below or at any other address given by Agent in writing to Lessor) not less than
thirty (30) days before commencing any proceedings or otherwise taking any
action to terminate the Lease or to enforce its remedies thereunder.
 
Subordination — Lessor agrees that all of Lessee's machinery, equipment,
inventory, fixtures or other property ("Lessee's Property") which may be located
on the leased premises shall remain the personal property of the Lessee and
shall not become a fixture or part of the realty notwithstanding anything that
may be implied by law from the mode of attachment, installation or otherwise.
Lessor further agrees that any lien or security interest Lessor may claim
against any of Lessee's Property is subordinated to any lien or security
interest now or subsequently held by Agent in any of such property.
 
Limited Right of Entry — Lessor acknowledges that, notwithstanding any
noncompliance with or default by Lessee under the Lease, the Agent shall have
the limited right to enter into and remain in possession of the leased premises
for a reasonable period not to exceed ninety (90) consecutive days for the
purpose of enforcing its liens and security interests in Lessee's Property,
including the sale and/or detachment and/or removal from the leased premises of
such property. Agent shall pay to Lessor, on a weekly basis in advance (pro
rata, depending on the number of days Agent is in possession), the current
monthly rent accruing under the Lease during the period while Agent is in
possession of the leased premises. Agent shall have no responsibility whatsoever
for any back rent or other obligations which have accrued under the Lease prior
to Agent's entry into possession under this paragraph.
 
No Assumption — Lessor further agrees that Agent's rights have been given for
security purposes only, and that unless and until Agent agrees expressly and in
writing to do so, Agent shall have no obligations whatsoever under the Lease.
 

   ADDRESS OF LEASED PREMISES:       Lessor:    
 
   
 
   
 
   By:
 
   
 
   Its:
 
 

                                                    

   ACKNOWLEDGMENT OF LESSEE:      AGENT'S ADDRESS:      OMP, INC.       
 Comerica Bank            M/C 4770    By:
 
   
 75 E Trimble Road
   
Preston S. Romm 
   
 San Jose, CA 95131
   Its:
CFO and EVP Finance, Operations and Administration
   
 Attn:  Manager
 

 

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