CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

Exhibit 10.1

LOGO [g40085img001.jpg]

LOAN AGREEMENT

This Agreement dated as of September 1, 2006, is among Bank of America, N.A.
(the “Bank”), Ambassadors International, Inc. (“Borrower 1”), Ambassadors Marine
Group, LLC (“Borrower 2”), Ambassadors, LLC (“Borrower 3”), Ambassadors Cruise
Group, LLC (“Borrower 4”) and Cypress Reinsurance, Ltd. (“Borrower 5”) (Borrower
1, Borrower 2, Borrower 3, Borrower 4 and Borrower 5 are sometimes referred to
collectively as the “Borrowers” and individually as the “Borrower”).

 

1. FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS

 

1.1 Line of Credit Amount.

 

(a) During the availability period described below, the Bank will provide a line
of credit to the Borrowers. The amount of the line of credit (the “Facility
No. 1 Commitment”) is Twenty Million and 00/100 Dollars ($20,000,000.00).

 

(b) This is a revolving line of credit. During the availability period, the
Borrowers may repay principal amounts and reborrow them.

 

(c) The Borrowers agree not to permit the principal balance outstanding under
this Facility No. 1, including cash advances plus the amount of any letters of
credit outstanding, including amounts drawn on any letters of credit and not yet
reimbursed, to exceed the Facility No. 1 Commitment. In addition, the amount of
cash advances outstanding at any one time must not exceed Fifteen Million and
00/100 Dollars ($15,000,000.00). If the Borrower exceeds either of these limits,
the Borrower will immediately pay the excess to the Bank upon the Bank’s demand.

 

1.2 Availability Period. The line of credit is available between the date of
this Agreement and September 1, 2007, or such earlier date as the availability
may terminate as provided in this Agreement (the “Facility No. 1 Expiration
Date”).

The availability period for this line of credit will be considered renewed if
and only if the Bank has sent to the Borrowers a written notice of renewal
effective as of the Facility No. 1 Expiration Date for the line of credit (the
“Renewal Notice”). If this line of credit is renewed, it will continue to be
subject to all the terms and conditions set forth in this Agreement except as
modified by the Renewal Notice. If this line of credit is renewed, the term
“Expiration Date” shall mean the date set forth in the Renewal Notice as the
Expiration Date and the same process for renewal will apply to any subsequent
renewal of this line of credit. A renewal fee may be charged at the Bank’s
option. The amount of the renewal fee will be specified in the Renewal Notice.

 

1.3 Repayment Terms.

 

(a) The Borrowers will pay interest on October 1, 2006, and then on the same day
of each month thereafter until payment in full of any principal outstanding
under this facility.

 

(b) The Borrowers will repay in full any principal, interest or other charges
outstanding under this facility no later than the Facility No. 1 Expiration
Date.

 

1.4 Interest Rate.

 

(a) The interest rate is a rate per year equal to the Bank’s Prime Rate.

 

(b) The Prime Rate is the rate of interest publicly announced from time to time
by the Bank as its Prime Rate. The Prime Rate is set by the Bank based on
various factors, including the Bank’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans. The Bank may price loans to its customers at, above, or below the Prime
Rate. Any change in the Prime Rate shall take effect at the opening of business
on the day specified in the public announcement of a change in the Bank’s Prime
Rate.

 

1.5 Letters of Credit.

 

(a) During the availability period, at the request of the Borrowers, the Bank
will issue:

 

Standard Loan Agreement

  1   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

  (i) commercial letters of credit with a maximum maturity of two hundred ten
(210) days but not to extend more than two hundred ten (210) days beyond the
Facility No. 1 Expiration Date.

 

  (ii) standby letters of credit with a maximum maturity of three hundred
sixty-five (365) days but not to extend more than three hundred sixty-five
(365) days beyond the Facility No. 1 Expiration Date. The standby letters of
credit may include a provision providing that the maturity date will be
automatically extended each year for an additional year unless the Bank gives
written notice to the contrary; provided, however, that each letter of credit
must include a final maturity date which will not be subject to automatic
extension.

 

(b) The amount of the letters of credit outstanding at any one time (including
the drawn and unreimbursed amounts of the letters of credit) may not exceed
Twenty Million and 00/100 Dollars ($20,000,000).

 

(c) In calculating the principal amount outstanding under the Facility No. 1
Commitment, the calculation shall include the amount of any letters of credit
outstanding, including amounts drawn on any letters of credit and not yet
reimbursed.

 

(d) The following letters of credit are outstanding from the Bank for the
account of the Borrowers:

 

Letter of Credit Number

  

Amount

***

   $50,000.00

***

   $70,000.00

***

   $1,262,645.00

***

   $1,752,875.00

***

   $629,500.00

***

   $1,973,033.00

***

   $1,909,115.00

***

   $1,638,750.00

***

   $560,000.00

***

   $1,145,000.00

***

   $25,000.00

***

   $888,774.00

As of the date of this Agreement, these letters of credit shall be deemed to be
outstanding under this Agreement, and shall be subject to all the terms and
conditions stated in this Agreement.

 

(e) The Borrowers agree:

 

  (i) Any sum drawn under a letter of credit may, at the option of the Bank, be
added to the principal amount outstanding under this Agreement. The amount will
bear interest and be due as described elsewhere in this Agreement.

 

  (ii) If there is a default under this Agreement, to immediately prepay and
make the Bank whole for any outstanding letters of credit.

 

  (iii) The issuance of any letter of credit and any amendment to a letter of
credit is subject to the Bank’s written approval and must be in form and content
satisfactory to the Bank and in favor of a beneficiary acceptable to the Bank.

 

  (iv) To sign the Bank’s form Application and Agreement for Commercial Letter
of Credit or Application and Agreement for Standby Letter of Credit, as
applicable.

 

  (v) To pay any issuance and/or other fees that the Bank notifies the Borrowers
will be charged for issuing and processing letters of credit for the Borrowers.

 

  (vi) To allow the Bank to automatically charge its checking account for
applicable fees, discounts, and other charges.

 

Standard Loan Agreement

  2   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

2. FEES AND EXPENSES

 

2.1 Fees.

 

(a) Waiver Fee. If the Bank, at its discretion, agrees to waive or amend any
terms of this Agreement, the Borrowers will, at the Bank’s option, pay the Bank
a fee for each waiver or amendment in an amount advised by the Bank at the time
the Borrowers request the waiver or amendment. Nothing in this paragraph shall
imply that the Bank is obligated to agree to any waiver or amendment requested
by the Borrowers. The Bank may impose additional requirements as a condition to
any waiver or amendment.

 

(b) Late Fee. To the extent permitted by law, the Borrowers agree to pay a late
fee in an amount not to exceed four percent (4%) of any payment that is more
than fifteen (15) days late. The imposition and payment of a late fee shall not
constitute a waiver of the Bank’s rights with respect to the default.

2.2 Expenses. The Borrowers agree to immediately repay the Bank for expenses
that include, but are not limited to, filing, recording and search fees,
appraisal fees, title report fees, and documentation fees.

 

2.3 Reimbursement Costs.

 

(a) The Borrowers agree to reimburse the Bank for any expenses it incurs in the
preparation of this Agreement and any agreement or instrument required by this
Agreement. Expenses include, but are not limited to, reasonable attorneys’ fees,
including any allocated costs of the Bank’s in-house counsel to the extent
permitted by applicable law.

 

3. DISBURSEMENTS, PAYMENTS AND COSTS

 

3.1 Disbursements and Payments.

 

(a) Each payment by the Borrowers will be made in U.S. Dollars and immediately
available funds by direct debit to a deposit account as specified below or, for
payments not required to be made by direct debit, by mail to the address shown
on the Borrowers’ statement or at one of the Bank’s banking centers in the
United States.

 

(b) Each disbursement by the Bank and each payment by the Borrowers will be
evidenced by records kept by the Bank. In addition, the Bank may, at its
discretion, require the Borrowers to sign one or more promissory notes.

3.2 Requests for Credit; Equal Access by all Borrowers. If there is more than
one Borrower, any Borrower (or a person or persons authorized by any one of the
Borrowers), acting alone, can borrow up to the full amount of credit provided
under this Agreement. Each Borrower will be liable for all extensions of credit
made under this Agreement to any other Borrower.

 

3.3 Telephone and Telefax Authorization.

 

(a) The Bank may honor telephone or telefax instructions for advances or
repayments and telefax requests for the issuance of letters of credit given, or
purported to be given, by any one of the individuals authorized to sign loan
agreements on behalf of any of the Borrowers, or any other individual designated
by any one of such authorized signers.

 

(b) Advances will be deposited in and repayments will be withdrawn from account
number     ***     owned by the Borrowers or such other of the Borrowers’
accounts with the Bank as designated in writing by the Borrowers.

 

(c) The Borrowers will indemnify and hold the Bank harmless from all liability,
loss, and costs in connection with any act resulting from telephone or telefax
instructions the Bank reasonably believes are made by any individual authorized
by the Borrowers to give such instructions. This paragraph will survive this
Agreement’s termination, and will benefit the Bank and its officers, employees,
and agents.

3.4 Direct Debit (Pre-Billing).

 

(a)

The Borrowers agree that the Bank will debit deposit account number     ***    
owned by the Borrowers or such other of the Borrowers’ accounts with the Bank as
designated in writing by the Borrowers (the “Designated

 

Standard Loan Agreement

  3   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

 

Account”) on the date each payment of principal and interest and any fees from
the Borrowers become due (the “Due Date”).

 

(b) Prior to each Due Date, the Bank will mail to the Borrowers a statement of
the amounts that will be due on that Due Date (the “Billed Amount”). The bill
will be mailed a specified number of calendar days prior to the Due Date, which
number of days will be mutually agreed from time to time by the Bank and the
Borrowers. The calculations in the bill will be made on the assumption that no
new extensions of credit or payments will be made between the date of the
billing statement and the Due Date, and that there will be no changes in the
applicable interest rate.

 

(c) The Bank will debit the Designated Account for the Billed Amount, regardless
of the actual amount due on that date (the “Accrued Amount”). If the Billed
Amount debited to the Designated Account differs from the Accrued Amount, the
discrepancy will be treated as follows:

 

  (i) If the Billed Amount is less than the Accrued Amount, the Billed Amount
for the following Due Date will be increased by the amount of the discrepancy.
The Borrowers will not be in default by reason of any such discrepancy.

 

  (ii) If the Billed Amount is more than the Accrued Amount, the Billed Amount
for the following Due Date will be decreased by the amount of the discrepancy.

Regardless of any such discrepancy, interest will continue to accrue based on
the actual amount of principal outstanding without compounding. The Bank will
not pay the Borrowers interest on any overpayment.

 

(d) The Borrowers will maintain sufficient funds in the Designated Account to
cover each debit. If there are insufficient funds in the Designated Account on
the date the Bank enters any debit authorized by this Agreement, the Bank may
reverse the debit.

 

(e) The Borrowers may terminate this direct debit arrangement at any time by
sending written notice to the Bank at the address specified at the end of this
Agreement. If the Borrowers terminate this arrangement, then the principal
amount outstanding under this Agreement will at the option of the Bank bear
interest at a rate per annum which is 0.5 percentage point(s) higher than the
rate of interest otherwise provided under this Agreement.

3.5 Banking Days. Unless otherwise provided in this Agreement, a banking day is
a day other than a Saturday, Sunday or other day on which commercial banks are
authorized to close, or are in fact closed, in the state where the Bank’s
lending office is located, and, if such day relates to amounts bearing interest
at an offshore rate (if any), means any such day on which dealings in dollar
deposits are conducted among banks in the offshore dollar interbank market. All
payments and disbursements which would be due on a day which is not a banking
day will be due on the next banking day. All payments received on a day which is
not a banking day will be applied to the credit on the next banking day.

3.6 Interest Calculation. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.

3.7 Default Rate. Upon the occurrence of any default or after maturity or after
judgement has been rendered on any obligation under this Agreement, all amounts
outstanding under this Agreement, including any interest, fees, or costs which
are not paid when due, will at the option of the Bank bear interest at a rate
which is 6.0 percentage point(s) higher than the rate of interest otherwise
provided under this Agreement. This may result in compounding of interest. This
will not constitute a waiver of any default.

3.8 Taxes. If any payments to the Bank under this Agreement are made from
outside the United States, the Borrowers will not deduct any foreign taxes from
any payments it makes to the Bank. If any such taxes are imposed on any payments
made by the Borrowers (including payments under this paragraph), the Borrowers
will pay the taxes and will also pay to the Bank, at the time interest is paid,
any additional amount which the Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such taxes had not been imposed.
The Borrowers will confirm that they have paid the taxes by giving the Bank
official tax receipts (or notarized copies) within thirty (30) days after the
due date.

 

Standard Loan Agreement

  4   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

4. CONDITIONS

Before the Bank is required to extend any credit to the Borrowers under this
Agreement, it must receive any documents and other items it may reasonably
require, in form and content acceptable to the Bank, including any items
specifically listed below.

4.1 Authorizations. If any Borrower or any guarantor is anything other than a
natural person, evidence that the execution, delivery and performance by such
Borrower and/or such guarantor of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.

4.2 Governing Documents. If required by the Bank, a copy of the Borrowers’
organizational documents.

4.3 Payment of Fees. Payment of all fees and other amounts due and owing to the
Bank, including without limitation payment of all accrued and unpaid expenses
incurred by the Bank as required by the paragraph entitled “Reimbursement
Costs.”

4.4 Good Standing. Certificates of good standing for each Borrower as applicable
from its state of formation and from any other state in which such Borrowers is
required to qualify to conduct its business.

4.5 Insurance. Evidence of insurance coverage, as required in the “Covenants”
section of this Agreement.

 

5. REPRESENTATIONS AND WARRANTIES

When the Borrowers sign this Agreement, and until the Bank is repaid in full,
the Borrowers make the following representations and warranties. Each request
for an extension of credit constitutes a renewal of these representations and
warranties as of the date of the request:

5.1 Formation. If any Borrower is anything other than a natural person, it is
duly formed and existing under the laws of the state or other jurisdiction where
organized.

5.2 Authorization. This Agreement, and any instrument or agreement required
hereunder, are within each Borrower’s powers, have been duly authorized, and do
not conflict with any of its organizational papers.

5.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of each Borrower, enforceable against each Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.

5.4 Good Standing. In each state in which each Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.

5.5 No Conflicts. This Agreement does not conflict with any law, agreement, or
obligation by which any Borrower is bound.

5.6 Financial Information. All financial and other information that has been or
will be supplied to the Bank is sufficiently complete to give the Bank accurate
knowledge of the Borrowers’ (and any guarantor’s) financial condition, including
all material contingent liabilities. Since the date of the most recent financial
statement provided to the Bank, there has been no material adverse change in the
business condition (financial or otherwise), operations, properties or prospects
of any Borrower (or any guarantor). If any Borrower is comprised of the trustees
of a trust, the foregoing representations shall also pertain to the trustor(s)
of the trust.

5.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against any Borrower which, if lost, would impair such Borrower’s
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.

5.8 Permits, Franchises. Each Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights, copyrights and fictitious name rights necessary to enable
it to conduct the business in which it is now engaged.

 

Standard Loan Agreement

  5   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

5.9 Other Obligations. No Borrower is in default on any obligation for borrowed
money, any purchase money obligation or any other material lease, commitment,
contract, instrument or obligation, except as have been disclosed in writing to
the Bank.

5.10 Tax Matters. No Borrower has any knowledge of any pending assessments or
adjustments of its income tax for any year and all taxes due have been paid,
except as have been disclosed in writing to the Bank.

5.11 No Event of Default. There is no event which is, or with notice or lapse of
time or both would be, a default under this Agreement.

5.12 Insurance. Each Borrower has obtained, and maintained in effect, the
insurance coverage required in the “Covenants” section of this Agreement.

 

6. COVENANTS

The Borrowers agree, so long as credit is available under this Agreement and
until the Bank is repaid in full:

 

6.1 Use of Proceeds.

 

(a) To use the proceeds of Facility No. 1 only for working capital and issuance
of letters of credit.

 

(b) The proceeds of the credit extended under this Loan Agreement may not be
used directly or indirectly to purchase or carry any “margin stock” as that term
is defined in Regulation U of the Board of Governors of the Federal Reserve
System, or extend credit to or invest in other parties for the purpose of
purchasing or carrying any such “margin stock,” or to reduce or retire any
indebtedness incurred for such purpose.

6.2 Financial Information. To provide the following financial information and
statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time.

 

(a) Within ninety (90) days of the fiscal year end, the annual financial
statements of Borrower 1. These financial statements must be audited (with an
opinion satisfactory to the Bank) by a Certified Public Accountant acceptable to
the Bank. The statements shall be prepared on a consolidated basis.

 

(b) Within forty five (45) days of the period’s end, quarterly financial
statements of Borrower 1, certified and dated by an authorized financial
officer. These financial statements may be company-prepared. The statements
shall be prepared on a consolidated basis.

 

(c) Within ninety (90) days of the end of each fiscal year and within forty five
(45) days of the end of each quarter, a compliance certificate of each Borrower
signed by an authorized financial officer, and setting forth (i) the information
and computations (in sufficient detail) to establish that each Borrower is in
compliance with all financial covenants at the end of the period covered by the
financial statements then being furnished and (ii) whether there existed as of
the date of such financial statements and whether there exists as of the date of
the certificate, any default under this Agreement and, if any such default
exists, specifying the nature thereof and the action the Borrowers are taking
and propose to take with respect thereto.

6.3 Unencumbered Liquid Assets. To maintain Unencumbered Liquid Assets having an
aggregate market value of not less than Forty Million and 00/100 Dollars
($40,000,000.00).

“Unencumbered Liquid Assets” means the following assets (excluding assets of any
retirement plan) which (i) are not the subject of any lien, pledge, security
interest or other arrangement with any creditor to have his claim satisfied out
of the asset (or proceeds thereof) prior to the general creditors of the owner
of the asset, and (ii) may be converted to cash within five (5) days:

 

(a) Cash or cash equivalents held in the United States;

 

(b) United States Treasury or governmental agency obligations which constitute
full faith and credit of the United States of America;

 

(c) Commercial paper rated P-1 or A1 by Moody’s or S&P, respectively;

 

Standard Loan Agreement

  6   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

(d) Medium and long-term securities rated investment grade by one of the rating
agencies described in (c) above;

 

(e) Eligible Stocks;

 

(f) Mutual funds quoted in The Wall Street Journal which invest primarily in the
assets described in (a) – (e) above.

“Eligible Stocks” includes any common or preferred stock which (i) is not
subject to statutory or contractual restrictions on sales, (ii) is traded on a
U. S. national stock exchange or included in the National Market tier of NASDAQ
and (iii) has, as of the close of trading on the applicable exchange (excluding
after hours trading), a per share price of at least Fifteen Dollars ($15).

The Borrowers will provide the Bank a Form U-1 Purpose Statement, confirming
that none of the proceeds of the loan will be used to buy or carry any margin
stock.

6.4 Debt to Worth Ratio. To maintain on a consolidated basis a ratio of Total
Liabilities (excluding the non-current portion of Subordinated Liabilities) to
Tangible Net Worth not exceeding 1.75:1.0.

“Total Liabilities” means the sum of current liabilities plus long term
liabilities.

“Tangible Net Worth” means the value of total assets (including leaseholds and
leasehold improvements and reserves against assets but excluding goodwill,
patents, trademarks, trade names, organization expense, unamortized debt
discount and expense, capitalized or deferred research and development costs,
deferred marketing expenses, and other like intangibles, and monies due from
affiliates, officers, directors, employees, shareholders, members or managers)
less total liabilities, including but not limited to accrued and deferred income
taxes, but excluding the non-current portion of Subordinated Liabilities.

“Subordinated Liabilities” means liabilities subordinated to the Borrowers’
obligations to the Bank in a manner acceptable to the Bank in its sole
discretion.

6.5 Bank as Principal Depository. With respect to Borrower 1, to maintain the
Bank as its principal depository bank, including for the maintenance of
business, cash management, operating and administrative deposit accounts.

6.6 Other Debts. Not to have outstanding or incur any direct or contingent
liabilities or lease obligations (other than those to the Bank), or become
liable for the liabilities of others, without the Bank’s written consent. This
does not prohibit:

 

(a) Acquiring goods, supplies, or merchandise on normal trade credit.

 

(b) Endorsing negotiable instruments received in the usual course of business.

 

(c) Obtaining surety bonds in the usual course of business.

 

(d) Liabilities, lines of credit and leases in existence on the date of this
Agreement disclosed in writing to the Bank.

 

(e) Additional debts assumed in connection with acquisitions permitted under
this Agreement.

6.7 Other Liens. Not to create, assume, or allow any security interest or lien
(including judicial liens) on property any Borrower now or later owns, except:

 

(a) Liens and security interests in favor of the Bank.

 

(b) Liens for taxes not yet due.

 

(c) Liens outstanding on the date of this Agreement disclosed in writing to the
Bank.

 

d) Liens securing debts assumed in connection with acquisitions permitted under
this Agreement.

6.8 Maintenance of Assets.

 

(a) Not to sell, assign, lease, transfer or otherwise dispose of any part of any
Borrower’s business or any Borrower’s assets except in the ordinary course of
business.

 

Standard Loan Agreement

  7   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

(b) Not to sell, assign, lease, transfer or otherwise dispose of any assets for
less than fair market value, or enter into any agreement to do so.

 

(c) Not to enter into any sale and leaseback agreement covering any of its fixed
assets.

 

(d) To maintain and preserve all rights, privileges, and franchises the
Borrowers now have.

 

(e) To make any repairs, renewals, or replacements to keep the Borrowers’
properties in good working condition.

6.9 Investments. Not to have any existing, or make any new, investments in any
individual or entity, or make any capital contributions or other transfers of
assets to any individual or entity, except for:

 

(a) Existing investments disclosed to the Bank in writing.

 

(b) Investments in the Borrowers’ current subsidiaries.

 

(c) Investments in any of the following:

 

  (i) certificates of deposit;

 

  (ii) U.S. treasury bills and other obligations of the federal government;

 

  (iii) readily marketable securities (including commercial paper, but excluding
restricted stock and stock subject to the provisions of Rule 144 of the
Securities and Exchange Commission).

6.10 Loans. Not to make any loans, advances or other extensions of credit to any
individual or entity, except for:

 

(a) Existing extensions of credit disclosed to the Bank in writing.

 

(b) Extensions of credit to the Borrowers’ current subsidiaries.

 

(c) Extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business to non-affiliated entities.

6.11 Change of Management. Not to make any substantial change in the present
executive or management personnel of the Borrowers.

6.12 Change of Ownership. Not to cause, permit, or suffer any change in capital
ownership such that there is a change of more than twenty-five percent (25%) in
the direct or indirect capital ownership of any Borrower.

6.13 Additional Negative Covenants. Not to, without the Bank’s written consent:

 

  (a) Enter into any consolidation, merger, or other combination, or become a
partner in a partnership, a member of a joint venture, or a member of a limited
liability company.

 

  (b) Acquire or purchase a business or its assets unless all of the following
conditions have been met:

 

  (i) The acquisition or purchase has been approved by the board of directors or
similar governing body of the business to be acquired;

 

  (ii) The business to be acquired is in a similar or related line of business
as the Borrower’s line of business; and

 

  (iii) The Borrower has delivered to the Bank a certificate, executed by a
responsible officer of the Borrower, stating that, on a pro forma basis, the
acquisition will not cause the Borrower to violate any financial covenants set
forth in this Agreement.

 

  (c) Engage in any business activities substantially different from each
Borrower’s present business.

 

Standard Loan Agreement

  8   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

  (d) Liquidate or dissolve any Borrower’s business.

 

  (e) Voluntarily suspend any Borrower’s business for more than thirty (30) days
in any three hundred sixty five (365) day period.

 

6.14 Notices to Bank. To promptly notify the Bank in writing of:

 

(a) Any lawsuit over Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)
against any Borrower (or any guarantor or, if any Borrower is comprised of the
trustees of a trust, any trustor).

 

(b) Any substantial dispute between any governmental authority and any Borrower
(or any guarantor or, if any Borrower is comprised of the trustees of a trust,
any trustor).

 

(c) Any event of default under this Agreement, or any event which, with notice
or lapse of time or both, would constitute an event of default.

 

(d) Any material adverse change in any Borrower’s (or any guarantor’s, or, if
any Borrower is comprised of the trustees of a trust, any trustor’s) business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit.

 

(e) Any change in any Borrower’s name, legal structure, place of business, or
chief executive office if such Borrower has more than one place of business.

 

(f) Any actual contingent liabilities of any Borrower (or any guarantor or, if
any Borrower is comprised of the trustees of a trust, any trustor), and any such
contingent liabilities which are reasonably foreseeable, where such liabilities
are in excess of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) in
the aggregate.

6.15 Insurance.

 

(a) General Business Insurance. To maintain insurance as is usual for the
business it is in.

6.16 Compliance with Laws. To comply with the laws (including any fictitious or
trade name statute), regulations, and orders of any government body with
authority over any Borrower’s business. The Bank shall have no obligation to
make any advance to any Borrowers except in compliance with all applicable laws
and regulations and any Borrowers shall fully cooperate with the Bank in
complying with all such applicable laws and regulations.

6.17 ERISA Plans. Promptly during each year, to pay and cause any subsidiaries
to pay contributions adequate to meet at least the minimum funding standards
under ERISA with respect to each and every Plan; file each annual report
required to be filed pursuant to ERISA in connection with each Plan for each
year; and notify the Bank within ten (10) days of the occurrence of any
Reportable Event that might constitute grounds for termination of any capital
Plan by the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer any Plan.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Capitalized terms in this paragraph shall have the meanings
defined within ERISA.

6.18 Books and Records. To maintain adequate books and records.

6.19 Audits. To allow the Bank and its agents to inspect each Borrower’s
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrowers’ properties, books or records are in
the possession of a third party, the Borrowers authorize that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank’s requests for information concerning such
properties, books and records.

6.20 Cooperation. To take any action reasonably requested by the Bank to carry
out the intent of this Agreement.

 

7. DEFAULT AND REMEDIES

If any of the following events of default occurs, the Bank may do one or more of
the following: declare the Borrowers in default, stop making any additional
credit available to the Borrowers, and require the Borrowers to repay their
entire debt immediately and without prior notice. If an event which, with notice
or the passage of time, will constitute an event of default has occurred and is
continuing, the Bank has no obligation to make advances or extend additional
credit under this

 

Standard Loan Agreement

  9   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

Agreement. In addition, if any event of default occurs, the Bank shall have all
rights, powers and remedies available under any instruments and agreements
required by or executed in connection with this Agreement, as well as all rights
and remedies available at law or in equity. If an event of default occurs under
the paragraph entitled “Bankruptcy,” below, with respect to any Borrower, then
the entire debt outstanding under this Agreement will automatically be due
immediately.

 

7.1 Failure to Pay. The Borrowers fail to make a payment under this Agreement
when due.

7.2 Other Bank Agreements. Any default occurs under any other agreement any
Borrower (or any Obligor) or any of the Borrowers’ related entities or
affiliates has with the Bank or any affiliate of the Bank. For purposes of this
Agreement, “Obligor” shall mean any guarantor, any party pledging collateral to
the Bank, or, if any Borrower is comprised of the trustees of a trust, any
trustor.

7.3 Cross-default. Any default occurs under any agreement in connection with any
credit any Borrower (or any Obligor) or any of the Borrowers’ related entities
or affiliates has obtained from anyone else or which any Borrower (or any
Obligor) or any of the Borrowers’ related entities or affiliates has guaranteed.

7.4 False Information. Any Borrower or any Obligor has given the Bank false or
misleading information or representations.

7.5 Bankruptcy. Any Borrower, any Obligor, or any general partner of any
Borrower or of any Obligor files a bankruptcy petition, a bankruptcy petition is
filed against any of the foregoing parties, or any Borrower, any Obligor, or any
general partner of any Borrower or of any Obligor makes a general assignment for
the benefit of creditors.

7.6 Receivers. A receiver or similar official is appointed for a substantial
portion of any Borrower’s or any Obligor’s business, or the business is
terminated, or, if any Obligor is anything other than a natural person, such
Obligor is liquidated or dissolved.

7.7 Judgments. Any judgments or arbitration awards are entered against any
Borrower or any Obligor, or any Borrower or any Obligor enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)
or more in excess of any insurance coverage.

7.8 Material Adverse Change. A material adverse change occurs, or is reasonably
likely to occur, in any Borrower’s (or any Obligor’s) business condition
(financial or otherwise), operations, properties or prospects, or ability to
repay the credit.

7.9 Government Action. Any government authority takes action that the Bank
believes materially adversely affects any Borrower’s or any Obligor’s financial
condition or ability to repay.

7.10 Default under Related Documents. Any default occurs under any guaranty,
subordination agreement, security agreement, deed of trust, mortgage, or other
document required by or delivered in connection with this Agreement or any such
document is no longer in effect, or any guarantor purports to revoke or disavow
the guaranty.

7.11 ERISA Plans. Any one or more of the following events occurs with respect to
a Plan of any Borrower subject to Title IV of ERISA, provided such event or
events could reasonably be expected, in the judgment of the Bank, to subject any
Borrower to any tax, penalty or liability (or any combination of the foregoing)
which, in the aggregate, could have a material adverse effect on the financial
condition of such Borrower:

 

(a) A reportable event shall occur under Section 4043(c) of ERISA with respect
to a Plan.

 

(b) Any Plan termination (or commencement of proceedings to terminate a Plan) or
the full or partial withdrawal from a Plan by any Borrower or any ERISA
Affiliate.

7.12 Other Breach Under Agreement. A default occurs under any other term or
condition of this Agreement not specifically referred to in this Article. This
includes any failure or anticipated failure by any Borrower (or any other party
named in the Covenants section) to comply with the financial covenants set forth
in this Agreement, whether such failure is evidenced by financial statements
delivered to the Bank or is otherwise known to the Borrowers or the Bank.

 

Standard Loan Agreement

  10   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

8. ENFORCING THIS AGREEMENT; MISCELLANEOUS

8.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.

 

8.2 California Law. This Agreement is governed by California state law.

8.3 Successors and Assigns. This Agreement is binding on the Borrowers’ and the
Bank’s successors and assignees. The Borrowers agree that they may not assign
this Agreement without the Bank’s prior consent. The Bank may sell
participations in or assign this loan, and may exchange information about the
Borrowers (including, without limitation, any information regarding any
hazardous substances) with actual or potential participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the right
of set-off against the Borrowers.

8.4 Dispute Resolution Provision. This paragraph, including the subparagraphs
below, is referred to as the “Dispute Resolution Provision.” This Dispute
Resolution Provision is a material inducement for the parties entering into this
agreement.

 

(a) This Dispute Resolution Provision concerns the resolution of any
controversies or claims between the parties, whether arising in contract, tort
or by statute, including but not limited to controversies or claims that arise
out of or relate to: (i) this agreement (including any renewals, extensions or
modifications); or (ii) any document related to this agreement (collectively a
“Claim”). For the purposes of this Dispute Resolution Provision only, the term
“parties” shall include any parent corporation, subsidiary or affiliate of the
Bank involved in the servicing, management or administration of any obligation
described or evidenced by this agreement.

 

(b) At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U.S. Code) (the “Act”). The Act will apply even though this agreement provides
that it is governed by the law of a specified state.

 

(c) Arbitration proceedings will be determined in accordance with the Act, the
then-current rules and procedures for the arbitration of financial services
disputes of the American Arbitration Association or any successor thereof
(“AAA”), and the terms of this Dispute Resolution Provision. In the event of any
inconsistency, the terms of this Dispute Resolution Provision shall control. If
AAA is unwilling or unable to (i) serve as the provider of arbitration or
(ii) enforce any provision of this arbitration clause, the Bank may designate
another arbitration organization with similar procedures to serve as the
provider of arbitration.

 

(d) The arbitration shall be administered by AAA and conducted, unless otherwise
required by law, in any U.S. state where real or tangible personal property
collateral for this credit is located or if there is no such collateral, in the
state specified in the governing law section of this agreement. All Claims shall
be determined by one arbitrator; however, if Claims exceed Five Million Dollars
($5,000,000), upon the request of any party, the Claims shall be decided by
three arbitrators. All arbitration hearings shall commence within ninety
(90) days of the demand for arbitration and close within ninety (90) days of
commencement and the award of the arbitrator(s) shall be issued within thirty
(30) days of the close of the hearing. However, the arbitrator(s), upon a
showing of good cause, may extend the commencement of the hearing for up to an
additional sixty (60) days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may be submitted to
any court having jurisdiction to be confirmed and have judgment entered and
enforced.

 

(e) The arbitrator(s) will give effect to statutes of limitation in determining
any Claim and may dismiss the arbitration on the basis that the Claim is barred.
For purposes of the application of any statutes of limitation, the service on
AAA under applicable AAA rules of a notice of Claim is the equivalent of the
filing of a lawsuit. Any dispute concerning this arbitration provision or
whether a Claim is arbitrable shall be determined by the arbitrator(s), except
as set forth at subparagraph (j) of this Dispute Resolution Provision. The
arbitrator(s) shall have the power to award legal fees pursuant to the terms of
this agreement.

 

(f) The procedure described above will not apply if the Claim, at the time of
the proposed submission to arbitration, arises from or relates to an obligation
to the Bank secured by real property. In this case, all of the parties to this
agreement must consent to submission of the Claim to arbitration.

 

(g) To the extent any Claims are not arbitrated, to the extent permitted by law
the Claims shall be resolved in court by a judge without a jury, except any
Claims which are brought in California state court shall be determined by
judicial reference as described below.

 

Standard Loan Agreement

  11   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

(h) Any Claim which is not arbitrated and which is brought in California state
court will be resolved by a general reference to a referee (or a panel of
referees) as provided in California Code of Civil Procedure Section 638. The
referee (or presiding referee of the panel) shall be a retired Judge or Justice.
The referee (or panel of referees) shall be selected by mutual written agreement
of the parties. If the parties do not agree, the referee shall be selected by
the Presiding Judge of the Court (or his or her representative) as provided in
California Code of Civil Procedure Section 638 and the following related
sections. The referee shall determine all issues in accordance with existing
California law and the California rules of evidence and civil procedure. The
referee shall be empowered to enter equitable as well as legal relief, provide
all temporary or provisional remedies, 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 award that results from the decision of the referee(s) will
be entered as a judgment in the court that appointed the referee, in accordance
with the provisions of California Code of Civil Procedure Sections 644(a) and
645. The parties reserve the right to seek appellate review of any judgment or
order, including but not limited to, orders pertaining to class certification,
to the same extent permitted in a court of law.

 

(i) This Dispute Resolution Provision does not limit the right of any party to:
(i) exercise self-help remedies, such as but not limited to, setoff;
(ii) initiate judicial or non-judicial foreclosure against any real or personal
property collateral; (iii) exercise any judicial or power of sale rights, or
(iv) act in a court of law to obtain an interim remedy, such as but not limited
to, injunctive relief, writ of possession or appointment of a receiver, or
additional or supplementary remedies. The filing of a court action is not
intended to constitute a waiver of the right of any party, including the suing
party, thereafter to require submittal of the Claim to arbitration or judicial
reference.

 

(j) Any arbitration, judicial reference or trial by a judge of any Claim will
take place on an individual basis without resort to any form of class or
representative action (the “Class Action Waiver”). Regardless of anything else
in this Dispute Resolution Provision, the validity and effect of the Class
Action Waiver may be determined only by a court or referee and not by an
arbitrator. The parties to this Agreement acknowledge that the Class Action
Waiver is material and essential to the arbitration of any disputes between the
parties and is nonseverable from the agreement to arbitrate Claims. If the Class
Action Waiver is limited, voided or found unenforceable, then the parties’
agreement to arbitrate shall be null and void with respect to such proceeding,
subject to the right to appeal the limitation or invalidation of the Class
Action Waiver. The Parties acknowledge and agree that under no circumstances
will a class action be arbitrated.

 

(k) By agreeing to binding arbitration or judicial reference, the parties
irrevocably and voluntarily waive any right they may have to a trial by jury as
permitted by law in respect of any Claim. Furthermore, without intending in any
way to limit this Dispute Resolution Provision, to the extent any Claim is not
arbitrated or submitted to judicial reference, the parties irrevocably and
voluntarily waive any right they may have to a trial by jury to the extent
permitted by law in respect of such Claim. This waiver of jury trial shall
remain in effect even if the Class Action Waiver is limited, voided or found
unenforceable. WHETHER THE CLAIM IS DECIDED BY ARBITRATION, BY JUDICIAL
REFERENCE, OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE
EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY
TO THE EXTENT PERMITTED BY LAW.

8.5 Severability; Waivers. If any part of this Agreement is not enforceable, the
rest of the Agreement may be enforced. The Bank retains all rights, even if it
makes a loan after default. If the Bank waives a default, it may enforce a later
default. Any consent or waiver under this Agreement must be in writing.

8.6 Attorneys’ Fees. The Borrowers shall reimburse the Bank for any reasonable
costs and attorneys’ fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, “workout” or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys’ fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against the
Borrowers under the Bankruptcy Code (Title 11, United States Code) or any
similar or successor statute, the Bank is entitled to recover costs and
reasonable attorneys’ fees incurred by the Bank related to the preservation,
protection, or enforcement of any rights of the Bank in such a case. As used in
this paragraph, “attorneys’ fees” includes the allocated costs of the Bank’s
in-house counsel.

 

Standard Loan Agreement

  12   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

8.7 Joint and Several Liability. This paragraph shall apply if two or more
Borrowers sign this agreement:

 

(a) Each Borrower agrees that it is jointly and severally liable to the Bank for
the payment of all obligations arising under this Agreement, and that such
liability is independent of the obligations of the other Borrower(s). Each
obligation, promise, covenant, representation and warranty in this Agreement
shall be deemed to have been made by, and be binding upon, each Borrower, unless
this Agreement expressly provides otherwise. The Bank may bring an action
against any Borrower, whether an action is brought against the other
Borrower(s).

 

(b) Each Borrower agrees that any release which may be given by the Bank to the
other Borrower(s) or any guarantor will not release such Borrower from its
obligations under this Agreement.

 

(c) Each Borrower waives any right to assert against the Bank any defense,
setoff, counterclaim, or claims which such Borrower may have against the other
Borrower(s) or any other party liable to the Bank for the obligations of the
Borrowers under this Agreement.

 

(d) Each Borrower waives any defense by reason of any other Borrower’s or any
other person’s defense, disability, or release from liability. The Bank can
exercise its rights against each Borrower even if any other Borrower or any
other person no longer is liable because of a statute of limitations or for
other reasons.

 

(e) Each Borrower agrees that it is solely responsible for keeping itself
informed as to the financial condition of the other Borrower(s) and of all
circumstances which bear upon the risk of nonpayment. Each Borrower waives any
right it may have to require the Bank to disclose to such Borrower any
information which the Bank may now or hereafter acquire concerning the financial
condition of the other Borrower(s).

 

(f) Each Borrower waives all rights to notices of default or nonperformance by
any other Borrower under this Agreement. Each Borrower further waives all rights
to notices of the existence or the creation of new indebtedness by any other
Borrower and all rights to any other notices to any party liable on any of the
credit extended under this Agreement.

 

(g) The Borrowers represent and warrant to the Bank that each will derive
benefit, directly and indirectly, from the collective administration and
availability of credit under this Agreement. The Borrowers agree that the Bank
will not be required to inquire as to the disposition by any Borrower of funds
disbursed in accordance with the terms of this Agreement.

 

(h) Until all obligations of the Borrowers to the Bank under this Agreement have
been paid in full and any commitments of the Bank or facilities provided by the
Bank under this Agreement have been terminated, each Borrower (a) waives any
right of subrogation, reimbursement, indemnification and contribution
(contractual, statutory or otherwise), including without limitation, any claim
or right of subrogation under the Bankruptcy Code (Title 11, United States Code)
or any successor statute, which such Borrower may now or hereafter have against
any other Borrower with respect to the indebtedness incurred under this
Agreement; (b) waives any right to enforce any remedy which the Bank now has or
may hereafter have against any other Borrower, and waives any benefit of, and
any right to participate in, any security now or hereafter held by the Bank.

 

(i) Each Borrower waives any right to require the Bank to proceed against any
other Borrower or any other person; proceed against or exhaust any security; or
pursue any other remedy. Further, each Borrower consents to the taking of, or
failure to take, any action which might in any manner or to any extent vary the
risks of the Borrowers under this Agreement or which, but for this provision,
might operate as a discharge of the Borrowers.

8.8 Individual Liability. If any Borrower is a partnership, the Bank may proceed
against the business and non-business property of each general partner of such
Borrower in enforcing this Agreement and other agreements relating to this loan.

8.9 One Agreement. This Agreement and any related security or other agreements
required by this Agreement, collectively:

 

(a) represent the sum of the understandings and agreements between the Bank and
the Borrowers concerning this credit;

 

(b) replace any prior oral or written agreements between the Bank and the
Borrowers concerning this credit; and

 

Standard Loan Agreement

  13   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

(c) are intended by the Bank and the Borrowers as the final, complete and
exclusive statement of the terms agreed to by them.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail. Any reference in any
related document to a “promissory note” or a “note” executed by the Borrowers
and dated as of the date of this Agreement shall be deemed to refer to this
Agreement, as now in effect or as hereafter amended, renewed, or restated.

8.10 Indemnification. The Borrowers will indemnify and hold the Bank harmless
from any loss, liability, damages, judgments, and costs of any kind relating to
or arising directly or indirectly out of (a) this Agreement or any document
required hereunder, (b) any credit extended or committed by the Bank to the
Borrowers hereunder, and (c) any litigation or proceeding related to or arising
out of this Agreement, any such document, or any such credit. This indemnity
includes but is not limited to attorneys’ fees (including the allocated cost of
in-house counsel). This indemnity extends to the Bank, its parent, subsidiaries
and all of their directors, officers, employees, agents, successors, attorneys,
and assigns. This indemnity will survive repayment of the Borrowers’ obligations
to the Bank. All sums due to the Bank hereunder shall be obligations of the
Borrowers, due and payable immediately without demand.

8.11 Notices. Unless otherwise provided in this Agreement or in another
agreement between the Bank and the Borrowers, all notices required under this
Agreement shall be personally delivered or sent by first class mail, postage
prepaid, or by overnight courier, to the addresses on the signature page of this
Agreement, or sent by facsimile to the fax numbers listed on the signature page,
or to such other addresses as the Bank and the Borrowers may specify from time
to time in writing. Notices and other communications shall be effective (i) if
mailed, upon the earlier of receipt or five (5) days after deposit in the U.S.
mail, first class, postage prepaid, (ii) if telecopied, when transmitted, or
(iii) if hand-delivered, by courier or otherwise (including telegram, lettergram
or mailgram), when delivered.

8.12 Headings. Article and paragraph headings are for reference only and shall
not affect the interpretation or meaning of any provisions of this Agreement.

8.13 Counterparts. This Agreement may be executed in as many counterparts as
necessary or convenient, and by the different parties on separate counterparts
each of which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same agreement.

8.14 Prior Agreement Superseded. This Agreement supersedes the Loan Agreement
entered into as of January 28, 2005, between the Bank and the Borrowers, and any
credit outstanding thereunder shall be deemed to be outstanding under this
Agreement.

 

Standard Loan Agreement

  14   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

    This Agreement is executed as of the date stated at the top of the first
page.

Borrower:

   

Bank:

Ambassadors International, Inc.

   

Bank of America, N.A.

By:

 

/s/ Brian R. Schaefgen

   

By:

 

/s/ David Surch

 

Brian R. Schaefgen, Chief Financial Officer

      David Surch, Senior Vice President and Credit Products Senior Manager

By:

 

/s/ Laura L. Tuthill

       

Laura L. Tuthill, Vice President

and Corporate Controller

     

Borrower:

   

Ambassadors Marine Group, LLC

   

By:

 

Ambassadors International, Inc., Member

     

By:

 

/s/ Brian R. Schaefgen

       

Brian R. Schaefgen, Chief Financial Officer,

Treasurer and Secretary

     

Borrower:

   

Ambassadors, LLC

   

By:

 

Ambassadors International, Inc., Member

       

/s/ Brian R. Schaefgen

        By: Brian R. Schaefgen, Chief Financial Officer, Treasurer and Secretary
     

Borrower:

   

Ambassadors Cruise Group, LLC

   

By:

 

Ambassadors International, Inc., Member

       

/s/ Brian R. Schaefgen

        By: Brian R. Schaefgen, Chief Financial Officer, Treasurer and Secretary
     

 

Standard Loan Agreement

  15   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

Borrower:

   

Cypress Reinsurance, Ltd.

      /s/ Joseph J. Ueberroth        

By: Joseph J. Ueberroth, President

       

/s/ Brian R. Schaefgen

       

By: Brian R. Schaefgen, Vice President, Chief Financial Officer and Secretary

     

 

Address where notices to Ambassadors International, Inc.

are to be sent:

  Address where notices to the Bank are to be sent:

1071 Camelback Street

Newport Beach, CA 92660

 

Pasadena – Attn: Notice Desk

CA9-702-05-71

101 S. Marengo Avenue, 5th Floor

Pasadena, CA 91101-2428

Telephone: (949) 759-5900  

Address where notices to Ambassadors Marine Group,

LLC are to be sent:

 

1071 Camelback Street

Newport Beach, CA 92660

  Address where notices to Ambassadors, LLC are to be sent:  

1071 Camelback Street

Newport Beach, CA 92660

 

Address where notices to Ambassadors Cruise Group, LLC

are to be sent:

 

1071 Camelback Street

Newport Beach, CA 92660

 

Address where notices to Cypress Reinsurance, Ltd. are to

be sent:

 

1071 Camelback Street

Newport Beach, CA 92660

 

 

Standard Loan Agreement

  16   Revised 2/2005

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

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK
(***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

 

Affiliate Sharing Notice. Notice to Individual Borrowers, Guarantors and
Pledgors (“Obligors”): From time to time Bank of America, N.A. (the “Bank”) may
share information about the Obligor’s experience with Bank of America
Corporation (or any successor company) and its subsidiaries and affiliated
companies (the “Affiliates”). The Bank may also share with the Affiliates
credit-related information contained in any applications, from credit reports
and information it may obtain about the Obligor from outside sources. If the
Obligor is an individual, the Obligor may instruct the Bank not to share this
information with the Affiliates. The Obligor can make this election by
(1) calling the Bank at 1.888.341.5000, (2) visiting the Bank online at
www.bankofamerica.com, selecting “Privacy & Security,” and then selecting “Set
Your Privacy Preferences,” or (3) contacting the Obligor’s client manager or
local banking center. To help the Bank complete the Obligor’s request, the
Obligor should include the Obligor’s name, address, phone number, account
number(s) and social security number. If the Obligor makes this election,
certain products or services may not be made available to the Obligor. This
request will apply to information from applications, consumer reports and other
outside sources only, and may take six to eight weeks to be fully effective.
Through the normal course of doing business, including servicing the Obligor’s
accounts and better serving the Obligor’s financial needs, the Bank will
continue to share transaction and account experience information, as well as
other general information among the Affiliates. The Bank may change this policy
from time to time. Visit our website, www.bankofamerica.com, for the latest
policy.

USA Patriot Act Notice. Federal law requires all financial institutions to
obtain, verify and record information that identifies each person who opens an
account or obtains a loan. The Bank will ask for the Borrower’s legal name,
address, tax ID number or social security number and other identifying
information. The Bank may also ask for additional information or documentation
or take other actions reasonably necessary to verify the identity of the
Borrower, guarantors or other related persons.

 

Standard Loan Agreement

  17   Revised 2/2005