Exhibit 10.1

 

 

 

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CREDIT AGREEMENT

 

 

 

by and among

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

 

 

as Agent,

 

 

 

THE LENDERS THAT ARE PARTIES HERETO

 

 

 

as the Lenders,

 

 

 

and

 

 

 

NEOPHOTONICS CORPORATION

 

 

 

as Borrower

 

 

 

Dated as of September 8, 2017

 

 

 

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

1.

DEFINITIONS AND CONSTRUCTION

1

 

 

 

1.1

Definitions

1

1.2

Accounting Terms

41

1.3

Code

42

1.4

Construction

42

1.5

Time References

42

1.6

Schedules and Exhibits

43

 

 

 

2.

LOANS AND TERMS OF PAYMENT

43

 

 

 

2.1

Revolving Loans

43

2.2

[Intentionally Omitted.]

43

2.3

Borrowing Procedures and Settlements

44

2.4

Payments; Reductions of Commitments; Prepayments

51

2.5

Promise to Pay; Promissory Notes

54

2.6

Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations

54

2.7

Crediting Payments

56

2.8

Designated Account

56

2.9

Maintenance of Loan Account; Statements of Obligations

56

2.10

Fees

57

2.11

Letters of Credit

57

2.12

LIBOR Option

65

2.13

Capital Requirements

67

2.14

Incremental Facilities

69

2.15

Joint and Several Liability of Borrowers

70

 

 

 

3.

CONDITIONS; TERM OF AGREEMENT

74

 

 

 

3.1

Conditions Precedent to the Initial Extension of Credit

74

3.2

Conditions Precedent to all Extensions of Credit

74

3.3

Maturity

74

3.4

Effect of Maturity

74

3.5

Early Termination by Borrowers

75

3.6

Conditions Subsequent

75

 

 

 

4.

REPRESENTATIONS AND WARRANTIES

75

 

 

 

4.1

Due Organization and Qualification; Subsidiaries

75

4.2

Due Authorization; No Conflict

76

 

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TABLE OF CONTENTS

 

(continued)

 

 

 

Page

4.3

Governmental Consents

77

4.4

Binding Obligations; Perfected Liens

77

4.5

Title to Assets; No Encumbrances

77

4.6

Litigation

77

4.7

Compliance with Laws

78

4.8

No Material Adverse Effect

78

4.9

Solvency

78

4.10

Employee Benefits

78

4.11

Environmental Condition

78

4.12

Complete Disclosure

79

4.13

Patriot Act

79

4.14

Indebtedness

79

4.15

Payment of Taxes

79

4.16

Margin Stock

80

4.17

Governmental Regulation

80

4.18

OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws

80

4.19

Employee and Labor Matters

80

4.20

Immaterial Subsidiaries

81

4.21

Leases

81

4.22

Eligible Accounts

81

4.23

Hedge Agreements

81

4.24

Material Contracts

81

 

 

 

5.

AFFIRMATIVE COVENANTS

81

 

 

 

5.1

Financial Statements, Reports, Certificates

81

5.2

Reporting

82

5.3

Existence

82

5.4

Maintenance of Properties

82

5.5

Taxes

82

5.6

Insurance

82

5.7

Inspection

83

5.8

Compliance with Laws

83

 

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TABLE OF CONTENTS

 

(continued)

 

 

 

Page

5.9

Environmental

84

5.10

Disclosure Updates

84

5.11

Formation of Subsidiaries

84

5.12

Further Assurances

85

5.13

Lender Meetings

85

5.14

Location of Collateral; Chief Executive Office

85

5.15

OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws

85

5.16

Material Contracts

86

5.17

Bank Products

86

 

 

 

6.

NEGATIVE COVENANTS

86

 

 

 

6.1

Indebtedness

86

6.2

Liens

86

6.3

Restrictions on Fundamental Changes

86

6.4

Disposal of Assets

87

6.5

Nature of Business

87

6.6

Prepayments and Amendments

87

6.7

Restricted Payments

88

6.8

Accounting Methods

89

6.9

Investments

89

6.10

Transactions with Affiliates

89

6.11

Use of Proceeds

89

 

 

 

7.

FINANCIAL COVENANTS

90

 

 

 

8.

EVENTS OF DEFAULT

90

 

 

 

8.1

Payments

90

8.2

Covenants

90

8.3

Judgments

91

8.4

Voluntary Bankruptcy, etc.

91

8.5

Involuntary Bankruptcy, etc.

91

8.6

Default Under Other Agreements

91

8.7

Representations, etc.

91

8.8

Guaranty

91

 

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TABLE OF CONTENTS

 

(continued)

 

 

 

Page

8.9

Security Documents

91

8.10

Loan Documents

92

8.11

Change of Control

92

 

 

 

9.

RIGHTS AND REMEDIES

92

 

 

 

9.1

Rights and Remedies

92

9.2

Remedies Cumulative

93

 

 

 

10.

WAIVERS; INDEMNIFICATION

93

 

 

 

10.1

Demand; Protest; etc.

93

10.2

The Lender Group’s Liability for Collateral

93

10.3

Indemnification

93

 

 

 

11.

NOTICES

94

 

 

 

12.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION

95

 

 

 

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

98

 

 

 

13.1

Assignments and Participations

98

13.2

Successors

102

 

 

 

14.

AMENDMENTS; WAIVERS

102

 

 

 

14.1

Amendments and Waivers

102

14.2

Replacement of Certain Lenders

104

14.3

No Waivers; Cumulative Remedies

104

 

 

 

15.

AGENT; THE LENDER GROUP

104

 

 

 

15.1

Appointment and Authorization of Agent

104

15.2

Delegation of Duties

105

15.3

Liability of Agent

105

15.4

Reliance by Agent

106

15.5

Notice of Default or Event of Default

106

15.6

Credit Decision

106

15.7

Costs and Expenses; Indemnification

107

15.8

Agent in Individual Capacity

108

15.9

Successor Agent

108

15.10

Lender in Individual Capacity

108

15.11

Collateral Matters

109

 

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TABLE OF CONTENTS

 

(continued)

 

 

 

Page

15.12

Restrictions on Actions by Lenders; Sharing of Payments

110

15.13

Agency for Perfection

111

15.14

Payments by Agent to the Lenders

111

15.15

Concerning the Collateral and Related Loan Documents

111

15.16

Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information

111

15.17

Several Obligations; No Liability

112

 

 

 

16.

WITHHOLDING TAXES

113

 

 

 

16.1

Payments

113

16.2

Exemptions

113

16.3

Reductions

115

16.4

Refunds

116

 

 

 

17.

GENERAL PROVISIONS

116

 

 

 

17.1

Effectiveness

116

17.2

Section Headings

116

17.3

Interpretation

116

17.4

Severability of Provisions

116

17.5

Bank Product Providers

116

17.6

Debtor-Creditor Relationship

117

17.7

Counterparts; Electronic Execution

117

17.8

Revival and Reinstatement of Obligations; Certain Waivers

117

17.9

Confidentiality

118

17.10

Survival

120

17.11

Patriot Act; Due Diligence

120

17.12

Integration

120

17.13

NeoPhotonics as Agent for Borrowers

120

17.14

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

121

 

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EXHIBITS AND SCHEDULES

 

 

 

 

Exhibit A-1

Form of Assignment and Acceptance

 

Exhibit B-1

Form of Borrowing Base Certificate

 

Exhibit B-2

Form of Bank Product Provider Agreement

 

Exhibit C-1

Form of Compliance Certificate

 

Exhibit L-1

Form of LIBOR Notice

 

Exhibit J-1

Form of Joinder

 

Exhibit P-1

Form of Perfection Certificate

 

 

 

 

 

 

 

Schedule A-1

Agent’s Account

 

Schedule C-1

Commitments

 

Schedule 3.1

Conditions Precedent

 

Schedule 3.6

Conditions Subsequent

 

Schedule 5.1

Financial Statements, Reports, Certificates

 

Schedule 5.2

Collateral Reporting

 

 

vi

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CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT, is entered into as of September 8, 2017 by and among the
lenders identified on the signature pages hereof (each of such lenders, together
with its successors and permitted assigns, is referred to hereinafter as a
“Lender”, as that term is hereinafter further defined), WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association, as administrative agent
for each member of the Lender Group and the Bank Product Providers (in such
capacity, together with its successors and assigns in such capacity, “Agent”),
NEOPHOTONICS CORPORATION, a Delaware corporation (“NeoPhotonics”), and those
additional Persons that are joined as a party hereto by executing the form of
Joinder attached hereto as Exhibit J-1 (each, a “Borrower” and individually and
collectively, jointly and severally, the “Borrowers”).

 

The parties agree as follows:

 

1.                                      DEFINITIONS AND CONSTRUCTION.

 

1.1                               Definitions.  As used in this Agreement, the
following terms shall have the following definitions:

 

“Account” means an account (as that term is defined in the Code).

 

“Account Debtor” means any Person who is obligated on an Account, chattel paper,
or a general intangible.

 

“Account Party” has the meaning specified therefor in Section 2.11(h) of this
Agreement.

 

“Accounting Changes” means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

 

“Acquired Secured Indebtedness” means Indebtedness of a Person whose assets or
Equity Interests are acquired by a Loan Party or any of its Subsidiaries in a
Permitted Acquisition; provided, that such Indebtedness (a) is either purchase
money Indebtedness or a Capital Lease with respect to Equipment or mortgage
financing with respect to Real Property, (b) was in existence prior to the date
of such Permitted Acquisition, and (c) was not incurred in connection with, or
in contemplation of, such Permitted Acquisition.

 

“Acquisition” means (a) the purchase or other acquisition by a Person or its
Subsidiaries of all or substantially all of the assets of (or any division or
business line of) any other Person, or (b) the purchase or other acquisition
(whether by means of a merger, consolidation, or otherwise) by a Person or its
Subsidiaries of all or substantially all of the Equity Interests of any other
Person.

 

“Additional Documents” has the meaning specified therefor in Section 5.12 of
this Agreement.

 

“Administrative Borrower” has the meaning specified therefor in Section 17.13 of
this Agreement.

 

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“Administrative Questionnaire” has the meaning specified therefor in
Section 13.1(a) of this Agreement.

 

“Affected Lender” has the meaning specified therefor in Section 2.13(b) of this
Agreement.

 

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person.  For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Equity Interests, by contract, or
otherwise; provided, that for purposes of the definition of Eligible Accounts,
Eligible Tier 1 Accounts, Eligible Tier 2 Accounts and Section 6.10 of this
Agreement: (a) any Person which owns directly or indirectly 10% or more of the
Equity Interests having ordinary voting power for the election of directors or
other members of the governing body of a Person or 10% or more of the
partnership or other ownership interests of a Person (other than as a limited
partner of such Person) shall be deemed an Affiliate of such Person, (b) each
director (or comparable manager) of a Person shall be deemed to be an Affiliate
of such Person, and (c) each partnership in which a Person is a general partner
shall be deemed an Affiliate of such Person.

 

“Agent” has the meaning specified therefor in the preamble to this Agreement.

 

“Agent-Related Persons” means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.

 

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1
hereto (or such other Deposit Account of Agent that has been designated as such,
in writing, by Agent to Borrowers and the Lenders).

 

“Agent’s Liens” means the Liens granted by each Loan Party or its Subsidiaries
to Agent under the Loan Documents and securing the Obligations.

 

“Agreement” means this Credit Agreement, as amended, restated, amended and
restated, supplemented or otherwise modified from time to time.

 

“Anti-Corruption Laws” means the FCPA, the U.K. Bribery Act of 2010, as amended,
and all other applicable laws and regulations or ordinances concerning or
relating to bribery, money laundering or corruption in any jurisdiction in which
any Loan Party or any of its Subsidiaries or Affiliates is located or is doing
business.

 

“Anti-Money Laundering Laws” means the applicable laws or regulations in any
jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is
located or is doing business that relates to money laundering, any predicate
crime to money laundering, or any financial record keeping and reporting
requirements related thereto.

 

“Applicable Margin” means, as of any date of determination and with respect to
Base Rate Loans or LIBOR Rate Loans, as applicable, the applicable margin set
forth in the following table that corresponds to the Average Excess Availability
of Borrowers for the most recently completed month; provided, that for the
period from the Closing Date through the date Agent receives the certified
calculation of the availability in respect of the testing period ended
September 30, 2017, the Applicable Margin shall be set at the margin in the row
styled “Level II”; provided further, that any time an Event of Default has
occurred and is continuing, the Applicable Margin shall be set at the margin in
the row styled “Level II”:

 

2

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Level

 

Average Excess
Availability

 

Applicable Margin for Base
Rate Loans which are
Revolving Loans (the
“Revolving Loan Base Rate
Margin”)

 

Applicable Margin for LIBOR
Rate Loans which are
Revolving Loans  (the
“Revolving Loan LIBOR Rate
Margin”)

I

 

> $25,000,000

 

0.50 percentage points

 

1.50 percentage points

II

 

< $25,000,000

 

0.75 percentage points

 

1.75 percentage points

 

The Applicable Margin shall be re-determined as of the first day of each month.

 

“Application Event” means the occurrence of (a) a failure by Borrowers to repay
all of the Obligations in full on the Maturity Date, or (b) an Event of Default
and the election by Agent or the Required Lenders to require that payments and
proceeds of Collateral be applied pursuant to Section 2.4(b)(iii) of this
Agreement.

 

“Assignee” has the meaning specified therefor in Section 13.1(a) of this
Agreement.

 

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1 to this Agreement.

 

“Authorized Person” means any one of the individuals identified as an officer of
a Borrower on Schedule A-2 of the Disclosure Letter, or any other individual
identified by Administrative Borrower as an authorized person and authenticated
through Agent’s electronic platform or portal in accordance with its procedures
for such authentication.

 

“Availability” means, as of any date of determination, the amount that Borrowers
are entitled to borrow as Revolving Loans under Section 2.1 of this Agreement
(after giving effect to the then outstanding Revolver Usage).

 

“Available Increase Amount” means, as of any date of determination, an amount
equal to the result of (a) $25,000,000, minus (b) the aggregate principal amount
of Increases to the Revolver Commitments previously made pursuant to
Section 2.14 of this Agreement.

 

“Average Excess Availability” means, with respect to any period, the sum of the
aggregate amount of Excess Availability for each day in such period (as
calculated by Agent as of the end of each respective day) divided by the number
of days in such period.

 

“Average Revolver Usage” means, with respect to any period, the sum of the
aggregate amount of Revolver Usage for each day in such period (calculated as of
the end of each respective day) divided by the number of days in such period.

 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

 

3

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“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.

 

“Bank Product” means any one or more of the following financial products or
accommodations extended to any Loan Party or any of its Subsidiaries by a Bank
Product Provider:  (a) credit cards (including commercial cards (including
so-called “purchase cards”, “procurement cards” or “p-cards”)), (b) payment card
processing services, (c) debit cards, (d) stored value cards, (e) Cash
Management Services, or (f) transactions under Hedge Agreements.

 

“Bank Product Agreements” means those agreements entered into from time to time
by any Loan Party or any of its Subsidiaries with a Bank Product Provider in
connection with the obtaining of any of the Bank Products.

 

“Bank Product Collateralization” means providing cash collateral (pursuant to
documentation reasonably satisfactory to Agent) to be held by Agent for the
benefit of the Bank Product Providers (other than the Hedge Providers) in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure, operational risk or processing risk with respect to the then
existing Bank Product Obligations (other than Hedge Obligations).

 

“Bank Product Obligations” means (a) all obligations, liabilities, reimbursement
obligations, fees, or expenses owing by each Loan Party and its Subsidiaries to
any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement
and irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, (b) all Hedge Obligations, and (c) all amounts that Agent or
any Lender is obligated to pay to a Bank Product Provider as a result of Agent
or such Lender purchasing participations from, or executing guarantees or
indemnities or reimbursement obligations to, a Bank Product Provider with
respect to the Bank Products provided by such Bank Product Provider to a Loan
Party or its Subsidiaries.

 

“Bank Product Provider” means Wells Fargo or any of its Affiliates, including
each of the foregoing in its capacity, if applicable, as a Hedge Provider.

 

“Bank Product Provider Agreement” means an agreement in substantially the form
attached hereto as Exhibit B-2 to this Agreement, in form and substance
satisfactory to Agent, duly executed by the applicable Bank Product Provider,
the applicable Loan Parties, and Agent.

 

“Bank Product Reserves” means, as of any date of determination, those reserves
that Agent deems necessary or appropriate to establish (based upon the Bank
Product Providers’ determination of the liabilities and obligations of each Loan
Party and its Subsidiaries in respect of Bank Product Obligations) in respect of
Bank Products then provided or outstanding.

 

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

 

“Base Rate” means the greatest of (a) the Federal Funds Rate plus ½%, (b) the
LIBOR Rate (which rate shall be calculated based upon an Interest Period of one
month and shall be determined on a daily basis), plus one percentage point, and
(c) the rate of interest announced, from time to time, within Wells Fargo at its
principal office in San Francisco as its “prime rate”, with the understanding
that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the
lowest of such rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publications as Wells Fargo may designate (and, if any such announced rate is
below zero, then the rate determined pursuant to this clause (c) shall be deemed
to be zero).

 

4

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“Base Rate Loan” means each portion of the Revolving Loans that bears interest
at a rate determined by reference to the Base Rate.

 

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which any Loan Party or any of its Subsidiaries or ERISA Affiliates
has been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

 

“Board of Directors” means, as to any Person, the board of directors (or
comparable managers) of such Person, or any committee thereof duly authorized to
act on behalf of the board of directors (or comparable managers).

 

“Board of Governors” means the Board of Governors of the Federal Reserve System
of the United States (or any successor).

 

“Borrower” and “Borrowers” have the respective meanings specified therefor in
the preamble to this Agreement.

 

“Borrower Materials” has the meaning specified therefor in Section 17.9(c) of
this Agreement.

 

“Borrowing” means a borrowing consisting of Revolving Loans made on the same day
by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a
Swing Loan, or by Agent in the case of an Extraordinary Advance.

 

“Borrowing Base” means, as of any date of determination, the result of:

 

(a)                                 85% of the amount of Eligible Tier 1
Accounts, less the amount, if any, of the Dilution Reserve (without duplication
of any Dilution Reserve deducted in clauses (b) below), plus

 

(b)                                 80% of the amount of Eligible Tier 2
Accounts, less the amount, if any, of the Dilution Reserve (without duplication
of any Dilution Reserve deducted in clause (a) above), plus

 

(c)                                  100% of Qualified Cash up to $15,000,000,
less

 

(d)                                 the aggregate amount of Reserves, if any,
established by Agent from time to time under Section 2.1(c) of this Agreement.

 

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1 to
this Agreement.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the state of California,
except that, if a determination of a Business Day shall relate to a LIBOR Rate
Loan, the term “Business Day” also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.

 

5

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“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

 

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

 

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition thereof and, at
the time of acquisition, having one of the three highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers’ acceptances maturing within one
year from the date of acquisition thereof issued by any bank organized under the
laws of the United States or any state thereof or the District of Columbia or
any United States branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250,000,000, (e) Deposit
Accounts maintained with (i) any bank that satisfies the criteria described in
clause (d) above, or (ii) any other bank organized under the laws of the United
States or any state thereof so long as the full amount maintained with any such
other bank is insured by the Federal Deposit Insurance Corporation,
(f) repurchase obligations of any commercial bank satisfying the requirements of
clause (d) of this definition or of any recognized securities dealer having
combined capital and surplus of not less than $250,000,000, having a term of not
more than seven days, with respect to securities satisfying the criteria in
clauses (a) or (d) above, (g) debt securities with maturities of six months or
less from the date of acquisition backed by standby letters of credit issued by
any commercial bank satisfying the criteria described in clause (d) above,
(h) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (g) above, and
(i) deposits of any Foreign Subsidiary of any Loan Party maintained with
regulated financial institutions (reasonably determined by the applicable Loan
Party to be reputable and solvent) located in countries outside of the United
States where the Loan Parties conduct business.

 

“Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement,  merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other customary cash
management arrangements.

 

“CFC” means a Person that is a controlled foreign corporation as such term is
defined in Section 957 of the IRC.

 

“Change of Control” means that:

 

(a)                                 any Person or two or more Persons acting in
concert, shall have acquired beneficial ownership, directly or indirectly, of
Equity Interests of Administrative Borrower (or other securities convertible
into such Equity Interests) representing 40% or more of the combined voting
power of all Equity Interests of Administrative Borrower entitled (without
regard to the occurrence of any contingency) to vote for the election of members
of the Board of Directors of Administrative Borrower, or

 

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(b)                                 Administrative Borrower fails to own and
control, directly or indirectly, 100% of the Equity Interests of each other Loan
Party.

 

“Change in Law” means the occurrence after the date of this Agreement of:
(a) the adoption or effectiveness of any law, rule, regulation, judicial ruling,
judgment or treaty, (b) any change in any law, rule, regulation, judicial
ruling, judgment or treaty or in the administration, interpretation,
implementation or application by any Governmental Authority of any law, rule,
regulation, guideline or treaty, or (c) the making or issuance by any
Governmental Authority of any request, rule, guideline or directive, whether or
not having the force of law; provided, that notwithstanding anything in this
Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith, and (ii) all requests, rules, guidelines or
directives concerning capital adequacy promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities shall,
in each case, be deemed to be a “Change in Law,” regardless of the date enacted,
adopted or issued.

 

“Closing Date” means September 8, 2017.

 

“Code” means the California Uniform Commercial Code, as in effect from time to
time.

 

“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by any Loan Party or its Subsidiaries in or upon
which a Lien is granted by such Person in favor of Agent or the Lenders under
any of the Loan Documents.

 

“Collateral Access Agreement” means a landlord waiver, bailee letter, processor
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in any Loan Party’s or its Subsidiaries’ books and records,
Equipment, or Inventory, in each case, in form and substance reasonably
satisfactory to Agent.

 

“Collections” means, all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, cash proceeds of asset sales, rental
proceeds and tax refunds).

 

“Commitment” means, with respect to each Lender, its Revolver Commitment, and
with respect to all Lenders, their Revolver Commitments, in each case as such
Dollar amounts are set forth beside such Lender’s name under the applicable
heading on Schedule C-1 to this Agreement or in the Assignment and Acceptance
pursuant to which such Lender became a Lender under this Agreement, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1 of this Agreement.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 to this Agreement delivered by the chief financial officer or
treasurer of Administrative Borrower to Agent.

 

“Confidential Information” has the meaning specified therefor in
Section 17.9(a) of this Agreement.

 

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“Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Administrative Borrower on the Closing Date,
and (b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was approved, appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors.

 

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by a Loan Party or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).

 

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

 

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

 

“Defaulting Lender Rate” means (a) for the first three days from and after the
date the relevant payment is due, the Base Rate, and (b) thereafter, the
interest rate then applicable to Revolving Loans that are Base Rate Loans
(inclusive of the Revolving Loan Base Rate Margin).

 

“Deposit Account” means any deposit account (as that term is defined in the
Code).

 

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“Designated Account” means the Deposit Account of Administrative Borrower
identified on Schedule D-1 of the Disclosure Letter (or such other Deposit
Account of Administrative Borrower located at Designated Account Bank that has
been designated as such, in writing, by Borrowers to Agent).

 

“Designated Account Bank” has the meaning specified therefor in Schedule D-1 of
the Disclosure Letter (or such other bank that is located within the United
States that has been designated as such, in writing, by Borrowers to Agent).

 

“Dilution” means, as of any date of determination, a percentage, based upon the
experience of a period determined by Agent in its Permitted Discretion, but not
less than the immediately prior 12 months, that is the result of dividing the
Dollar amount of (a) bad debt write-downs, discounts, advertising allowances,
credits, or other dilutive items with respect to Borrowers’ Accounts during such
period, by (b) Borrowers’ billings with respect to Accounts during such period.

 

“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts by the extent to which
Dilution is in excess of 5%.

 

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

 

“Disqualified Equity Interests” means any Equity Interests that, by their terms
(or by the terms of any security or other Equity Interests into which they are
convertible or for which they are exchangeable), or upon the happening of any
event or condition (a) matures or are mandatorily redeemable (other than solely
for Qualified Equity Interests), pursuant to a sinking fund obligation or
otherwise (except as a result of a change of control or asset sale so long as
any rights of the holders thereof upon the occurrence of a change of control or
asset sale event shall be subject to the prior repayment in full of the Loans
and all other Obligations that are accrued and payable and the termination of
the Commitments), (b) are redeemable at the option of the holder thereof (other
than solely for Qualified Equity Interests), in whole or in part, (c) provide
for the scheduled payments of dividends in cash, or (d) are or become
convertible into or exchangeable for Indebtedness or any other Equity Interests
that would constitute Disqualified Equity Interests, in each case, prior to the
date that is 180 days after the Maturity Date.

 

“Disqualified Institution” means, on any date, (a) any Person designated by
Administrative Borrower as a “Disqualified Institution” by written notice
delivered to Agent prior to the date hereof, and (b) those Persons who are
direct competitors of any of the Loan Parties or its Subsidiaries identified in
writing by Administrative Borrower to Agent from time to time, subject to the
written consent of Agent; provided, that “Disqualified Institutions” shall
exclude any Person that Administrative Borrower has designated as no longer
being a “Disqualified Institution” by written notice delivered to Agent from
time to time; provided further, that in connection with any assignment or
participation, the Assignee or Participant with respect to such proposed
assignment or participation that is an investment bank, a commercial bank, a
finance company, a fund, or other Person which merely has an economic interest
in any such direct competitor, and is not itself such a direct competitor of
Borrower or its Subsidiaries, shall not be deemed to be a Disqualified
Institution for the purposes of this definition.

 

“Disregarded Person” means a direct or indirect Subsidiary if it holds, directly
or indirectly, no material assets other than Equity Interests in Foreign
Subsidiaries that are CFCs.

 

“Dollars” or “$” means United States dollars.

 

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

 

“Drawing Document” means any Letter of Credit or other document presented for
purposes of drawing under any Letter of Credit, including by electronic
transmission such as SWIFT, electronic mail, facsimile or computer generated
communication.

 

“Earn-Outs” means unsecured liabilities of a Loan Party arising under an
agreement to make any deferred payment as a part of the Purchase Price for a
Permitted Acquisition, including performance bonuses or consulting payments in
any related services, employment or similar agreement, in an amount that is
subject to or contingent upon the revenues, income, cash flow or profits (or the
like) of the target of such Permitted Acquisition.

 

“EBITDA” means, with respect to any fiscal period and with respect to any Person
determined, in each case, on a consolidated basis in accordance with GAAP:

 

(e)                                  the consolidated net income (or loss),

 

minus

 

(f)                                   without duplication, the sum of the
following amounts for such period to the extent included in determining
consolidated net income (or loss) for such period:

 

(i)                                     extraordinary gains, and

 

(ii)                                  interest income,

 

plus

 

(g)                                  without duplication, the sum of the
following amounts for such period to the extent included in determining
consolidated net income (or loss) for such period:

 

(i)                                     non-cash extraordinary losses,

 

(ii)                                  Interest Expense,

 

(iii)                               income taxes, and

 

(iv)                              depreciation and amortization.

 

“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in clause (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in clauses (a) or (b) of this definition
and is subject to consolidated supervision with its parent.

 

“EEA Member Country” means any of the member states of the European
Union, Iceland, Liechtenstein, and Norway.

 

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“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

 

“Eligible Accounts” means those Accounts created by a Borrower in the ordinary
course of its business, that arise out of such Borrower’s sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made in the Loan Documents, and that are
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, that such criteria may be revised from time to time
by Agent in Agent’s Permitted Discretion to address the results of any
information with respect to the Borrowers’ business or assets of which Agent
becomes aware after the Closing Date, including any field examination performed
by (or on behalf of) Agent from time to time after the Closing Date.  In
determining the amount to be included, Eligible Accounts shall be calculated net
of customer deposits, unapplied cash, taxes, finance charges, service charges,
discounts, credits, allowances, and rebates.  Eligible Accounts shall not
include the following:

 

(a)                                 Accounts that the Account Debtor has failed
to pay within 90 days of original invoice date or 60 days of due date, provided,
that up to $2,500,000 of Accounts in which the Account Debtor has failed to pay
between 91 to 120 days of original invoice date may be included,

 

(b)                                 Accounts owed by an Account Debtor (or its
Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or
its Affiliates) are deemed ineligible under clause (a) above,

 

(c)                                  Accounts with selling terms of more than 90
days, provided, that up to $1,000,000 of Accounts owing from Alcatel — Lucent,
Nokia Siemens Networks OY and of their Affiliates with selling terms between 91
to 120 days may be included,

 

(d)                                 Accounts with respect to which the Account
Debtor is an Affiliate of any Borrower or an employee or agent of any Borrower
or any Affiliate of any Borrower,

 

(e)                                  Accounts (i) arising in a transaction
wherein goods are placed on consignment or are sold pursuant to a guaranteed
sale, a sale or return, a sale on approval, a bill and hold, or any other terms
by reason of which the payment by the Account Debtor may be conditional, or
(ii) with respect to which the payment terms are “C.O.D.”, cash on delivery or
other similar terms,

 

(f)                                   Accounts that are not invoiced in the
United States and payable in Dollars,

 

(g)                                  Accounts with respect to which the Account
Debtor is the government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(A) the Account is supported by an irrevocable letter of credit reasonably
satisfactory to Agent (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Agent and, if requested by Agent, is directly
drawable by Agent, or (B) the Account is covered by credit insurance in form,
substance, and amount, and by an insurer, reasonably satisfactory to Agent,

 

(h)                                 Accounts with respect to which the Account
Debtor is either (i) the United States or any department, agency, or
instrumentality of the United States (exclusive, however, of Accounts with
respect to which Borrowers have complied, to the reasonable satisfaction of
Agent, with the Assignment of Claims Act, 31 USC §3727), or (ii) any state of
the United States or any other Governmental Authority,

 

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(i)                                     Accounts with respect to which the
Account Debtor is a creditor of a Borrower, has or has asserted a right of
recoupment or setoff, or has disputed its obligation to pay all or any portion
of the Account, to the extent of such claim, right of recoupment or setoff, or
dispute,

 

(j)                                    Except for such higher percentages
otherwise specified in this clause (j), Accounts with respect to an Account
Debtor whose Eligible Accounts owing to Borrowers exceed 10% (such percentage,
as applied to a particular Account Debtor, being subject to reduction by Agent
in its Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates) of all Eligible Accounts, to the extent of the obligations owing
by such Account Debtor in excess of such percentage; provided, such percentage
shall be (i) 20% in aggregate for Ciena and its Affiliates, (ii) 20% in
aggregate for Cisco and its Affiliates, (iii) 20% in aggregate for Alcatel —
Lucent, Nokia Siemens Networks OY and any of their Affiliates, (iv) 15% in
aggregate for Sanmina and its Affiliates, (v) 40% in aggregate for Huawei and
its Affiliates, and (vi) 15% in aggregate for Fabrinet and its Affiliates, in
each case set forth in clauses (i) through (vi), subject to reduction by Agent
in its Permitted Discretion if the creditworthiness of any such Account Debtor
deteriorates; provided further, that in each case, (1) the amount of Eligible
Accounts that are excluded because they exceed the foregoing percentage shall be
determined by Agent based on all of the otherwise Eligible Accounts prior to
giving effect to any eliminations based upon the foregoing concentration limit
and (2) Agent may, in its sole Permitted Discretion, increase or decrease such
percentages or add additional Account Debtors to this proviso from time to time
upon request from Administrative Borrower,

 

(k)                                 Accounts with respect to which the Account
Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of
business, or as to which any Borrower has received notice of an imminent
Insolvency Proceeding or a material impairment of the financial condition of
such Account Debtor,

 

(l)                                     Accounts, the collection of which,
Agent, in its Permitted Discretion, believes to be doubtful, including by reason
of the Account Debtor’s financial condition,

 

(m)                             Accounts that are not subject to a valid and
perfected first priority Agent’s Lien,

 

(n)                                 Accounts with respect to which (i) the goods
giving rise to such Account have not been shipped and billed to the Account
Debtor, or (ii) the services giving rise to such Account have not been performed
and billed to the Account Debtor,

 

(o)                                 Accounts with respect to which the Account
Debtor is a Sanctioned Person or Sanctioned Entity,

 

(p)                                 Accounts (i) that represent the right to
receive progress payments or other advance billings that are due prior to the
completion of performance by the applicable Borrower of the subject contract for
goods or services, or (ii) that represent credit card sales, or

 

(q)                                 Accounts owned by a target acquired in
connection with a Permitted Acquisition or Permitted Investment, or Accounts
owned by a Person that is joined to this Agreement as a Borrower pursuant to the
provisions of this Agreement, until the completion of a field examination with
respect to such Accounts, in each case, satisfactory to Agent in its Permitted
Discretion.

 

“Eligible Tier 1 Accounts” means Eligible Accounts with respect to which the
Account Debtor (i) maintains its chief executive office in the United States,
Canada, the Republic of Ireland, the United Kingdom or a Tier 1 Country, and
(ii) is organized under the laws of the United States, Canada, the Republic of
Ireland, the United Kingdom, a Tier 1 Country, or any state or province thereof,
provided, for clarity, that Eligible Accounts owing from Coriant and
subsidiaries shall be treated as Eligible Tier 1 Accounts, subject to Agent’s
right to modify such list for time to time in its Permitted Discretion.

 

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“Eligible Tier 2 Accounts” means Eligible Accounts with respect to which the
Account Debtor (i) maintains its chief executive office in a Tier 2 Country, and
(ii) is organized under the laws of a Tier 2 Country, or any state or province
thereof; provided, that Eligible Accounts owing from (i) Huawei Investment &
Holding Co., Ltd and subsidiaries including, but not limited to, Hisilicon
Optoelectronics Co. Ltd, Huawei Technologies Co., Ltd, and Huawei Tech.
Investment Co., Ltd., (ii) Fiberhome Telecommunication Technologies Co., Ltd and
subsidiaries including, but not limited to, Wuhan Fiberhome International
Technologies Co., Ltd, (iii) Flextronics International Ltd. and subsidiaries
including, but not limited to, Flextronics Manufacturing SRL,
(iv) Celestica, Inc. and subsidiaries including, but not limited to, Celestica
(Thailand) Ltd, and (v) Fabrinet shall be treated as Eligible Tier 2 Accounts,
subject to Agent’s right to modify such list for time to time in its Permitted
Discretion.

 

“Eligible Transferee” means (a) any Lender (other than a Defaulting Lender), any
Affiliate of any Lender and any Related Fund of any Lender; (b) (i) a commercial
bank organized under the laws of the United States or any state thereof, and
having total assets in excess of $1,000,000,000; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof, and having total assets in excess of $1,000,000,000; (iii) a
commercial bank organized under the laws of any other country or a political
subdivision thereof; provided, that (A) (x) such bank is acting through a branch
or agency located in the United States, or (y) such bank is organized under the
laws of a country that is a member of the Organization for Economic Cooperation
and Development or a political subdivision of such country, and (B) such bank
has total assets in excess of $1,000,000,000; (c) any other entity (other than a
natural person) that is an “accredited investor” (as defined in Regulation D
under the Securities Act) that extends credit or buys loans as one of its
businesses including insurance companies, investment or mutual funds and lease
financing companies, and having total assets in excess of $1,000,000,000; and
(d) during the continuation of an Event of Default, any other Person approved by
Agent.

 

“Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other written communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials (a) from any assets, properties, or
businesses of any Borrower, any Subsidiary of any Borrower, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials generated by
any Borrower, any Subsidiary of any Borrower, or any of their predecessors in
interest.

 

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on any
Loan Party or its Subsidiaries, relating to the environment, the effect of the
environment on employee health, or Hazardous Materials, in each case as amended
from time to time.

 

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

 

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“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

 

“Equipment” means equipment (as that term is defined in the Code).

 

“Equity Interests” means, with respect to a Person, all of the shares, options,
warrants, interests, participations, or other equivalents (regardless of how
designated) of or in such Person, whether voting or nonvoting, including capital
stock (or other ownership or profit interests or units), preferred stock, or any
other “equity security” (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act); provided
that restricted stock units, stock appreciation rights and other phantom equity
rights (but excluding any capital stock or options or other rights to purchase
capital stock) that are granted to employees of the Borrowers pursuant to the
Borrower’s long-term incentive plans shall not be considered “Equity Interests”.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

 

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of any Loan Party or
its Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of any Loan Party or its Subsidiaries under IRC Section 414(c),
(c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which any Loan Party or any of its Subsidiaries is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with any Loan Party or any of its Subsidiaries and whose employees
are aggregated with the employees of such Loan Party or its Subsidiaries under
IRC Section 414(o).

 

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.

 

“Event of Default” has the meaning specified therefor in Section 8 of this
Agreement.

 

“Excess” has the meaning specified therefor in Section 2.14 of this Agreement.

 

“Excess Availability” means, as of any date of determination, the amount equal
to (a) the lesser of (i) the Maximum Revolver Amount and (ii) the most recently
determined Borrowing Base  minus (b) Revolver Usage, in each case as determined
by Agent in its Permitted Discretion.

 

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

 

“Excluded Subsidiary” means any (a) Immaterial Subsidiaries, (b) Disregarded
Persons, (c) Foreign Subsidiary of a Loan Party if such Foreign Subsidiary is a
CFC, or (d) Domestic Subsidiary of a Loan Party if such Domestic Subsidiary (i) 
is a direct or indirect Subsidiary of a Foreign Subsidiary that is a CFC and
(ii) does not own any assets in the United States and has no operations in the
United States.

 

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“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap
Obligation if, and to the extent that, all or a portion of the guaranty of such
Loan Party of (including by virtue of the joint and several liability provisions
of Section 2.15), or the grant by such Loan Party of a security interest to
secure, such Swap Obligation (or any guaranty thereof) is or becomes illegal
under the Commodity Exchange Act or any rule, regulation or order of the
Commodity Futures Trading Commission (or the application or official
interpretation of any thereof) by virtue of such Loan Party’s failure for any
reason to constitute an “eligible contract participant” as defined in the
Commodity Exchange Act and the regulations thereunder at the time the guaranty
of such Loan Party or the grant of such security interest becomes effective with
respect to such Swap Obligation.  If a Swap Obligation arises under a master
agreement governing more than one swap, such exclusion shall apply only to the
portion of such Swap Obligation that is attributable to swaps for which such
guaranty or security interest is or becomes illegal.

 

“Excluded Taxes” means (i) any tax imposed on the net income or net profits of
any Lender or any Participant (including any branch profits taxes) and any
franchise tax imposed in lieu of income tax, in each case imposed by the
jurisdiction (or by any political subdivision or taxing authority thereof) in
which such Lender or such Participant is organized or the jurisdiction (or by
any political subdivision or taxing authority thereof) in which such Lender’s or
such Participant’s principal office is located in or as a result of a present or
former connection between such Lender or such Participant and the jurisdiction
or taxing authority imposing the tax (other than any such connection arising
solely from such Lender or such Participant having executed, delivered or
performed its obligations or received payment under, or enforced its rights or
remedies under this Agreement or any other Loan Document), (ii) taxes
attributable to a Lender’s or a Participant’s failure to comply with the
requirements of Section 16.2 of this Agreement, (iii) any United States federal
withholding taxes that would be imposed on amounts payable to a Foreign Lender
based upon the applicable withholding rate in effect at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office,
other than a designation made at the request of a Loan Party), except that
Excluded Taxes shall not include (A) any amount that such Foreign Lender (or its
assignor, if any) was previously entitled to receive pursuant to Section 16.1 of
this Agreement, if any, with respect to such withholding tax at the time such
Foreign Lender becomes a party to this Agreement (or designates a new lending
office), and (B) additional United States federal withholding taxes that may be
imposed after the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office), as a result of a change in law, rule,
regulation, treaty, order or other decision or other Change in Law with respect
to any of the foregoing by any Governmental Authority, and (iv) any United
States federal withholding taxes imposed under FATCA.

 

“Existing Credit Facility” means the Credit Agreement, dated as of March 21,
2013, among NeoPhotonics, certain financial institutions from time to time
parties thereto and Comerica Bank, as administrative agent for lenders (as
amended from time to time).

 

“Extraordinary Advances” has the meaning specified therefor in
Section 2.3(d)(iii) of this Agreement.

 

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), and (a) any current or future
regulations or official interpretations thereof, (b) any agreements entered into
pursuant to Section 1471(b)(1) of the IRC, and (c) any intergovernmental
agreement entered into by the United States (or any fiscal or regulatory
legislation, rules, or practices adopted pursuant to any such intergovernmental
agreement entered into in connection therewith).

 

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder.

 

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“Fee Letter” means that certain fee letter, dated as of even date with this
Agreement, among Borrowers and Agent, in form and substance reasonably
satisfactory to Agent.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal to, for each day during such period, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by it (and, if any such rate is below zero, then the rate
determined pursuant to this definition shall be deemed to be zero).

 

“Flow of Funds Agreement” means a flow of funds agreement, dated as of even date
with this Agreement, in form and substance reasonably satisfactory to Agent,
executed and delivered by Borrowers and Agent.

 

“Foreign Lender” means any Lender or Participant that is not a United States
person within the meaning of IRC section 7701(a)(30).

 

“Foreign Subsidiary” means any direct or indirect Subsidiary of any Loan Party
that is organized under the laws of any jurisdiction other than the United
States, any state thereof or the District of Columbia.

 

“Funding Date” means the date on which a Borrowing occurs.

 

“Funding Losses” has the meaning specified therefor in Section 2.12(b)(ii) of
this Agreement.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.

 

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

 

“Governmental Authority” means the government of any nation or any political
subdivision thereof, whether at the national, state, territorial, provincial,
county, municipal or any other level, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of, or pertaining to, government (including any supra-national bodies
such as the European Union or the European Central Bank).

 

“Guarantor” means (a) each Person that guaranties all or a portion of the
Obligations, including any Person that is a “Guarantor” under the Guaranty and
Security Agreement, and (b) each other Person that becomes a guarantor after the
Closing Date pursuant to Section 5.11 of this Agreement.

 

“Guaranty and Security Agreement” means a guaranty and security agreement, dated
as of even date with this Agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by each of the Loan Parties to
Agent.

 

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“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

 

“Hedge Agreement” means a “swap agreement” as that term is defined in
Section 101(53B)(A) of the Bankruptcy Code.

 

“Hedge Obligations” means any and all obligations or liabilities, whether
absolute or contingent, due or to become due, now existing or hereafter arising,
of each Loan Party and its Subsidiaries arising under, owing pursuant to, or
existing in respect of Hedge Agreements entered into with one or more of the
Hedge Providers.

 

“Hedge Provider” means Wells Fargo or any of its Affiliates.

 

“Immaterial Subsidiary” means each Subsidiary of a Borrower that is not a
Material Subsidiary.

 

“Increase” has the meaning specified therefor in Section 2.14.

 

“Increase Date” has the meaning specified therefor in Section 2.14.

 

“Increase Joinder” has the meaning specified therefor in Section 2.14.

 

“Increased Reporting Event” means if at any time Excess Availability is less
than 12.5% of the Maximum Revolver Amount for 3 consecutive Business Days.

 

“Increased Reporting Period” means the period commencing after the continuance
of an Increased Reporting Event and continuing until the date when no Increased
Reporting Event has occurred for 30 consecutive days.

 

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices and, for the
avoidance of doubt, other than royalty payments payable in the ordinary course
of business in respect of non-exclusive licenses) and any earn-out or similar
obligations, (f) all monetary obligations of such Person owing under Hedge
Agreements (which amount shall be calculated based on the amount that would be
payable by such Person if the Hedge Agreement were terminated on the date of
determination), (g) any Disqualified Equity Interests of such Person, and
(h) any obligation of such Person guaranteeing or intended to guarantee (whether
directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with
recourse) any obligation of any other Person that constitutes Indebtedness under
any of clauses (a) through (g) above.  For purposes of this

 

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definition, (i) the amount of any Indebtedness represented by a guaranty or
other similar instrument shall be the lesser of the principal amount of the
obligations guaranteed and still outstanding and the maximum amount for which
the guaranteeing Person may be liable pursuant to the terms of the instrument
embodying such Indebtedness, and (ii) the amount of any Indebtedness which is
limited or is non-recourse to a Person or for which recourse is limited to an
identified asset shall be valued at the lesser of (A) if applicable, the limited
amount of such obligations, and (B) if applicable, the fair market value of such
assets securing such obligation.

 

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of
this Agreement.

 

“Indemnified Person” has the meaning specified therefor in Section 10.3 of this
Agreement.

 

“Indemnified Taxes” means, (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by, or on account of any obligation of, any
Loan Party under any Loan Document, and (b) to the extent not otherwise
described in the foregoing clause (a), Other Taxes.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

 

“Intercompany Subordination Agreement” means an intercompany subordination
agreement, executed and delivered by each Loan Party and each of its
Subsidiaries, and Agent, the form and substance of which is reasonably
satisfactory to Agent.

 

“Interest Expense” means, for any period, the aggregate of the interest expense
of Borrowers for such period, determined on a consolidated basis in accordance
with GAAP.

 

“Interest Period” means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3, or 6 months thereafter; provided, that
(a) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (b) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (c) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, 3, or 6 months
after the date on which the Interest Period began, as applicable, and
(d) Borrowers may not elect an Interest Period which will end after the Maturity
Date.

 

“Inventory” means inventory (as that term is defined in the Code).

 

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“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide accounts receivable arising in the ordinary course
of business), or acquisitions of Indebtedness, Equity Interests, or all or
substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP. 
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustment for increases or
decreases in value, or write-ups, write-downs, or write-offs with respect to
such Investment.

 

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

 

“ISP” means, with respect to any Letter of Credit, the International Standby
Practices 1998 (International Chamber of Commerce Publication No. 590) and any
version or revision thereof accepted by the Issuing Bank for use.

 

“Issuer Document” means, with respect to any Letter of Credit, a letter of
credit application, a letter of credit agreement, or any other document,
agreement or instrument entered into (or to be entered into) by a Borrower in
favor of Issuing Bank and relating to such Letter of Credit.

 

“Issuing Bank” means Wells Fargo or any other Lender that, at the request of
Borrowers and with the consent of Agent, agrees, in such Lender’s sole
discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 2.11 of this Agreement, and Issuing Bank shall be a
Lender.

 

“Joinder” means a joinder agreement substantially in the form of Exhibit J-1 to
this Agreement.

 

“Landlord Reserve” means, as to each location at which a Borrower has books and
records located and as to which a Collateral Access Agreement has not been
received by Agent, a reserve in an amount equal to 3 months’ rent, storage
charges, fees or other amounts under the lease or other applicable agreement
relative to such location or, if greater and Agent so elects, the number of
months’ rent, storage charges, fess or other amounts for which the landlord,
bailee, processor, warehouseman or other property owner will have, under
applicable law, a Lien in the assets of such Borrower at such location to secure
the payment of such amounts under the lease or other applicable agreement
relative to such location.

 

“Lender” has the meaning set forth in the preamble to this Agreement, shall
include Issuing Bank and the Swing Lender, and shall also include any other
Person made a party to this Agreement pursuant to the provisions of Section 13.1
of this Agreement and “Lenders” means each of the Lenders or any one or more of
them.

 

“Lender Group” means each of the Lenders (including Issuing Bank and the Swing
Lender) and Agent, or any one or more of them.

 

“Lender Group Expenses” means all (a) costs or expenses (including taxes and
insurance premiums) required to be paid by any Loan Party or its Subsidiaries
under any of the Loan Documents that are paid, advanced, or incurred by the
Lender Group, (b) documented out-of-pocket fees or charges paid or incurred by
Agent in connection with the Lender Group’s transactions with each Loan Party
and its Subsidiaries under any of the Loan Documents, including, photocopying,
notarization, couriers and messengers, telecommunication, public record
searches, filing fees, recording fees, publication, real estate surveys, real
estate title policies and endorsements, and environmental audits, (c) Agent’s
customary fees and charges imposed or incurred in connection with any background
checks or OFAC/PEP searches

 

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related to any Loan Party or its Subsidiaries, (d) Agent’s customary fees and
charges (as adjusted from time to time) with respect to the disbursement of
funds (or the receipt of funds) to or for the account of any Borrower (whether
by wire transfer or otherwise), together with any out-of-pocket costs and
expenses incurred in connection therewith, (e) customary charges imposed or
incurred by Agent resulting from the dishonor of checks payable by or to any
Loan Party, (f) reasonable, documented out-of-pocket costs and expenses paid or
incurred by the Lender Group to correct any default or enforce any provision of
the Loan Documents, or during the continuance of an Event of Default, in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (g) field examination,
appraisal, and valuation fees and expenses of Agent related to any field
examinations, appraisals, or valuation to the extent of the fees and charges
(and up to the amount of any limitation) provided in Section 2.10 of this
Agreement, (h) Agent’s and Lenders’ reasonable, documented costs and expenses
(including reasonable and documented attorneys’ fees and expenses) relative to
third party claims or any other lawsuit or adverse proceeding paid or incurred,
whether in enforcing or defending the Loan Documents or otherwise in connection
with the transactions contemplated by the Loan Documents, Agent’s Liens in and
to the Collateral, or the Lender Group’s relationship with any Loan Party or any
of its Subsidiaries, (i) Agent’s reasonable and documented costs and expenses
(including reasonable and documented attorneys’ fees and due diligence expenses)
incurred in advising, structuring, drafting, reviewing, administering (including
travel, meals, and lodging), syndicating (including reasonable costs and
expenses relative to CUSIP, DXSyndicate™, SyndTrak or other communication costs
incurred in connection with a syndication of the loan facilities), or amending,
waiving, or modifying the Loan Documents, and (j) Agent’s and each Lender’s
reasonable and documented costs and expenses (including reasonable and
documented attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
“workout,” a “restructuring,” or an Insolvency Proceeding concerning any Loan
Party or any of its Subsidiaries or in exercising rights or remedies under the
Loan Documents), or defending the Loan Documents, irrespective of whether a
lawsuit or other adverse proceeding is brought, or in taking any enforcement
action or any Remedial Action with respect to the Collateral.

 

“Lender Group Representatives” has the meaning specified therefor in
Section 17.9 of this Agreement.

 

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

 

“Letter of Credit” means a letter of credit (as that term is defined in the
Code) issued by Issuing Bank.

 

“Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent (including that
Agent has a first priority perfected Lien in such cash collateral), including
provisions that specify that the Letter of Credit Fees and all commissions,
fees, charges and expenses provided for in Section 2.11(k) of this Agreement
(including any fronting fees) will continue to accrue while the Letters of
Credit are outstanding) to be held by Agent for the benefit of the Revolving
Lenders in an amount equal to 103% of the then existing Letter of Credit Usage,
(b) delivering to Agent documentation executed by all beneficiaries under the
Letters of Credit, in form and substance reasonably satisfactory to Agent and
Issuing Bank, terminating all of such beneficiaries’ rights under the Letters of
Credit, or (c) providing Agent with a standby letter of credit, in form and
substance reasonably satisfactory to Agent, from a commercial bank acceptable to
Agent (in its sole discretion) in an amount equal to 103% of the then existing
Letter of Credit Usage (it being understood that the Letter of Credit Fee and
all fronting fees set forth in this Agreement will continue to accrue while the
Letters of Credit are outstanding and that any such fees that accrue must be an
amount that can be drawn under any such standby letter of credit).

 

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“Letter of Credit Disbursement” means a payment made by Issuing Bank pursuant to
a Letter of Credit.

 

“Letter of Credit Exposure” means, as of any date of determination with respect
to any Lender, such Lender’s participation in the Letter of Credit Usage
pursuant to Section 2.11(e) on such date.

 

“Letter of Credit Fee” has the meaning specified therefor in Section 2.6(b) of
this Agreement.

 

“Letter of Credit Indemnified Costs” has the meaning specified therefor in
Section 2.11(f) of this Agreement.

 

“Letter of Credit Related Person” has the meaning specified therefor in
Section 2.11(f) of this Agreement.

 

“Letter of Credit Sublimit” means $5,000,000.

 

“Letter of Credit Usage” means, as of any date of determination, the sum of
(a) the aggregate undrawn amount of all outstanding Letters of Credit, plus
(b) the aggregate amount of outstanding reimbursement obligations with respect
to Letters of Credit which remain unreimbursed or which have not been paid
through a Revolving Loan.

 

“LIBOR Deadline” has the meaning specified therefor in Section 2.12(b)(i) of
this Agreement.

 

“LIBOR Notice” means a written notice in the form of Exhibit L-1 to this
Agreement.

 

“LIBOR Option” has the meaning specified therefor in Section 2.12(a) of this
Agreement.

 

“LIBOR Rate” means the rate per annum as published by ICE Benchmark
Administration Limited (or any successor page or other commercially available
source as Agent may designate from time to time) as of 11:00 a.m., London time,
two Business Days prior to the commencement of the requested Interest Period,
for a term, and in an amount, comparable to the Interest Period and the amount
of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a
continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a
LIBOR Rate Loan) by Borrowers in accordance with this Agreement (and, if any
such published rate is below zero, then the rate shall be deemed to be zero).
Each determination of the LIBOR Rate shall be made by Agent and shall be
conclusive in the absence of manifest error.

 

“LIBOR Rate Loan” means each portion of a Revolving Loan that bears interest at
a rate determined by reference to the LIBOR Rate.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

 

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“Liquidity” means, as of any date of determination, the sum of Excess
Availability and Qualified Cash (without duplication of any Qualified Cash
included in the calculation of clause (c) of the Borrowing Base).

 

“Loan” means any Revolving Loan, Swing Loan, or Extraordinary Advance made (or
to be made) hereunder.

 

“Loan Account” has the meaning specified therefor in Section 2.9 of this
Agreement.

 

“Loan Documents” means this Agreement, the Disclosure Letter, the Control
Agreements, any Borrowing Base Certificate, any Compliance Certificate, the Flow
of Funds Agreement, the Fee Letter, the Guaranty and Security Agreement, any
Intercompany Subordination Agreement, any Issuer Documents, the Letters of
Credit, any note or notes executed by Borrowers in connection with this
Agreement and payable to any member of the Lender Group, and any other
instrument or agreement entered into, now or in the future, by any Loan Party or
any of its Subsidiaries and any member of the Lender Group in connection with
this Agreement (but specifically excluding Bank Product Agreements).

 

“Loan Party” means any Borrower or any Guarantor.

 

“Margin Stock” as defined in Regulation U of the Board of Governors as in effect
from time to time.

 

“Material Adverse Effect” means (a) a material adverse effect in the business,
operations, results of operations, assets, liabilities or financial condition of
the Loan Parties and their Subsidiaries, taken as a whole, (b) a material
impairment of the Loan Parties’ and their Subsidiaries’ ability to perform their
obligations under the Loan Documents to which they are parties or of the Lender
Group’s ability to enforce the Obligations or realize upon the Collateral (other
than as a result of as a result of an action taken or not taken that is solely
in the control of Agent), or (c) a material impairment of the enforceability or
priority of Agent’s Liens with respect to all or a material portion of the
Collateral.

 

Material Contract” means, with respect to any Person, each contract or agreement
to which such Person or any of its Subsidiaries is a party involving aggregate
consideration payable to or by such Person or such Subsidiary of $10,000,000 or
more (other than purchase orders in the ordinary course of the business of such
Person or such Subsidiary and other than contracts that by their terms may be
terminated by such Person or Subsidiary in the ordinary course of its business
upon less than 60 days’ notice without penalty or premium) and all other
contracts or agreements, the loss of which could reasonably be expected to
result in a Material Adverse Effect; provided that certain contracts in
existence on the Closing Date to which any of NeoPhotonics Japan, NeoPhotonics
(China) Co., Ltd. or NeoPhotonics Dongguan Co., Ltd. is a party that pertain to
such Subsidiaries’ labor relations with a portion of their manufacturing work
force and which are not revenue generating shall not be considered Material
Contracts.

 

“Material Subsidiary” means (a) each Borrower, and (b) each Subsidiary of a Loan
Party that (i) owns at least 5.0% of the consolidated total assets of the Loan
Parties and their Subsidiaries, (ii) generates at least 5.0% of the consolidated
revenues of the Loan Parties and their Subsidiaries or (iii) is the owner of
Equity Interests of any Subsidiary of a Loan Party that otherwise constitutes a
Material Subsidiary.

 

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“Maturity Date” means June 30, 2022.

 

“Maximum Revolver Amount” means $50,000,000, decreased by the amount of
reductions in the Revolver Commitments made in accordance with Section 2.4(c) of
this Agreement and increased by the amount of any Increase made in accordance
with Section 2.14 of this Agreement.

 

“Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.

 

“Mortgages” means, individually and collectively, one or more mortgages, deeds
of trust, or deeds to secure debt, executed and delivered by a Loan Party or one
of its Subsidiaries in favor of Agent, in form and substance reasonably
satisfactory to Agent, that encumber the Real Property Collateral.

 

“NeoPhotonics Japan” means NeoPhotonics Semiconductor, Godo Kaisa.

 

“Non-Consenting Lender” has the meaning specified therefor in Section 14.2(a) of
this Agreement.

 

“Non-Defaulting Lender” means each Lender other than a Defaulting Lender.

 

“Obligations” means (a) all loans (including the Revolving Loans (inclusive of
Extraordinary Advances and Swing Loans)), debts, principal, interest (including
any interest that accrues after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), reimbursement or indemnification obligations with
respect to Letters of Credit (irrespective of whether contingent), premiums,
liabilities (including all amounts charged to the Loan Account pursuant to this
Agreement), obligations (including indemnification obligations), fees (including
the fees provided for in the Fee Letter), Lender Group Expenses (including any
fees or expenses that accrue after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), guaranties, and all covenants and duties of any
other kind and description owing by any Loan Party arising out of, under,
pursuant to, in connection with, or evidenced by this Agreement or any of the
other Loan Documents and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest not paid when due and
all other expenses or other amounts that any Loan Party is required to pay or
reimburse by the Loan Documents or by law or otherwise in connection with the
Loan Documents, and (b) all Bank Product Obligations; provided that, anything to
the contrary contained in the foregoing notwithstanding, the Obligations shall
exclude any Excluded Swap Obligation.  Without limiting the generality of the
foregoing, the Obligations of Borrowers under the Loan Documents include the
obligation to pay (i) the principal of the Revolving Loans, (ii) interest
accrued on the Revolving Loans, (iii) the amount necessary to reimburse Issuing
Bank for amounts paid or payable pursuant to Letters of Credit, (iv) Letter of
Credit commissions, fees (including fronting fees) and charges, (v) Lender Group
Expenses, (vi) fees payable under this Agreement or any of the other Loan
Documents, and (vii) indemnities and other amounts payable by any Loan Party
under any Loan Document.  Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all or any portion thereof and any
extensions, modifications, renewals, or alterations thereof, both prior and
subsequent to any Insolvency Proceeding.

 

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“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.

 

“Originating Lender” has the meaning specified therefor in Section 13.1(e) of
this Agreement.

 

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising solely from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

“Other Taxes” means all present or future stamp, court, or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 14.2).

 

“Overadvance” means, as of any date of determination, that the Revolver Usage is
greater than any of the limitations set forth in Section 2.1 or Section 2.11 of
this Agreement.

 

“Participant” has the meaning specified therefor in Section 13.1(e) of this
Agreement.

 

“Participant Register” has the meaning set forth in Section 13.1(i) of this
Agreement.

 

“Patriot Act” has the meaning specified therefor in Section 4.13 of this
Agreement.

 

“Perfection Certificate” means a certificate in the form of Exhibit P-1 to this
Agreement.

 

“Permitted Acquisition” means any Acquisition so long as:

 

(a)                                 no Default or Event of Default shall have
occurred and be continuing or would result from the consummation of the proposed
Acquisition, the proposed Acquisition is consensual, and Borrowers shall be in
compliance with Section 7 immediately after giving effect to such Acquisition,

 

(b)                                 no Indebtedness will be incurred, assumed,
or would exist with respect to any Loan Party or its Subsidiaries as a result of
such Acquisition, other than Indebtedness permitted the definition of Permitted
Indebtedness and no Liens will be incurred, assumed, or would exist with respect
to the assets of any Loan Party or its Subsidiaries as a result of such
Acquisition other than Permitted Liens,

 

(c)                                  with respect to any proposed Acquisition
that will have a purchase price or aggregate consideration payable in connection
therewith in excess of $2,500,000, Borrowers have provided Agent with its due
diligence package relative to such proposed Acquisition, including forecasted
balance sheets, profit and loss statements, and cash flow statements of the
Person or assets to be acquired, all prepared on a basis consistent with such
Person’s (or assets’) historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions for the one year
period following the date of the proposed Acquisition, on a quarter by quarter
basis), in form and substance (including as to scope and underlying assumptions)
reasonably satisfactory to Agent,

 

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(d)                                 if the cash portion of the purchase price of
such Acquisition is not funded solely with the cash proceeds received from a
substantially concurrent issuance of new Qualified Equity Interests, Borrowers
have Excess Availability (i) at all times during the 30 consecutive days
immediately preceding the date of consummation of such Acquisition, calculated
on a pro forma basis as if such Acquisition was consummated on the first day of
such period, and (ii) immediately after giving effect to such Acquisition, in an
amount not less than 20% of the then applicable Maximum Revolver Amount,

 

(e)                                  with respect to any proposed Acquisition
that will have a purchase price or aggregate consideration payable in connection
therewith in excess of $2,500,000, Borrowers have provided Agent with, not later
than 10 Business Days prior to the anticipated closing date of such proposed
Acquisition, copies of the acquisition agreement and other material documents
relative to the proposed Acquisition, which agreement and documents must be
reasonably acceptable to Agent,

 

(f)                                   the assets being acquired (other than a de
minimis amount of assets in relation to Borrowers’ and their Subsidiaries’ total
assets), or the Person whose Equity Interests are being acquired, are useful in
or engaged in, as applicable, the business of the Loan Parties and their
Subsidiaries or a business reasonably related, ancillary, supplementary or
complementary thereto,

 

(g)                                  the subject assets or Equity Interests, as
applicable, are being acquired directly by a Borrower or one of its Subsidiaries
that is a Loan Party, and, in connection therewith, the applicable Loan Party
shall have complied with Section 5.11 or 5.12 of this Agreement, as applicable,
of this Agreement and, in the case of an acquisition of Equity Interests, the
Person whose Equity Interests are acquired shall become a Loan Party if required
by Section 5.11 or 5.12 of this Agreement and the applicable Loan Party shall
have demonstrated to Agent that the new Loan Parties have received consideration
sufficient to make the joinder documents binding and enforceable against such
new Loan Parties, and

 

(h)                                 the cash purchase consideration payable in
respect of all Permitted Acquisitions (including the proposed Acquisition and
including deferred payment obligations) shall not exceed $10,000,000 in the
aggregate per fiscal year.

 

“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured asset-based lender) business judgment.

 

“Permitted Dispositions” means:

 

(a)                                 (i) sales, abandonment, or other
dispositions of property (other than accounts receivables, intellectual
property, Equity Interests of the Borrower or any Material Subsidiary or
Material Contracts) that is worn, damaged, uneconomic or obsolete or no longer
used or useful in the ordinary course of business; (ii) dispositions of owned or
leased vehicles in the ordinary course of business or pursuant to restructuring
and (iii) leases or subleases of Real Property not useful in the conduct of the
business of the Loan Parties and their Subsidiaries,

 

(b)                                 sales or leases of Inventory to buyers in
the ordinary course of business,

 

(c)                                  the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of this Agreement or
the other Loan Documents,

 

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(d)                                 (i) the licensing, on a non-exclusive basis,
of patents, trademarks, copyrights, and other intellectual property rights in
the ordinary course of business, (ii) licensing of patents, trademarks,
copyrights, and other intellectual property rights customary for companies of
similar size and in the same industry as Borrowers and that are approved by
Borrower’s board of directors and which would not result in a legal transfer of
title of such licensed Intellectual Property, but that may be exclusive as long
as such exclusivity is limited to (x) a particular product line or application
field not including optical communications and for a limited time period that is
less than the expected useful life of such intellectual property, or (y) 
territorial exclusivity but only as to discrete geographical areas outside of
the United States, and (iii) the license agreement described on Schedule P-3 of
the Disclosure Letter,

 

(e)                                  the granting of Permitted Liens,

 

(f)                                   the sale or discount, in each case without
recourse, of accounts receivable (other than Eligible Accounts) arising in the
ordinary course of business, but only in connection with the compromise or
collection thereof,

 

(g)                                  any involuntary loss, damage or destruction
of property,

 

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

 

(i)                                     the leasing or subleasing of assets
(including Real Property) of any Loan Party or its Subsidiaries in the ordinary
course of business),

 

(j)                                    the sale or issuance of Equity Interests
(other than Disqualified Equity Interests) of Administrative Borrower,

 

(k)                                 (i) the lapse or abandonment of registered
patents, trademarks, copyrights and other intellectual property of any Loan
Party or any of its Subsidiaries to the extent not economically desirable in the
conduct of its business, or (ii) the lapse or abandonment of patents,
trademarks, copyrights, or other intellectual property rights in the ordinary
course of business so long as (in each case under clauses (i) and (ii)),
(A) with respect to copyrights, such copyrights are not material revenue
generating copyrights, and (B) such lapse or abandonment is not materially
adverse to the interests of the Lender Group,

 

(l)                                     the making of Restricted Payments and
transactions permitted under Section 6.10 of the Agreement, provided that such
transactions do not include the disposition of Eligible Accounts or the
licensing of Intellectual Property owned by a Loan Party except to the extent
permitted under clause (d) of this definition,

 

(m)                             the making of Permitted Investments,

 

(n)                                 transfers of assets (other than Intellectual
Property)  (i) from any Loan Party or any of its Subsidiaries to a Loan Party,
(ii) from any Subsidiary of any Loan Party that is not a Loan Party to any other
Subsidiary of any Loan Party and (iii) from any Loan Party to any Subsidiary of
any Loan Party that is not a Loan Party, so long as with respect to transfers
and dispositions pursuant to this clause (iii), (w) the aggregate book value of
all such assets subject to such transfer or disposition shall not exceed
$10,000,000 in any fiscal year with respect to manufacturing equipment and
$2,500,000 in any fiscal year with respect to all other assets, (x) such
disposition shall not include any intellectual property except to the extent
otherwise permitted under clauses (d) and (k) of the definition of Permitted
Disposition, (y) no Event of Default has occurred and is continuing or would
immediately result therefrom and (z) with respect to any transfers or
dispositions of assets other than manufacturing equipment,  immediately after
giving effect to such transfer and disposition and at all times during the 30
consecutive days immediately preceding the date of such transfer or disposition,
the Borrowers shall have Excess Availability in an amount not less than 20% of
the then applicable Maximum Revolver Amount,

 

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(o)                                 dispositions of Equipment or Real Property
to the extent that (i) such property is exchanged for credit against the
purchase price of similar replacement property, or (ii) the proceeds of such
disposition are promptly applied to the purchase price of such replacement
property; provided, that to the extent the property being transferred
constitutes Collateral, such replacement property shall constitute Collateral,

 

(p)                                 dispositions of assets (other than Eligible
Accounts) acquired by the Loan Parties and their Subsidiaries pursuant to a
Permitted Acquisition consummated within 12 months of the date of the proposed
disposition so long as (i) the consideration received for the assets to be so
disposed is at least equal to the fair market value of such assets, (ii) the
assets to be so disposed are not necessary or economically desirable in
connection with the business of the Loan Parties and their Subsidiaries, and
(iii) the assets to be so disposed are readily identifiable as assets acquired
pursuant to the subject Permitted Acquisition,

 

(q)                                 sales or dispositions to a third party
non-Affiliate buyer of (i) an unprofitable business line or unit and assets used
solely in connection therewith if such business line or unit has been generating
negative cash flow for the 18 months prior to such sale or disposition or has
otherwise had a negative impact on EBITDA for Borrower and its Subsidiaries
during such period or (ii) fixed assets (including intangible property related
to such fixed assets) not otherwise permitted in clauses (a) through (p) above;
so long as, with respect to dispositions described in clauses (i) and
(ii) above, such sale or disposition is in exchange for the fair market value of
such assets and the aggregate fair market value of all assets disposed of in any
fiscal year (including the proposed disposition) would not exceed $10,000,000,

 

(r)                                    dispositions by a Loan Party or any of
its Subsidiaries of real or personal property (other than intellectual property)
to any Person in connection with a sale and leaseback transaction of such
disposed assets, provided, that (i) such disposition is made at fair market
value, (ii) the lease terms pursuant to which such Loan Party or Subsidiary
leases back such assets are customary for transactions of this type and, if such
arrangement is with an Affiliate of such Loan Party or Subsidiary, are
comparable to those which would be obtained by it in an arm’s length transaction
with an independent, unrelated third party and (iii) any Indebtedness incurred
in connection therewith (including Capital Lease Obligations) is Permitted
Indebtedness , including a sale leaseback transaction of the assets of
NeoPhotonics Japan,

 

(s)                                   Borrowers may sell, dispose, transfer all
or substantially all of its Equity Interests or assets in NeoPhotonics
Corporation, LLC, and

 

(t)                                    NeoPhotonics Japan may sell, dispose or
transfer all or substantially all of its Real Property so long as such
disposition is in exchange for consideration equal to the fair market value of
the assets subject to such sale, disposition or transfer.

 

“Permitted Indebtedness” means:

 

(a)                                 Indebtedness in respect of the Obligations,

 

(b)                                 Indebtedness as of the Closing Date set
forth on Schedule 4.14 of the Disclosure Letter and any Refinancing Indebtedness
in respect of such Indebtedness, provided that such Indebtedness is solely the
obligation of Subsidiaries of the Loan Parties that are not Loan Parties and no
Loan Party has provided any guaranty or other assurance of payment with respect
thereto,

 

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(c)                                  Permitted Purchase Money Indebtedness and
any Refinancing Indebtedness in respect of such Indebtedness, subject to
aggregate limitation set forth in clause (q) of this definition,

 

(d)                                 Indebtedness arising in connection with the
endorsement of instruments or other payment items for deposit,

 

(e)                                  Indebtedness consisting of (i) unsecured
guarantees incurred in the ordinary course of business with respect to surety
and appeal bonds, performance bonds, bid bonds, appeal bonds, completion
guarantee and similar obligations (including, but not limited to such
obligations arising in connection with worker’s compensation claims,
unemployment insurance, health benefits and other social security legislation
and local, state and federal payroll taxes) and obligations arising in the
ordinary course of business in connection with self-insurance or similar
requirements; (ii) unsecured guarantees arising with respect to customary
indemnification obligations to purchasers in connection with Permitted
Dispositions; and (iii) unsecured guarantees with respect to Indebtedness of any
Loan Party or one of its Subsidiaries, to the extent that the Person that is
obligated under such guaranty could have incurred such underlying Indebtedness
as Permitted Indebtedness hereunder,

 

(f)                                   unsecured Indebtedness of any Loan Party
that is incurred on the date of the consummation of a Permitted Acquisition
solely for the purpose of consummating such Permitted Acquisition so long as
(i) no Event of Default has occurred and is continuing or would result
therefrom, (ii) such unsecured Indebtedness is not incurred for working capital
purposes, (iii) such unsecured Indebtedness does not mature prior to the date
that is 91 days after the Maturity Date, (iv) such unsecured Indebtedness does
not amortize until 91 days after the Maturity Date, (v) such unsecured
Indebtedness does not provide for the payment of interest thereon in cash or
Cash Equivalents prior to the date that is 91 days after the Maturity Date, and
(vi) such Indebtedness is subordinated in right of payment to the Obligations on
terms and conditions reasonably satisfactory to Agent and is otherwise on terms
and conditions (including economic terms and absence of covenants) reasonably
satisfactory to Agent,

 

(g)                                  Acquired Secured Indebtedness, subject to
aggregate limitation set forth in (q) of the definition of Permitted
Indebtedness,

 

(h)                                 Indebtedness incurred in the ordinary course
of business under performance, surety, statutory, or appeal bonds,

 

(i)                                     Indebtedness owed to any Person
providing property, casualty, liability, or other insurance to any Loan Party or
any of its Subsidiaries, so long as the amount of such Indebtedness is not in
excess of the amount of the unpaid cost of, and shall be incurred only to defer
the cost of, such insurance for the year in which such Indebtedness is incurred
and such Indebtedness is outstanding only during such year,

 

(j)                                    the incurrence by any Loan Party or its
Subsidiaries of Indebtedness under Hedge Agreements that is incurred for the
bona fide purpose of hedging the interest rate, commodity, or foreign currency
risks associated with such Loan Party’s or such Subsidiary’s operations and not
for speculative purposes,

 

(k)                                 Indebtedness incurred in the ordinary course
of business in respect of credit cards, credit card processing services, debit
cards, stored value cards, commercial cards (including so-called “purchase
cards”, “procurement cards” or “p-cards”), or Cash Management Services,

 

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(l)                                     unsecured Indebtedness of any Loan Party
owing to former or current employees, directors, or consultants (or any spouses,
ex-spouses, or estates of any of the foregoing) incurred in connection with the
repurchase or redemption by such Loan Party of the Equity Interests of
Administrative Borrower that has been issued to such Persons, so long as no
Default or Event of Default has occurred and is continuing or would result from
the incurrence of such Indebtedness, (ii) the aggregate amount of all such
Indebtedness outstanding at any one time does not exceed $1,000,000, and
(iii) such Indebtedness is subordinated in right of payment to the Obligations
on terms and conditions reasonably acceptable to Agent,

 

(m)                             contingent liabilities in respect of any
indemnification obligation, adjustment of purchase price, non-compete, or
similar obligation of any Loan Party incurred in connection with the
consummation of one or more Permitted Acquisitions,

 

(n)                                 Indebtedness composing Permitted
Investments,

 

(o)                                 unsecured Indebtedness incurred in respect
of netting services, overdraft protection, and other like services, in each
case, incurred in the ordinary course of business,

 

(p)                                 unsecured Indebtedness of any Loan Party or
its Subsidiaries in respect of Earn-Outs owing to sellers of assets or Equity
Interests to such Loan Party or its Subsidiaries that is incurred in connection
with the consummation of one or more Permitted Acquisitions so long as such
unsecured Indebtedness is on terms and conditions reasonably acceptable to
Agent,

 

(q)                                 other Indebtedness incurred after the
Closing Date (including in respect of letters of credit, banker’s acceptances or
similar arrangements) in an aggregate amount not to exceed (i) for all
Subsidiaries of Loan Parties that are not Loan Parties, in aggregate with
Indebtedness of such Subsidiaries under clauses (c) (including Capital Lease
Obligations arising under clause (r) of Permitted Dispositions without
duplication for Capital Lease Obligations included under clause (x) of the
definition of Permitted Indebtedness), and (g) of the definition of Permitted
Indebtedness $10,000,000  at any time outstanding; provided, that such
Indebtedness is not directly or indirectly recourse to any of the Loan Parties
or to such Loan Parties’ assets, and (ii) for all Loan Parties, in aggregate
with Indebtedness of the Loan Party’s permitted under clauses (c) (including
Capital Lease Obligations arising under clause (r) of Permitted Dispositions
without duplication for Capital Lease Obligations included under clause (x) of
the definition of Permitted Indebtedness), (f), and (g) of the definition of
Permitted Indebtedness, $10,000,000 at any time outstanding,

 

(r)                                    accrual of interest, accretion or
amortization of original issue discount, or the payment of interest in kind, in
each case, on Indebtedness that otherwise constitutes Permitted Indebtedness,

 

(s)                                   Subordinated Indebtedness in an amount not
to exceed $10,000,000 outstanding at any one time,

 

(t)                                    Indebtedness arising from judgments or
decrees not deemed to be a Default or Event of Default under Section 8.3,

 

(u)                                 Indebtedness to trade creditors in the
ordinary course of business,

 

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

 

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(w)                               guarantee of obligations incurred in the
ordinary course of business to support obligations not constituting Indebtedness
for borrowed money of any Loan Party, including, without limitations,
obligations of a Loan Party owing to suppliers, customers, lessors and
licensors,

 

(x)                                 without duplication for Capital Lease
Obligations included under clause (q) of the definition of Permitted
Indebtedness, other Indebtedness incurred after the Closing Date by Subsidiaries
of a Loan Party that are not Loan Parties in connection with sale and leaseback
transactions permitted under clause (r) of the definition of Permitted
Dispositions so long as the aggregate amount of all such Indebtedness
outstanding at any one time does not exceed $10,000,000; and

 

(y)                                 any other unsecured Indebtedness incurred by
any Loan Party or any of its Subsidiaries in an aggregate outstanding amount not
to exceed $1,000,000 at any one time.

 

“Permitted Intercompany Advances” means loans made by (a) a Loan Party to
another Loan Party, (b) a Subsidiary of a Loan Party that is not a Loan Party to
another Subsidiary of a Loan Party that is not a Loan Party, (c) a Subsidiary
that is not a Loan Party to a Loan Party so long as such loan is subordinated to
the Obligations pursuant to the Intercompany Subordination Agreement, (d) a Loan
Party to a Subsidiary that is not a Loan Party in an aggregate principal amount
not to exceed in any fiscal year $10,000,000 less any Investments made in such
fiscal year which are permitted under clause (s)(iii) of the definition of
Permitted Investments and so long as with respect to all loans under clause
(d) above, (i) no Event of Default has occurred and is continuing or would
result therefrom and (ii) immediately after giving effect to the advance of any
such loan and at all times during the 30 consecutive days immediately preceding
the date of such advance, the Borrowers have Excess Availability in an amount
not less than 20% of the then applicable Maximum Revolver Amount; provided, that
this shall not be deemed to permit guaranties by a Loan Party of Permitted
Indebtedness under clause (q) of the definition of Permitted Indebtedness of its
Subsidiaries that are not Loan Parties.

 

“Permitted Investments” means:

 

(a)                                 Investments in cash and Cash Equivalents,

 

(b)                                 Investments in negotiable instruments
deposited or to be deposited for collection in the ordinary course of business,

 

(c)                                  advances made in connection with purchases
of goods or services in the ordinary course of business,

 

(d)                                 Investments received in settlement of
amounts due to any Loan Party or any of its Subsidiaries effected in the
ordinary course of business or owing to any Loan Party or any of its
Subsidiaries as a result of Insolvency Proceedings involving an account debtor
or upon the foreclosure or enforcement of any Lien in favor of a Loan Party or
its Subsidiaries,

 

(e)                                  Investments owned by any Loan Party or any
of its Subsidiaries on the Closing Date and set forth on Schedule P-1 of the
Disclosure Letter,

 

(f)                                   guarantees permitted under the definition
of Permitted Indebtedness,

 

(g)                                  Permitted Intercompany Advances,

 

(h)                                 Equity Interests or other securities
acquired in connection with the satisfaction or enforcement of Indebtedness or
claims due or owing to a Loan Party or its Subsidiaries (in bankruptcy of
customers or suppliers or otherwise outside the ordinary course of business) or
as security for any such Indebtedness or claims,

 

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(i)                                     deposits of cash made in the ordinary
course of business to secure performance of operating leases and other
commercial contracts,

 

(j)                                    (i) non-cash loans and advances to
employees, officers, and directors of a Loan Party or any of its Subsidiaries
for the purpose of purchasing Equity Interests in Administrative Borrower so
long as the proceeds of such loans are used in their entirety to purchase such
Equity Interests in Administrative Borrower, and (ii) loans and advances to
employees, directors and officers of a Loan Party or any of its Subsidiaries in
the ordinary course of business for any other business purpose, including but
not limited to moving, entertainment, travel and other similar expenses in an
aggregate amount outstanding at any one time not to exceed $1,000,000,

 

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

 

(l)                                     Investments in the form of capital
contributions and the acquisition of Equity Interests made by any Loan Party in
any other Loan Party (other than capital contributions to or the acquisition of
Equity Interests of Administrative Borrower),

 

(m)                             Investments resulting from entering into
(i) Bank Product Agreements, or (ii) agreements relative to obligations
permitted under clause (j) of the definition of Permitted Indebtedness,

 

(n)                                 equity Investments by any Loan Party in any
Subsidiary of such Loan Party which is required by law to maintain a minimum net
capital requirement or as may be otherwise required by applicable law,

 

(o)                                 Investments held by a Person acquired in a
Permitted Acquisition to the extent that such Investments were not made in
contemplation of or in connection with such Permitted Acquisition and were in
existence on the date of such Permitted Acquisition,

 

(p)                                 sales on open accounts in the ordinary
course of business,

 

(q)                                 Investments in connection with joint
ventures or strategic alliances in the ordinary course of business consisting of
non-exclusive licensing of technology, the development of technology or the
providing of technical support in an aggregate amount which in aggregate with
Investments permitted under clause (u) of this definition shall not exceed
$10,000,000 in any fiscal year; provided, that immediately after giving effect
to any such Investment and at all times during the 30 consecutive days
immediately preceding the date of such Investment, the Borrowers shall have
Excess Availability in an amount not less than 20% of the then applicable
Maximum Revolver Amount, and provided, further, no such Investment shall be a
transfer of Intellectual Property except to the extent such transfer would
constitute a Permitted Disposition under clause (d) of the definition of
Permitted Disposition,

 

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

 

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(s)                                   Investments (i) by any Loan Party in any
other Loan Party, (ii) by any Subsidiary of a Loan Party that is not a Loan
Party in any Loan Party and (iii) by any Loan Party to any Subsidiary of any
Loan Party that is not a Loan Party in an aggregate amount not to exceed in any
fiscal year $10,000,000 less any Permitted Intercompany Advances under clause
(d) of the definition of Permitted Intercompany Advances which are made in such
fiscal year; provided, that with respect to Investments permitted under this
clause (iii), (x) no Event of Default has occurred and is continuing or would
result therefrom, (y) immediately after giving effect to any such Investment and
at all times during the 30 consecutive days immediately preceding the date of
such Investment, the Borrowers shall have Excess Availability in an amount not
less than 20% of the then applicable Maximum Revolver Amount and (z) no such
Investment shall be a transfer of Intellectual Property except to the extent
such transfer would constitute a Permitted Disposition under clause (d) of the
definition of Permitted Disposition; provided, further, that this shall not be
deemed to permit guaranties by a Loan Party of Permitted Indebtedness under
clause (q) of the definition of Permitted Indebtedness of its Subsidiaries that
are not Loan Parties,

 

(t)                                    Investments required under the Rusnano
Rights Agreements up to $3,500,000, and

 

(u)                                 so long as no Event of Default has occurred
and is continuing or would result therefrom, any other Investments in an
aggregate amount which in aggregate with Investments permitted under clause
(q) of this definition, shall not exceed $10,000,000 in a fiscal year; provided,
that immediately after giving effect to any such Investment and at all times
during the 30 consecutive days immediately preceding the date of such
Investment, the Borrowers shall have Excess Availability in an amount not less
than 20% of the then applicable Maximum Revolver Amount.

 

“Permitted Liens” means:

 

(a)                                 Liens granted to, or for the benefit of,
Agent to secure the Obligations,

 

(b)                                 Liens for unpaid taxes, assessments, or
other governmental charges or levies that either (i) are not yet delinquent, or
(ii) do not have priority over Agent’s Liens and the underlying taxes,
assessments, or charges or levies are the subject of Permitted Protests,

 

(c)                                  judgment Liens arising solely as a result
of the existence of judgments, orders, or awards that do not constitute an Event
of Default under Section 8.3 of this Agreement,

 

(d)                                 Liens set forth on Schedule P-2 of the
Disclosure Letter; provided, that to qualify as a Permitted Lien, any such Lien
described on Schedule P-2 of the Disclosure Letter shall only secure the
Indebtedness that it secures on the Closing Date and any Refinancing
Indebtedness in respect thereof,

 

(e)                                  the interests of lessors under operating
leases and non-exclusive licensors under license agreements,

 

(f)                                   purchase money Liens on fixed assets or
the interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as (i) such
Lien attaches only to the fixed asset purchased or acquired and the proceeds
thereof, and (ii) such Lien only secures the Indebtedness that was incurred to
acquire the fixed asset purchased or acquired or any Refinancing Indebtedness in
respect thereof,

 

(g)                                  Liens arising by operation of law in favor
of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business and not in connection
with the borrowing of money, and which Liens either (i) are for sums not yet
delinquent, or (ii) are the subject of Permitted Protests,

 

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(h)                                 Liens on amounts deposited to secure any
Borrower’s and its Subsidiaries’ obligations in connection with worker’s
compensation or other unemployment insurance or other social security
obligations,

 

(i)                                     Liens on amounts deposited to secure any
Borrower’s and its Subsidiaries’ obligations in connection with the making or
entering into of bids, tenders, or leases in the ordinary course of business and
not in connection with the borrowing of money,

 

(j)                                    Liens on amounts deposited to secure any
Borrower’s and its Subsidiaries’ reimbursement obligations with respect to
surety, performance or appeal bonds or to secure the performance of bids, trade
and commercial contracts, leases, statutory obligations and other obligations of
a like nature, in each case incurred or obtained in the ordinary course of
business,

 

(k)                                 with respect to any Real Property,
encumbrances, easements, rights of way, and zoning restrictions, building
ordinances, minor survey exceptions, title defects or other irregularities or
encumbrances on real property, governmental restrictions on the use of Real
Property and liens (other than liens securing Indebtedness for borrowed money)
in favor of governmental authorities and public utilities that do not, in the
aggregate, materially interfere with or impair the use or operation of any Real
Property,

 

(l)                                     licenses of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of
business so long as such licenses constitute Permitted Dispositions under clause
(d) of the definition of Permitted Dispositions , and leases or subleases of
Real Property (which may be exclusive) granted in the ordinary course of
business,

 

(m)                             Liens that are replacements of Permitted Liens
to the extent that the original Indebtedness is the subject of permitted
Refinancing Indebtedness and so long as the replacement Liens only encumber
those assets that secured the original Indebtedness,

 

(n)                                 (i) rights of setoff or bankers’ liens upon
deposits of funds in favor of banks or other depository institutions, solely to
the extent incurred in connection with the maintenance of such Deposit Accounts
in the ordinary course of business (ii) rights of setoff and similar
arrangements and liens in favor of securities intermediaries to secure customary
fees and similar amounts related to security accounts, and (iii) Liens attaching
to commodity trading accounts or other commodities brokerage accounts incurred
in the ordinary course of business and not for speculative purposes,

 

(o)                                 Liens granted in the ordinary course of
business on the unearned portion of insurance premiums securing the financing of
insurance premiums to the extent the financing is permitted under the definition
of Permitted Indebtedness,

 

(p)                                 Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods,

 

(q)                                 Liens solely on any cash earnest money
deposits, escrow arrangements or other similar arrangements made by a Loan Party
or any of its Subsidiaries in connection with any letter of intent or purchase
agreement with respect to a Permitted Acquisition or other acquisition of assets
permitted hereunder,

 

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(r)                                    Liens assumed by any Loan Party or its
Subsidiaries in connection with a Permitted Acquisition that secure Acquired
Secured Indebtedness,

 

(s)                                   in connection with the sale, lease or
other transfer of assets in a transaction permitted under Section 6.4, Liens
existing or deemed to exist by virtue of customary rights and restrictions
contained in agreements relating to such sale, lease or other transfer pending
the completion thereof,

 

(t)                                    Precautionary UCC or similar filings in
respect of true leases;

 

(u)                                 Liens on assets of any Foreign Subsidiary to
secure Indebtedness permitted pursuant to clause (q) of the definition of
“Permitted Indebtedness”, and

 

(v)                                 other Liens which do not secure Indebtedness
for borrowed money or letters of credit and as to which the aggregate amount of
the obligations secured thereby does not exceed $1,000,000.

 

“Permitted Protest” means the right of any Loan Party or any of its Subsidiaries
to protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment; provided, that (a) a reserve with respect
to such obligation is established on such Loan Party’s or its Subsidiaries’
books and records in such amount as is required under GAAP, (b) any such protest
is instituted promptly and prosecuted diligently by such Loan Party or its
Subsidiary, as applicable, in good faith, and (c) Agent is satisfied that, while
any such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of Agent’s Liens.

 

“Permitted Purchase Money Indebtedness” means, as of any date of
determination, Indebtedness (other than the Obligations, but including
Capitalized Lease Obligations), incurred after the Closing Date and at the time
of, or within 120 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.

 

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

 

“Platform” has the meaning specified therefor in Section 17.9(c) of this
Agreement.

 

“Post-Increase Revolver Lenders” has the meaning specified therefor in
Section 2.14 of this Agreement.

 

“Pre-Increase Revolver Lenders” has the meaning specified therefor in
Section 2.14 of this Agreement.

 

“Projections” means Borrowers’ forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrowers’ historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.

 

“Pro Rata Share” means, as of any date of determination:

 

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(a)                                 with respect to a Lender’s obligation to
make all or a portion of the Revolving Loans, with respect to such Lender’s
right to receive payments of interest, fees, and principal with respect to the
Revolving Loans, and with respect to all other computations and other matters
related to the Revolver Commitments or the Revolving Loans, the percentage
obtained by dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the
aggregate Revolving Loan Exposure of all Lenders,

 

(b)                                 with respect to a Lender’s obligation to
participate in the Letters of Credit, with respect to such Lender’s obligation
to reimburse Issuing Bank, and with respect to such Lender’s right to receive
payments of Letter of Credit Fees, and with respect to all other computations
and other matters related to the Letters of Credit, the percentage obtained by
dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the aggregate
Revolving Loan Exposure of all Lenders; provided, that if all of the Revolving
Loans have been repaid in full and all Revolver Commitments have been
terminated, but Letters of Credit remain outstanding, Pro Rata Share under this
clause shall be the percentage obtained by dividing (A) the Letter of Credit
Exposure of such Lender, by (B) the Letter of Credit Exposure of all Lenders,
and

 

(c)                                  with respect to all other matters and for
all other matters as to a particular Lender (including the indemnification
obligations arising under Section 15.7 of this Agreement), the percentage
obtained by dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the
aggregate Revolving Loan Exposure of all Lenders, in any such case as the
applicable percentage may be adjusted by assignments permitted pursuant to
Section 13.1; provided, that if all of the Loans have been repaid in full and
all Commitments have been terminated, Pro Rata Share under this clause shall be
the percentage obtained by dividing (A) the Letter of Credit Exposure of such
Lender, by (B) the Letter of Credit Exposure of all Lenders.

 

“Protective Advances” has the meaning specified therefor in Section 2.3(d)(i) of
this Agreement.

 

“Public Lender” has the meaning specified therefor in Section 17.9(c) of this
Agreement.

 

“Purchase Price” means, with respect to any Acquisition, an amount equal to the
aggregate consideration, whether cash, property or securities (including the
fair market value of any Equity Interests of Administrative Borrower issued in
connection with such Acquisition and including the maximum amount of Earn-Outs),
paid or delivered by a Loan Party or one of its Subsidiaries in connection with
such Acquisition (whether paid at the closing thereof or payable thereafter and
whether fixed or contingent), but excluding therefrom (a) any cash of the seller
and its Affiliates used to fund any portion of such consideration, and (b) any
cash or Cash Equivalents acquired in connection with such Acquisition.

 

“Qualified Cash” means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of the Loan Parties and their
Subsidiaries that is determined in Dollars and that is in Deposit Accounts or in
Securities Accounts, or any combination thereof, which such Deposit Accounts or
Securities Accounts are maintained at Wells Fargo Bank, N.A. located within the
United States and subject to a Control Agreement.

 

“Qualified Equity Interests” means and refers to any Equity Interests issued by
Administrative Borrower (and not by one or more of its Subsidiaries) that is not
a Disqualified Equity Interest.

 

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“Real Property” means any estates or interests in real property now owned or
hereafter acquired by any Loan Party or one of its Subsidiaries and the
improvements thereto.

 

“Real Property Collateral” means (a) the Real Property identified on Schedule
R-1 of the Disclosure Letter, and (b) any Real Property hereafter acquired by
any Loan Party or one of its Subsidiaries with a fair market value in excess of
$2,000,000.

 

“Receivables Reserves” means, as of any date of determination, those reserves
that Agent deems necessary or appropriate, in its Permitted Discretion and
subject to Section 2.1(c), to establish and maintain (including Landlord
Reserves for books and records locations and reserves for rebates, discounts,
warranty claims, and returns) with respect to the Eligible Accounts or the
Maximum Revolver Amount; provided that such reserves shall not be duplicative
with the Dilution Reserve.

 

“Recipient” means Agent or any Lender or Participant.

 

“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

 

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

 

(d)                                 such refinancings, renewals, or extensions
do not result in an increase in the principal amount of the Indebtedness so
refinanced, renewed, or extended, other than by the amount of premiums paid
thereon and the fees and expenses incurred in connection therewith and by the
amount of unfunded commitments with respect thereto,

 

(e)                                  such refinancings, renewals, or extensions
do not result in a shortening of the final stated maturity or the average
weighted maturity (measured as of the refinancing, renewal, or extension) of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions that, taken as a whole, are or could reasonably be expected to be
materially adverse to the interests of the Lenders,

 

(a)                                 if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of payment to the Obligations,
then the terms and conditions of the refinancing, renewal, or extension must
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness,

 

(b)                                 the Indebtedness that is refinanced,
renewed, or extended is not recourse to any Person that is liable on account of
the Obligations other than those Persons which were obligated with respect to
the Indebtedness that was refinanced, renewed, or extended,

 

(c)                                  if the Indebtedness that is refinanced,
renewed or extended was unsecured, such refinancing, renewal or extension shall
be unsecured, and

 

(d)                                 if the Indebtedness that is refinanced,
renewed, or extended was secured (i) such refinancing, renewal, or extension
shall be secured by substantially the same or less collateral as secured such
refinanced, renewed or extended Indebtedness on terms no less favorable to Agent
or the Lender Group and (ii) the Liens securing such refinancing, renewal or
extension shall not have a priority more senior than the Liens securing such
Indebtedness that is refinanced, renewed or extended.

 

“Register” has the meaning set forth in Section 13.1(h) of this Agreement.

 

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“Registered Loan” has the meaning set forth in Section 13.1(h) of this
Agreement.

 

“Related Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of
credit in the ordinary course and that is administered, advised or managed by
(a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of
an entity that administers, advises or manages a Lender.

 

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

 

“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of
this Agreement.

 

“Report” has the meaning specified therefor in Section 15.16 of this Agreement.

 

“Required Lenders” means, at any time, Lenders having or holding more than 50%
of the aggregate Revolving Loan Exposure of all Lenders; provided, that (i) the
Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the
determination of the Required Lenders, and (ii) at any time there are two or
more Lenders (who are not Affiliates of one another or Defaulting Lenders),
“Required Lenders” must include at least two Lenders (who are not Affiliates of
one another).

 

“Reserves” means, as of any date of determination, Receivables Reserves, Bank
Product Reserves and those other reserves that Agent deems necessary or
appropriate, in its Permitted Discretion and subject to Section 2.1(c), to
establish and maintain (including reserves with respect to (a) sums that any
Loan Party or its Subsidiaries are required to pay under any Section of this
Agreement or any other Loan Document (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and has failed to pay, and (b) amounts owing by any Loan Party or
its Subsidiaries to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than a Permitted Lien), which Lien or trust,
in the Permitted Discretion of Agent likely would have a priority superior to
the Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral) with respect to the Borrowing Base
or the Maximum Revolver Amount.

 

“Restricted Payment” means (a) any declaration or payment of any dividend or the
making of any other payment or distribution, directly or indirectly, on account
of Equity Interests issued by Administrative Borrower or any of its Subsidiaries
(including any payment in connection with any merger or consolidation involving
Administrative Borrower) or to the direct or indirect holders of Equity
Interests issued by Administrative Borrower or any of its Subsidiaries in their
capacity as such (other than dividends or distributions payable in Qualified
Equity Interests issued by Administrative Borrower or any of its Subsidiaries,
or (b) any purchase, redemption, making of any sinking fund or similar payment,
or other acquisition or retirement for value (including in connection with any
merger or consolidation involving Administrative Borrower) of any Equity
Interests issued by Administrative Borrower or any of its Subsidiaries,(but
excluding any exchange solely for Qualified Equity Interests), or (c) any making
of any payment to retire, or to obtain the surrender of, any outstanding
warrants, options, or other rights to acquire Equity Interests of Administrative
Borrower or any of its Subsidiaries now or hereafter outstanding.

 

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“Revolver Commitment” means, with respect to each Revolving Lender, its Revolver
Commitment, and, with respect to all Revolving Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Revolving Lender’s name under the applicable heading on Schedule C-1 to this
Agreement or in the Assignment and Acceptance pursuant to which such Revolving
Lender became a Revolving Lender under this Agreement, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1 of this Agreement, and as such
amounts may be decreased by the amount of reductions in the Revolver Commitments
made in accordance with Section 2.4(c) hereof.

 

“Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding Revolving Loans (inclusive of Swing Loans and Protective
Advances), plus (b) the amount of the Letter of Credit Usage.

 

“Revolving Lender” means a Lender that has a Revolving Loan Exposure or Letter
of Credit Exposure.

 

“Revolving Loan Base Rate Margin” has the meaning set forth in the definition of
Applicable Margin.

 

“Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any
date of determination (a) prior to the termination of the Revolver Commitments,
the amount of such Lender’s Revolver Commitment, and (b) after the termination
of the Revolver Commitments, the aggregate outstanding principal amount of the
Revolving Loans of such Lender.

 

“Revolving Loan LIBOR Rate Margin” has the meaning set forth in the definition
of Applicable Margin.

 

“Revolving Loans” has the meaning specified therefor in Section 2.1(a) of this
Agreement.

 

“Rusnano Rights Agreements” means that certain Rights Agreement, dated as of
April 27, 2012, by and among NeoPhotonics and Open Joint Stock Company “RUSNANO”
(Principal State Registration Number 1117799004333, with registered office at
Prospect 60-letiya Oktyabrya 10a, 117036 Moscow, Russian Federation), as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, or (d) a Person resident
in or determined to be resident in a country, in each case of clauses
(a) through (d) that is a target of Sanctions, including a target of any country
sanctions program administered and enforced by OFAC.

 

“Sanctioned Person” means, at any time (a) any Person named on the list of
Specially Designated Nationals and Blocked Persons maintained by OFAC, OFAC’s
consolidated Non-SDN list or any other Sanctions-related list maintained by any
Governmental Authority, (b) a Person or legal entity that is a target of
Sanctions, (c) any Person operating, organized or resident in a Sanctioned
Entity, or (d) any Person directly or indirectly owned or controlled
(individually or in the aggregate) by or acting on behalf of any such Person or
Persons described in clauses (a) through (c) above.

 

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“Sanctions” means individually and collectively, respectively, any and all
economic sanctions, trade sanctions, financial sanctions, sectoral sanctions,
secondary sanctions, trade embargoes anti-terrorism laws and other sanctions
laws, regulations or embargoes, including those imposed, administered or
enforced from time to time by:  (a) the United States of America, including
those administered by OFAC, the U.S. Department of State, the U.S. Department of
Commerce, or through any existing or future executive order, (b) the United
Nations Security Council, (c) the European Union or any European Union member
state, (d) Her Majesty’s Treasury of the United Kingdom, or (d) any other
Governmental Authority with jurisdiction over any member of Lender Group or any
Loan Party or any of their respective Subsidiaries or Affiliates.

 

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

 

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

 

“Securities Account” means a securities account (as that term is defined in the
Code).

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

 

“Settlement” has the meaning specified therefor in Section 2.3(e)(i) of this
Agreement.

 

“Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of
this Agreement.

 

“Solvent” means, with respect to any Person as of any date of determination,
that (a) at fair valuations, the sum of such Person’s debts (including
contingent liabilities) is less than all of such Person’s assets, (b) such
Person is not engaged in a business or transaction for which the remaining
assets of such Person are unreasonably small in relation to the business or
transaction or for which the property remaining with such Person is an
unreasonably small capital, (c) such Person has not incurred debts beyond its
ability to pay such debts as they become due (whether at maturity or otherwise),
and (d) such Person is “solvent” or not “insolvent”, as applicable within the
meaning given those terms and similar terms under applicable laws relating to
fraudulent transfers and conveyances.  For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability (irrespective of whether such contingent liabilities meet the
criteria for accrual under Statement of Financial Accounting Standard No. 5).

 

“Standard Letter of Credit Practice” means, for Issuing Bank, any domestic or
foreign law or letter of credit practices applicable in the city in which
Issuing Bank issued the applicable Letter of Credit or, for its branch or
correspondent, such laws and practices applicable in the city in which it has
advised, confirmed or negotiated such Letter of Credit, as the case may be, in
each case, (a) which letter of credit practices are of banks that regularly
issue letters of credit in the particular city, and (b) which laws or letter of
credit practices are required or permitted under ISP or UCP, as chosen in the
applicable Letter of Credit.

 

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“Subordinated Indebtedness” means any Indebtedness of any Loan Party or its
Subsidiaries incurred from time to time that is subordinated in right of payment
to the Obligations and is subject to a subordination agreement or contains terms
and conditions of subordination that are reasonably acceptable to Agent.

 

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the Equity Interests having ordinary voting power to elect a majority
of the Board of Directors of such corporation, partnership, limited liability
company, or other entity.

 

“Supermajority Lenders” means, at any time, Revolving Lenders having or holding
more than 66 2/3% of the aggregate Revolving Loan Exposure of all Revolving
Lenders; provided, that (i) the Revolving Loan Exposure of any Defaulting Lender
shall be disregarded in the determination of the Supermajority Lenders, and
(ii) at any time there are two or more Revolving Lenders (who are not Affiliates
of one another), “Supermajority Lenders” must include at least two Revolving
Lenders (who are not Affiliates of one another or Defaulting Lenders).

 

“Swap Obligation” means, with respect to any Loan Party, any obligation to pay
or perform under any agreement, contract or transaction that constitutes a
“swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Swing Lender” means Wells Fargo or any other Lender that, at the request of
Borrowers and with the consent of Agent agrees, in such Lender’s sole
discretion, to become the Swing Lender under Section 2.3(b) of this Agreement.

 

“Swing Loan” has the meaning specified therefor in Section 2.3(b) of this
Agreement.

 

“Swing Loan Exposure” means, as of any date of determination with respect to any
Lender, such Lender’s Pro Rata Share of the Swing Loans on such date.

 

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein, and all
interest, penalties or similar liabilities with respect thereto.

 

“Tax Lender” has the meaning specified therefor in Section 14.2(a) of this
Agreement.

 

“Tier 1 Country” means Australia, Austria, Belgium, Denmark, Finland, France,
Germany, Hong Kong, Israel, Japan, Luxembourg, Netherlands, New Zealand, Norway,
Puerto Rico, Singapore, Sweden, or Switzerland.  Notwithstanding the foregoing,
Agent may at any time (and from time to time), in its Permitted Discretion,
rescind a country’s status as a “Tier 1 Country”, whereupon such country shall
immediately cease to be an “Tier 1 Country” hereunder.

 

“Tier 2 Country” means British Virgin Islands, Cayman Islands, Cyprus, Italy,
Malaysia, Mexico, Poland, Portugal, Spain, or Taiwan.  Notwithstanding the
foregoing, Agent may at any time (and from time to time), in its Permitted
Discretion, rescind a country’s status as a “Tier 2 Country”, whereupon such
country shall immediately cease to be an “Tier 2 Country” hereunder.

 

“UCP” means, with respect to any Letter of Credit, the Uniform Customs and
Practice for Documentary Credits 2007 Revision, International Chamber of
Commerce Publication No. 600 and any version or revision thereof accepted by
Issuing Bank for use.

 

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“United States” means the United States of America.

 

“Unused Line Fee” has the meaning specified therefor in Section 2.10(b) of this
Agreement.

 

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the IRC.

 

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of this
Agreement.

 

“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association.

 

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule.

 

1.2                               Accounting Terms.  All accounting terms not
specifically defined herein shall be construed in accordance with GAAP;
provided, that if Administrative Borrower notifies Agent that Borrowers request
an amendment to any provision hereof to eliminate the effect of any Accounting
Change occurring after the Closing Date or in the application thereof on the
operation of such provision (or if Agent notifies Administrative Borrower that
the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
Accounting Change or in the application thereof, then Agent and Borrowers agree
that they will negotiate in good faith amendments to the provisions of this
Agreement that are directly affected by such Accounting Change with the intent
of having the respective positions of the Lenders and Borrowers after such
Accounting Change conform as nearly as possible to their respective positions
immediately before such Accounting Change took effect and, until any such
amendments have been agreed upon and agreed to by the Required Lenders, the
provisions in this Agreement shall be calculated as if no such Accounting Change
had occurred.  When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Borrowers” is used in
respect of a financial covenant or a related definition, it shall be understood
to mean the Loan Parties and their Subsidiaries on a consolidated basis, unless
the context clearly requires otherwise.  Notwithstanding anything to the
contrary contained herein, (a) all financial statements delivered hereunder
shall be prepared, and all financial covenants contained herein shall be
calculated, without giving effect to any election under the Statement of
Financial Accounting Standards Board’s Accounting Standards Codification Topic
825 (or any similar accounting principle) permitting a Person to value its
financial liabilities or Indebtedness at the fair value thereof, and (b) the
term “unqualified opinion” as used herein to refer to opinions or reports
provided by accountants shall mean an opinion or report that is (i) unqualified,
and (ii) does not include any explanation, supplemental comment, or other
comment concerning the ability of the applicable Person to continue as a going
concern or concerning the scope of the audit, provided, that it shall not be a
violation of this Agreement if the opinion and report accompanying the financial
statements for the fiscal year ending immediately prior to the Latest Maturity
Date is subject to a “going concern” or other qualification solely as a result
of such impending Latest Maturity Date.  For purposes of calculations made
pursuant to the terms of this Agreement, GAAP will be deemed to treat operating
and capital leases in a manner consistent with their current treatment under
GAAP as in effect on the Closing Date, notwithstanding any modifications or
interpretive changes thereto that may occur thereafter.

 

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1.3                               Code.  Any terms used in this Agreement that
are defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein; provided, that to the extent that the Code is
used to define any term herein and such term is defined differently in different
Articles of the Code, the definition of such term contained in Article 9 of the
Code shall govern.

 

1.4                               Construction.  Unless the context of this
Agreement or any other Loan Document clearly requires otherwise, references to
the plural include the singular, references to the singular include the plural,
the terms “includes” and “including” are not limiting, and the term “or” has,
except where otherwise indicated, the inclusive meaning represented by the
phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole and not to
any particular provision of this Agreement or such other Loan Document, as the
case may be.  Section, subsection, clause, schedule, and exhibit references
herein are to this Agreement unless otherwise specified.  Any reference in this
Agreement or in any other Loan Document to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein).  The
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties.  Any reference herein or in any other Loan Document to the
satisfaction, repayment, or payment in full of the Obligations shall mean
(a) the payment or repayment in full in immediately available funds of (i) the
principal amount of, and interest accrued and unpaid with respect to, all
outstanding Loans, together with the payment of any premium applicable to the
repayment of the Loans, (ii) all Lender Group Expenses that have accrued and are
unpaid regardless of whether demand has been made therefor, and (iii) all fees
or charges that have accrued hereunder or under any other Loan Document
(including the Letter of Credit Fee and the Unused Line Fee) and are unpaid,
(b) in the case of contingent reimbursement obligations with respect to Letters
of Credit, providing Letter of Credit Collateralization, (c) in the case of
obligations with respect to Bank Products (other than Hedge Obligations),
providing Bank Product Collateralization, (d) the receipt by Agent of cash
collateral in order to secure any other contingent Obligations for which a claim
or demand for payment has been made on or prior to such time or in respect of
matters or circumstances known to Agent or a Lender at such time that are
reasonably expected to result in any loss, cost, damage, or expense (including
attorneys’ fees and legal expenses), such cash collateral to be in such amount
as Agent reasonably determines is appropriate to secure such contingent
Obligations, (e) the payment or repayment in full in immediately available funds
of all other outstanding Obligations (including the payment of any termination
amount then applicable (or which would or could become applicable as a result of
the repayment of the other Obligations) under Hedge Agreements provided by Hedge
Providers) other than (i) unasserted contingent indemnification Obligations,
(ii) any Bank Product Obligations (other than Hedge Obligations) that, at such
time, are allowed by the applicable Bank Product Provider to remain outstanding
without being required to be repaid or cash collateralized, and (iii) any Hedge
Obligations that, at such time, are allowed by the applicable Hedge Provider to
remain outstanding without being required to be repaid, and (f) the termination
of all of the Commitments of the Lenders.  Any reference herein to any Person
shall be construed to include such Person’s successors and assigns.  Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record.

 

1.5                               Time References.  Unless the context of this
Agreement or any other Loan Document clearly requires otherwise, all references
to time of day refer to Pacific standard time or Pacific daylight saving time,
as in effect in Los Angeles, California on such day.  For purposes of the
computation of a period of time from a specified date to a later specified date,
unless otherwise expressly provided, the word “from” means “from and including”
and the words “to” and “until” each means “to and including”; provided, that
with respect to a computation of fees or interest payable to Agent or any
Lender, such period shall in any event consist of at least one full day.

 

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1.6                               Schedules and Exhibits.  All of the schedules
and exhibits attached to this Agreement shall be deemed incorporated herein by
reference.

 

2.                                      LOANS AND TERMS OF PAYMENT.

 

2.1                               Revolving Loans.

 

(a)                                 Subject to the terms and conditions of this
Agreement, and during the term of this Agreement, each Revolving Lender agrees
(severally, not jointly or jointly and severally) to make revolving loans
(“Revolving Loans”) to Borrowers in an amount at any one time outstanding not to
exceed the lesser of:

 

(i)                                     such Lender’s Revolver Commitment, or

 

(ii)                                  such Lender’s Pro Rata Share of an amount
equal to the lesser of:

 

(A)                               the amount equal to (1) the Maximum Revolver
Amount, less (2) the sum of (y) the Letter of Credit Usage at such time, plus
(z) the principal amount of Swing Loans outstanding at such time, and

 

(B)                               the amount equal to (1) the Borrowing Base as
of such date (based upon the most recent Borrowing Base Certificate delivered by
Borrowers to Agent, as adjusted for Reserves established by Agent in accordance
with Section 2.1(c)), less (2) the sum of (x) the Letter of Credit Usage at such
time, plus (y) the principal amount of Swing Loans outstanding at such time.

 

(b)                                 Amounts borrowed pursuant to this
Section 2.1 may be repaid and, subject to the terms and conditions of this
Agreement, reborrowed at any time during the term of this Agreement.  The
outstanding principal amount of the Revolving Loans, together with interest
accrued and unpaid thereon, shall constitute Obligations and shall be due and
payable on the Maturity Date or, if earlier, on the date on which they otherwise
become due and payable pursuant to the terms of this Agreement.

 

(c)                                  Anything to the contrary in this
Section 2.1 notwithstanding, Agent shall have the right (but not the obligation)
at any time, in the exercise of its Permitted Discretion, to establish and
increase or decrease Reserves against the Borrowing Base or the Maximum Revolver
Amount.  The amount of any Reserve established by Agent, and any changes to the
eligibility criteria set forth in the definitions of Eligible Accounts shall
have a reasonable relationship to the event, condition, other circumstance, or
fact that is the basis for such reserve or change in eligibility and shall not
be duplicative of any other reserve established and currently maintained or
eligibility criteria.  Upon establishment or an increase in reserves, Agent
agrees to make itself available to discuss the reserve or increase, and Borrower
may take such actions as may be required so that the event, condition,
circumstance, or fact that is the basis for such reserve or increase no longer
exists, in a manner and to the extent reasonably satisfactory to Agent in the
exercise of its Permitted Discretion.

 

2.2                               [Intentionally Omitted.]

 

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2.3                               Borrowing Procedures and Settlements.

 

(a)                                 Procedure for Borrowing Revolving Loans. 
Each Borrowing shall be made by a written request by an Authorized Person
delivered to Agent (which may be delivered through Agent’s electronic platform
or portal) and received by Agent no later than 11:00 a.m. (i) on the Business
Day that is the requested Funding Date in the case of a request for a Swing
Loan, (ii) on the Business Day that is one Business Day prior to the requested
Funding Date in the case of a request for a Base Rate Loan, and (iii) on the
Business Day that is three Business Days prior to the requested Funding Date in
the case of all other requests, specifying (A) the amount of such Borrowing, and
(B) the requested Funding Date (which shall be a Business Day); provided, that
Agent may, in its sole discretion, elect to accept as timely requests that are
received later than 11:00 a.m. on the applicable Business Day.  All Borrowing
requests which are not made on-line via Agent’s electronic platform or portal
shall be subject to (and unless Agent elects otherwise in the exercise of its
sole discretion, such Borrowings shall not be made until the completion of)
Agent’s authentication process (with results satisfactory to Agent) prior to the
funding of any such requested Revolving Loan.

 

(b)                                 Making of Swing Loans.  In the case of a
Revolving Loan and so long as any of (i) the aggregate amount of Swing Loans
made since the last Settlement Date, minus all payments or other amounts applied
to Swing Loans since the last Settlement Date, plus the amount of the requested
Swing Loan does not exceed $10,000,000, or (ii) Swing Lender, in its sole
discretion, agrees to make a Swing Loan notwithstanding the foregoing
limitation, Swing Lender shall make a Revolving Loan (any such Revolving Loan
made by Swing Lender pursuant to this Section 2.3(b) being referred to as a
“Swing Loan” and all such Revolving Loans being referred to as “Swing Loans”)
available to Borrowers on the Funding Date applicable thereto by transferring
immediately available funds in the amount of such Borrowing to the Designated
Account. Each Swing Loan shall be deemed to be a Revolving Loan hereunder and
shall be subject to all the terms and conditions (including Section 3)
applicable to other Revolving Loans, except that all payments (including
interest) on any Swing Loan shall be payable to Swing Lender solely for its own
account.  Subject to the provisions of Section 2.3(d)(ii), Swing Lender shall
not make and shall not be obligated to make any Swing Loan if Swing Lender has
actual knowledge that (i) one or more of the applicable conditions precedent set
forth in Section 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date.  Swing Lender shall not otherwise be required
to determine whether the applicable conditions precedent set forth in Section 3
have been satisfied on the Funding Date applicable thereto prior to making any
Swing Loan.  The Swing Loans shall be secured by Agent’s Liens, constitute
Revolving Loans and Obligations, and bear interest at the rate applicable from
time to time to Revolving Loans that are Base Rate Loans.

 

(c)                                  Making of Revolving Loans.

 

(i)                                     In the event that Swing Lender is not
obligated to make a Swing Loan, then after receipt of a request for a Borrowing
pursuant to Section 2.3(a)(i), Agent shall notify the Lenders by telecopy,
telephone, email, or other electronic form of transmission, of the requested
Borrowing; such notification to be sent on the Business Day that is (A) in the
case of a Base Rate Loan, at least one Business Day prior to the requested
Funding Date, or (B) in the case of a LIBOR Rate Loan, prior to 11:00 a.m. at
least three Business Days prior to the requested Funding Date.  If Agent has
notified the Lenders of a requested Borrowing on the Business Day that is one
Business Day prior to the Funding Date, then each Lender shall make the amount
of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent’s Account, not later than 10:00 a.m. on
the Business Day that is the requested Funding Date.  After Agent’s receipt of
the proceeds of such Revolving Loans from the Lenders, Agent shall make the
proceeds thereof available to Borrowers on

 

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the applicable Funding Date by transferring immediately available funds equal to
such proceeds received by Agent to the Designated Account; provided, that
subject to the provisions of Section 2.3(d)(ii), no Lender shall have an
obligation to make any Revolving Loan, if (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such condition has
been waived, or (2) the requested Borrowing would exceed the Availability on
such Funding Date.

 

(ii)                                  Unless Agent receives notice from a Lender
prior to 9:30 a.m. on the Business Day that is the requested Funding Date
relative to a requested Borrowing as to which Agent has notified the Lenders of
a requested Borrowing that such Lender will not make available as and when
required hereunder to Agent for the account of Borrowers the amount of that
Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has
made or will make such amount available to Agent in immediately available funds
on the Funding Date and Agent may (but shall not be so required), in reliance
upon such assumption, make available to Borrowers a corresponding amount.  If,
on the requested Funding Date, any Lender shall not have remitted the full
amount that it is required to make available to Agent in immediately available
funds and if Agent has made available to Borrowers such amount on the requested
Funding Date, then such Lender shall make the amount of such Lender’s Pro Rata
Share of the requested Borrowing available to Agent in immediately available
funds, to Agent’s Account, no later than 10:00 a.m. on the Business Day that is
the first Business Day after the requested Funding Date (in which case, the
interest accrued on such Lender’s portion of such Borrowing for the Funding Date
shall be for Agent’s separate account).  If any Lender shall not remit the full
amount that it is required to make available to Agent in immediately available
funds as and when required hereby and if Agent has made available to Borrowers
such amount, then that Lender shall be obligated to immediately remit such
amount to Agent, together with interest at the Defaulting Lender Rate for each
day until the date on which such amount is so remitted.  A notice submitted by
Agent to any Lender with respect to amounts owing under this
Section 2.3(c)(ii) shall be conclusive, absent manifest error.  If the amount
that a Lender is required to remit is made available to Agent, then such payment
to Agent shall constitute such Lender’s Revolving Loan for all purposes of this
Agreement.  If such amount is not made available to Agent on the Business Day
following the Funding Date, Agent will notify Administrative Borrower of such
failure to fund and, upon demand by Agent, Borrowers shall pay such amount to
Agent for Agent’s account, together with interest thereon for each day elapsed
since the date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Revolving Loans composing such Borrowing.

 

(d)                                 Protective Advances and Optional
Overadvances.

 

(i)                                     Any contrary provision of this Agreement
or any other Loan Document notwithstanding (but subject to Section 2.3(d)(iv)),
at any time (A) after the occurrence and during the continuance of a Default or
an Event of Default, or (B) that any of the other applicable conditions
precedent set forth in Section 3 are not satisfied, Agent hereby is authorized
by Borrowers and the Lenders, from time to time, in Agent’s sole discretion, to
make Revolving Loans to, or for the benefit of, Borrowers, on behalf of the
Revolving Lenders, that Agent, in its Permitted Discretion, deems necessary or
desirable (1) to preserve or protect the Collateral, or any portion thereof, or
(2) to enhance the likelihood of repayment of the Obligations (other than the
Bank Product Obligations) (the Revolving Loans described in this
Section 2.3(d)(i) shall be referred to as “Protective Advances”).

 

(ii)                                  Any contrary provision of this Agreement
or any other Loan Document notwithstanding, the Lenders hereby authorize Agent
or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable,
may, but is not obligated to, knowingly and intentionally, continue to make
Revolving Loans (including Swing Loans) to Borrowers notwithstanding that an
Overadvance exists or

 

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would be created thereby, so long as (A) after giving effect to such Revolving
Loans, the outstanding Revolver Usage does not exceed the Borrowing Base by more
than 10% of the Borrowing Base, and (B) subject to Section 2.3(d)(iv) below,
after giving effect to such Revolving Loans, the outstanding Revolver Usage
(except for and excluding amounts charged to the Loan Account for interest,
fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount.  In
the event Agent obtains actual knowledge that the Revolver Usage exceeds the
amounts permitted by this Section 2.3(d), regardless of the amount of, or reason
for, such excess, Agent shall notify the Lenders as soon as practicable (and
prior to making any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value, in which case Agent may make such
Overadvances and provide notice as promptly as practicable thereafter), and the
Lenders with Revolver Commitments thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented with Borrowers
intended to reduce, within a reasonable time, the outstanding principal amount
of the Revolving Loans to Borrowers to an amount permitted by the preceding
sentence.  In such circumstances, if any Lender with a Revolver Commitment
objects to the proposed terms of reduction or repayment of any Overadvance, the
terms of reduction or repayment thereof shall be implemented according to the
determination of the Required Lenders.

 

(iii)                               Each Protective Advance and each Overadvance
(each, an “Extraordinary Advance”) shall be deemed to be a Revolving Loan
hereunder, except that no Extraordinary Advance shall be eligible to be a LIBOR
Rate Loan.  Prior to Settlement of any Extraordinary Advance, all payments with
respect thereto, including interest thereon, shall be payable to Agent solely
for its own account. Each Revolving Lender shall be obligated to settle with
Agent as provided in Section 2.3(e) (or Section 2.3(g), as applicable) for the
amount of such Lender’s Pro Rata Share of any Extraordinary Advance.  The
Extraordinary Advances shall be repayable on demand, secured by Agent’s Liens,
constitute Obligations hereunder, and bear interest at the rate applicable from
time to time to Revolving Loans that are Base Rate Loans.  The provisions of
this Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and
the Lenders and are not intended to benefit Borrowers (or any other Loan Party)
in any way.

 

(iv)                              Notwithstanding anything contained in this
Agreement or any other Loan Document to the contrary, no Extraordinary Advance
may be made by Agent if such Extraordinary Advance would cause the aggregate
Revolver Usage to exceed the Maximum Revolver Amount or any Lender’s Pro Rata
Share of the Revolver Usage to exceed such Lender’s Revolver Commitments;
provided that Agent may make Extraordinary Advances in excess of the foregoing
limitations so long as such Extraordinary Advances that cause the aggregate
Revolver Usage to exceed the Maximum Revolver Amount or a Lender’s Pro Rata
Share of the Revolver Usage to exceed such Lender’s Revolver Commitments are for
Agent’s sole and separate account and not for the account of any Lender.  No
Lender shall have an obligation to settle with Agent for such Extraordinary
Advances that cause the aggregate Revolver Usage to exceed the Maximum Revolver
Amount or a Lender’s Pro Rata Share of the Revolver Usage to exceed such
Lender’s Revolver Commitments as provided in Section 2.3(e) (or Section 2.3(g),
as applicable).

 

(e)                                  Settlement.  It is agreed that each
Lender’s funded portion of the Revolving Loans is intended by the Lenders to
equal, at all times, such Lender’s Pro Rata Share of the outstanding Revolving
Loans.  Such agreement notwithstanding, Agent, Swing Lender, and the other
Lenders agree (which agreement shall not be for the benefit of Borrowers) that
in order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among the Lenders as to the Revolving Loans (including
Swing Loans and Extraordinary Advances) shall take place on a periodic basis in
accordance with the following provisions:

 

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(i)                                     Agent shall request settlement
(“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis
if so determined by Agent in its sole discretion (1) on behalf of Swing Lender,
with respect to the outstanding Swing Loans, (2) for itself, with respect to the
outstanding Extraordinary Advances, and (3) with respect to any Loan Party’s or
any of their Subsidiaries’ payments or other amounts received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m. on the
Business Day immediately prior to the date of such requested Settlement (the
date of such requested Settlement being the “Settlement Date”).  Such notice of
a Settlement Date shall include a summary statement of the amount of outstanding
Revolving Loans (including Swing Loans and Extraordinary Advances) for the
period since the prior Settlement Date.  Subject to the terms and conditions
contained herein (including Section 2.3(g)):  (y) if the amount of the Revolving
Loans (including Swing Loans and Extraordinary Advances) made by a Lender that
is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of the Revolving
Loans (including Swing Loans and Extraordinary Advances) as of a Settlement
Date, then Agent shall, by no later than 12:00 p.m. on the Settlement Date,
transfer in immediately available funds to a Deposit Account of such Lender (as
such Lender may designate), an amount such that each such Lender shall, upon
receipt of such amount, have as of the Settlement Date, its Pro Rata Share of
the Revolving Loans (including Swing Loans and Extraordinary Advances), and
(z) if the amount of the Revolving Loans (including Swing Loans and
Extraordinary Advances) made by a Lender is less than such Lender’s Pro Rata
Share of the Revolving Loans (including Swing Loans and Extraordinary Advances)
as of a Settlement Date, such Lender shall no later than 12:00 p.m. on the
Settlement Date transfer in immediately available funds to Agent’s Account, an
amount such that each such Lender shall, upon transfer of such amount, have as
of the Settlement Date, its Pro Rata Share of the Revolving Loans (including
Swing Loans and Extraordinary Advances).  Such amounts made available to Agent
under clause (z) of the immediately preceding sentence shall be applied against
the amounts of the applicable Swing Loans or Extraordinary Advances and,
together with the portion of such Swing Loans or Extraordinary Advances
representing Swing Lender’s Pro Rata Share thereof, shall constitute Revolving
Loans of such Lenders.  If any such amount is not made available to Agent by any
Lender on the Settlement Date applicable thereto to the extent required by the
terms hereof, Agent shall be entitled to recover for its account such amount on
demand from such Lender together with interest thereon at the Defaulting Lender
Rate.

 

(ii)                                  In determining whether a Lender’s balance
of the Revolving Loans (including Swing Loans and Extraordinary Advances) is
less than, equal to, or greater than such Lender’s Pro Rata Share of the
Revolving Loans (including Swing Loans and Extraordinary Advances) as of a
Settlement Date, Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by Agent with
respect to principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral.

 

(iii)                               Between Settlement Dates, Agent, to the
extent Extraordinary Advances or Swing Loans are outstanding, may pay over to
Agent or Swing Lender, as applicable, any payments or other amounts received by
Agent, that in accordance with the terms of this Agreement would be applied to
the reduction of the Revolving Loans, for application to the Extraordinary
Advances or Swing Loans.  Between Settlement Dates, Agent, to the extent no
Extraordinary Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments or other amounts received by Agent, that in accordance with
the terms of this Agreement would be applied to the reduction of the Revolving
Loans, for application to Swing Lender’s Pro Rata Share of the Revolving Loans. 
If, as of any Settlement Date, payments or other amounts of the Loan Parties or
their Subsidiaries received since the then immediately preceding Settlement Date
have been applied to Swing Lender’s Pro Rata Share of the Revolving Loans other
than to Swing Loans, as provided for in the previous sentence, Swing Lender
shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the
Lenders (other than a Defaulting Lender if Agent

 

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has implemented the provisions of Section 2.3(g)), to be applied to the
outstanding Revolving Loans of such Lenders, an amount such that each such
Lender shall, upon receipt of such amount, have, as of such Settlement Date, its
Pro Rata Share of the Revolving Loans.  During the period between Settlement
Dates, Swing Lender with respect to Swing Loans, Agent with respect to
Extraordinary Advances, and each Lender with respect to the Revolving Loans
other than Swing Loans and Extraordinary Advances, shall be entitled to interest
at the applicable rate or rates payable under this Agreement on the daily amount
of funds employed by Swing Lender, Agent, or the Lenders, as applicable.

 

(iv)                              Anything in this Section 2.3(e) to the
contrary notwithstanding, in the event that a Lender is a Defaulting Lender,
Agent shall be entitled to refrain from remitting settlement amounts to the
Defaulting Lender and, instead, shall be entitled to elect to implement the
provisions set forth in Section 2.3(g).

 

(f)                                   Notation.  Consistent with
Section 13.1(h), Agent, as a non-fiduciary agent for Borrowers, shall maintain a
register showing the principal amount and stated interest of the Revolving Loans
owing to each Lender, including the Swing Loans owing to Swing Lender, and
Extraordinary Advances owing to Agent, and the interests therein of each Lender,
from time to time and such register shall, absent manifest error, conclusively
be presumed to be correct and accurate.

 

(g)                                  Defaulting Lenders.

 

(i)                                     Notwithstanding the provisions of
Section 2.4(b)(iii), Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the Defaulting Lender’s
benefit or any proceeds of Collateral that would otherwise be remitted hereunder
to the Defaulting Lender, and, in the absence of such transfer to the Defaulting
Lender, Agent shall transfer any such payments (A) first, to Agent to the extent
of any Extraordinary Advances that were made by Agent and that were required to
be, but were not, paid by Defaulting Lender, (B) second, to Swing Lender to the
extent of any Swing Loans that were made by Swing Lender and that were required
to be, but were not, paid by the Defaulting Lender,  (C) third, to Issuing Bank,
to the extent of the portion of a Letter of Credit Disbursement that was
required to be, but was not, paid by the Defaulting Lender, (D) fourth, to each
Non-Defaulting Lender ratably in accordance with their Commitments (but, in each
case, only to the extent that such Defaulting Lender’s portion of a Revolving
Loan (or other funding obligation) was funded by such other Non-Defaulting
Lender), (E) fifth, in Agent’s sole discretion, to a suspense account maintained
by Agent, the proceeds of which shall be retained by Agent and may be made
available to be re-advanced to or for the benefit of Borrowers (upon the request
of Borrowers and subject to the conditions set forth in Section 3.2) as if such
Defaulting Lender had made its portion of Revolving Loans (or other funding
obligations) hereunder, and (F) sixth, from and after the date on which all
other Obligations have been paid in full, to such Defaulting Lender in
accordance with tier (L) of Section 2.4(b)(iii).  Subject to the foregoing,
Agent may hold and, in its discretion, re-lend to Borrowers for the account of
such Defaulting Lender the amount of all such payments received and retained by
Agent for the account of such Defaulting Lender.  Solely for the purposes of
voting or consenting to matters with respect to the Loan Documents (including
the calculation of Pro Rata Share in connection therewith) and for the purpose
of calculating the fee payable under Section 2.10(b), such Defaulting Lender
shall be deemed not to be a “Lender” and such Lender’s Commitment shall be
deemed to be zero; provided, that the foregoing shall not apply to any of the
matters governed by Section 14.1(a)(i) through (iii).  The provisions of this
Section 2.3(g) shall remain effective with respect to such Defaulting Lender
until the earlier of (y) the date on which all of the Non-Defaulting Lenders,
Agent, Issuing Bank, and Borrowers shall have waived, in writing, the
application of this Section 2.3(g) to such Defaulting Lender, or (z) the date on
which such Defaulting Lender makes payment of all amounts that it was obligated
to fund hereunder, pays to Agent all amounts owing by Defaulting Lender in
respect of the amounts that it was

 

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obligated to fund hereunder, and, if requested by Agent, provides adequate
assurance of its ability to perform its future obligations hereunder (on which
earlier date, so long as no Event of Default has occurred and is continuing, any
remaining cash collateral held by Agent pursuant to Section 2.3(g)(ii) shall be
released to Borrowers).  The operation of this Section 2.3(g) shall not be
construed to increase or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any other Lender
of its duties and obligations hereunder, or to relieve or excuse the performance
by any Borrower of its duties and obligations hereunder to Agent, Issuing Bank,
or to the Lenders other than such Defaulting Lender.  Any failure by a
Defaulting Lender to fund amounts that it was obligated to fund hereunder shall
constitute a material breach by such Defaulting Lender of this Agreement and
shall entitle Borrowers, at their option, upon written notice to Agent, to
arrange for a substitute Lender to assume the Commitment of such Defaulting
Lender, such substitute Lender to be reasonably acceptable to Agent.  In
connection with the arrangement of such a substitute Lender, the Defaulting
Lender shall have no right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and Acceptance in favor of
the substitute Lender (and agrees that it shall be deemed to have executed and
delivered such document if it fails to do so) subject only to being paid its
share of the outstanding Obligations (other than Bank Product Obligations, but
including (1) all interest, fees, and other amounts that may be due and payable
in respect thereof, and (2) an assumption of its Pro Rata Share of its
participation in the Letters of Credit); provided, that any such assumption of
the Commitment of such Defaulting Lender shall not be deemed to constitute a
waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any
such Defaulting Lender arising out of or in relation to such failure to fund. 
In the event of a direct conflict between the priority provisions of this
Section 2.3(g) and any other provision contained in this Agreement or any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other.  In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this
Section 2.3(g) shall control and govern.

 

(ii)                                  If any Swing Loan or Letter of Credit is
outstanding at the time that a Lender becomes a Defaulting Lender then:

 

(A)                               such Defaulting Lender’s Swing Loan Exposure
and Letter of Credit Exposure shall be reallocated among the Non-Defaulting
Lenders in accordance with their respective Pro Rata Shares but only to the
extent (x) the sum of all Non-Defaulting Lenders’ Pro Rata Share of Revolver
Usage plus such Defaulting Lender’s Swing Loan Exposure and Letter of Credit
Exposure does not exceed the total of all Non-Defaulting Lenders’ Revolver
Commitments and (y) the conditions set forth in Section 3.2 are satisfied at
such time;

 

(B)                               if the reallocation described in clause
(A) above cannot, or can only partially, be effected, Borrowers shall within one
Business Day following notice by Agent (x) first, prepay such Defaulting
Lender’s Swing Loan Exposure (after giving effect to any partial reallocation
pursuant to clause (A) above), and (y) second, cash collateralize such
Defaulting Lender’s Letter of Credit Exposure (after giving effect to any
partial reallocation pursuant to clause (A) above), pursuant to a cash
collateral agreement to be entered into in form and substance reasonably
satisfactory to Agent, for so long as such Letter of Credit Exposure is
outstanding; provided, that Borrowers shall not be obligated to cash
collateralize any Defaulting Lender’s Letter of Credit Exposure if such
Defaulting Lender is also Issuing Bank;

 

(C)                               if Borrowers cash collateralize any portion of
such Defaulting Lender’s Letter of Credit Exposure pursuant to this
Section 2.3(g)(ii), Borrowers shall not be required to pay any Letter of Credit
Fees to Agent for the account of such Defaulting Lender pursuant to Section
2.6(b) with respect to such cash collateralized portion of such Defaulting
Lender’s Letter of Credit Exposure during the period such Letter of Credit
Exposure is cash collateralized;

 

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(D)                               to the extent the Letter of Credit Exposure of
the Non-Defaulting Lenders is reallocated pursuant to this Section 2.3(g)(ii),
then the Letter of Credit Fees payable to the Non-Defaulting Lenders pursuant to
Section 2.6(b) shall be adjusted in accordance with such Non-Defaulting Lenders’
Letter of Credit Exposure;

 

(E)                                to the extent any Defaulting Lender’s Letter
of Credit Exposure is neither cash collateralized nor reallocated pursuant to
this Section 2.3(g)(ii), then, without prejudice to any rights or remedies of
Issuing Bank or any Lender hereunder, all Letter of Credit Fees that would have
otherwise been payable to such Defaulting Lender under Section 2.6(b) with
respect to such portion of such Letter of Credit Exposure shall instead be
payable to Issuing Bank until such portion of such Defaulting Lender’s Letter of
Credit Exposure is cash collateralized or reallocated;

 

(F)                                 so long as any Lender is a Defaulting
Lender, the Swing Lender shall not be required to make any Swing Loan and
Issuing Bank shall not be required to issue, amend, or increase any Letter of
Credit, in each case, to the extent (x) the Defaulting Lender’s Pro Rata Share
of such Swing Loans or Letter of Credit cannot be reallocated pursuant to this
Section 2.3(g)(ii), or (y) the Swing Lender or Issuing Bank, as applicable, has
not otherwise entered into arrangements reasonably satisfactory to the Swing
Lender or Issuing Bank, as applicable, and Borrowers to eliminate the Swing
Lender’s or Issuing Bank’s risk with respect to the Defaulting Lender’s
participation in Swing Loans or Letters of Credit; and

 

(G)                               Agent may release any cash collateral provided
by Borrowers pursuant to this Section 2.3(g)(ii) to Issuing Bank and Issuing
Bank may apply any such cash collateral to the payment of such Defaulting
Lender’s Pro Rata Share of any Letter of Credit Disbursement that is not
reimbursed by Borrowers pursuant to Section 2.11(d).  Subject to Section 17.14,
no reallocation hereunder shall constitute a waiver or release of any claim of
any party hereunder against a Defaulting Lender arising from that Lender having
become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a
result of such Non-Defaulting Lender’s increased exposure following such
reallocation.

 

(h)                                 Independent Obligations.  All Revolving
Loans (other than Swing Loans and Extraordinary Advances) shall be made by the
Lenders contemporaneously and in accordance with their Pro Rata Shares.  It is
understood that (i) no Lender shall be responsible for any failure by any other
Lender to perform its obligation to make any Revolving Loan (or other extension
of credit) hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.

 

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2.4                               Payments; Reductions of Commitments;
Prepayments.

 

(a)                                 Payments by Borrowers.

 

(i)                                     Except as otherwise expressly provided
herein, all payments by Borrowers shall be made to Agent’s Account for the
account of the Lender Group and shall be made in immediately available funds, no
later than 1:30 p.m. on the date specified herein.  Any payment received by
Agent later than 1:30 p.m. shall be deemed to have been received (unless Agent,
in its sole discretion, elects to credit it on the date received) on the
following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.

 

(ii)                                  Unless Agent receives notice from
Borrowers prior to the date on which any payment is due to the Lenders that
Borrowers will not make such payment in full as and when required, Agent may
assume that Borrowers have made (or will make) such payment in full to Agent on
such date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender.  If and to the
extent Borrowers do not make such payment in full to Agent on the date when due,
each Lender severally shall repay to Agent on demand such amount distributed to
such Lender, together with interest thereon at the Defaulting Lender Rate for
each day from the date such amount is distributed to such Lender until the date
repaid.

 

(b)                                 Apportionment and Application.

 

(i)                                     So long as no Application Event has
occurred and is continuing and except as otherwise provided herein with respect
to Defaulting Lenders, all principal and interest payments received by Agent
shall be apportioned ratably among the Lenders (according to the unpaid
principal balance of the Obligations to which such payments relate held by each
Lender) and all payments of fees and expenses received by Agent (other than fees
or expenses that are for Agent’s separate account or for the separate account of
Issuing Bank) shall be apportioned ratably among the Lenders having a Pro Rata
Share of the type of Commitment or Obligation to which a particular fee or
expense relates.

 

(ii)                                  Subject to Section 2.4(b)(v),
Section 2.4(d), and Section 2.4(e), all payments to be made hereunder by
Borrowers shall be remitted to Agent and all such payments, and all proceeds of
Collateral received by Agent, shall be applied, so long as no Application Event
has occurred and is continuing and except as otherwise provided herein with
respect to Defaulting Lenders, to reduce the balance of the Revolving Loans
outstanding and, thereafter, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.

 

(iii)                               At any time that an Application Event has
occurred and is continuing and except as otherwise provided herein with respect
to Defaulting Lenders, all payments remitted to Agent and all proceeds of
Collateral received by Agent shall be applied as follows:

 

(A)                               first, to pay any Lender Group Expenses
(including cost or expense reimbursements) or indemnities then due to Agent
under the Loan Documents and to pay interest and principal on Extraordinary
Advances that are held solely by Agent pursuant to the terms of
Section 2.3(d)(iv), until paid in full,

 

(B)                               second, to pay any fees or premiums then due
to Agent under the Loan Documents, until paid in full,

 

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(C)                               third, to pay interest due in respect of all
Protective Advances, until paid in full,

 

(D)                               fourth, to pay the principal of all Protective
Advances, until paid in full,

 

(E)                                fifth, ratably, to pay any Lender Group
Expenses (including cost or expense reimbursements) or indemnities then due to
any of the Lenders under the Loan Documents, until paid in full,

 

(F)                                 sixth, ratably, to pay any fees or premiums
then due to any of the Lenders under the Loan Documents, until paid in full,

 

(G)                               seventh, to pay interest accrued in respect of
the Swing Loans, until paid in full,

 

(H)                              eighth, to pay the principal of all Swing
Loans, until paid in full,

 

(I)                                   ninth, ratably, to pay interest accrued in
respect of the Revolving Loans (other than Protective Advances), until paid in
full,

 

(J)                                   tenth, ratably

 

i.                                ratably, to pay the principal of all Revolving
Loans, until paid in full,

 

ii.                             to Agent, to be held by Agent, for the benefit
of Issuing Bank (and for the ratable benefit of each of the Lenders that have an
obligation to pay to Agent, for the account of Issuing Bank, a share of each
Letter of Credit Disbursement), as cash collateral in an amount up to 105% of
the Letter of Credit Usage (to the extent permitted by applicable law, such cash
collateral shall be applied to the reimbursement of any Letter of Credit
Disbursement as and when such disbursement occurs and, if a Letter of Credit
expires undrawn, the cash collateral held by Agent in respect of such Letter of
Credit shall, to the extent permitted by applicable law, be reapplied pursuant
to this Section 2.4(b)(iii), beginning with tier (A) hereof),

 

iii.                          ratably, to (y) the Bank Product Providers based
upon amounts then certified by each applicable Bank Product Provider to Agent
(in form and substance satisfactory to Agent) to be due and payable to such Bank
Product Provider on account of Bank Product Obligations, and (z) with any
balance to be paid to Agent, to be held by Agent, for the ratable benefit of the
Bank Product Providers, as cash collateral (which cash collateral may be
released by Agent to the applicable Bank Product Provider and applied by such
Bank Product Provider to the payment or reimbursement of any amounts due and
payable with respect to Bank Product Obligations owed to the applicable Bank
Product Provider as and when such amounts first become due and payable and, if
and at such time as all such Bank Product Obligations are paid or otherwise
satisfied in full, the cash collateral held by Agent in respect of such Bank
Product Obligations shall be reapplied pursuant to this Section 2.4(b)(iii),
beginning with tier (A) hereof,

 

(K)                               eleventh, to pay any other Obligations other
than Obligations owed to Defaulting Lenders (including being paid, ratably, to
the Bank Product Providers on account of all amounts then due and payable in
respect of Bank Product Obligations, with any balance to be paid to Agent, to be
held by Agent, for the ratable benefit of the Bank Product Providers, as cash
collateral

 

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(which cash collateral may be released by Agent to the applicable Bank Product
Provider and applied by such Bank Product Provider to the payment or
reimbursement of any amounts due and payable with respect to Bank Product
Obligations owed to the applicable Bank Product Provider as and when such
amounts first become due and payable and, if and at such time as all such Bank
Product Obligations are paid or otherwise satisfied in full, the cash collateral
held by Agent in respect of such Bank Product Obligations shall be reapplied
pursuant to this Section 2.4(b)(iii), beginning with tier (A) hereof),

 

(L)                                twelfth, ratably to pay any Obligations owed
to Defaulting Lenders; and

 

(M)                            thirteenth, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.

 

(iv)                              Agent promptly shall distribute to each
Lender, pursuant to the applicable wire instructions received from each Lender
in writing, such funds as it may be entitled to receive, subject to a Settlement
delay as provided in Section 2.3(e).

 

(v)                                 In each instance, so long as no Application
Event has occurred and is continuing, Section 2.4(b)(ii) shall not apply to any
payment made by Borrowers to Agent and specified by Borrowers to be for the
payment of specific Obligations then due and payable (or prepayable) under any
provision of this Agreement or any other Loan Document.

 

(vi)                              For purposes of Section 2.4(b)(iii), “paid in
full” of a type of Obligation means payment in cash or immediately available
funds of all amounts owing on account of such type of Obligation, including
interest accrued after the commencement of any Insolvency Proceeding, default
interest, interest on interest, and expense reimbursements, irrespective of
whether any of the foregoing would be or is allowed or disallowed in whole or in
part in any Insolvency Proceeding.

 

(vii)                           In the event of a direct conflict between the
priority provisions of this Section 2.4 and any other provision contained in
this Agreement or any other Loan Document, it is the intention of the parties
hereto that such provisions be read together and construed, to the fullest
extent possible, to be in concert with each other.  In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, if the conflict
relates to the provisions of Section 2.3(g) and this Section 2.4, then the
provisions of Section 2.3(g) shall control and govern, and if otherwise, then
the terms and provisions of this Section 2.4 shall control and govern.

 

(c)                                  Reduction of Commitments.  The Revolver
Commitments shall terminate on the Maturity Date or earlier termination thereof
pursuant to the terms of this Agreement.  Borrowers may reduce the Revolver
Commitments, without premium or penalty, to an amount (which may be zero) not
less than the sum of (A) the Revolver Usage as of such date, plus (B) the
principal amount of all Revolving Loans not yet made as to which a request has
been given by Borrowers under Section 2.3(a), plus (C) the amount of all Letters
of Credit not yet issued as to which a request has been given by Borrowers
pursuant to Section 2.11(a).  Each such reduction shall be in an amount which is
not less than $5,000,000 (unless the Revolver Commitments are being reduced to
zero), shall be made by providing not less than ten Business Days prior written
notice to Agent, and shall be irrevocable.  The Revolver Commitments, once
reduced, may not be increased.  Each such reduction of the Revolver Commitments
shall reduce the Revolver Commitments of each Lender proportionately in
accordance with its ratable share thereof.  In connection with any reduction in
the Revolver Commitments prior to the Maturity Date, if any Loan Party or any of
its Subsidiaries owns any Margin Stock, Borrowers shall deliver to Agent an
updated Form U-1 (with sufficient additional originals thereof for each Lender),
duly executed and delivered by the Borrowers, together with such other
documentation as Agent shall reasonably request, in order to enable Agent and
the Lenders to comply with any of the requirements under Regulations T, U or X
of the Federal Reserve Board.

 

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(d)                                 Optional Prepayments. Borrowers may prepay
the principal of any Revolving Loan at any time in whole or in part, without
premium or penalty.

 

(e)                                  Mandatory Prepayments.  If, at any time,
(A) the Revolver Usage on such date exceeds (B) the lesser of (x) the Borrowing
Base reflected in the Borrowing Base Certificate most recently delivered by
Borrowers to Agent, or (y) the Maximum Revolver Amount, in all cases as adjusted
for Reserves established by Agent in accordance with Section 2.1(c), then
Borrowers shall immediately prepay the Obligations in accordance with
Section 2.4(f) in an aggregate amount equal to the amount of such excess.

 

(f)                                   Application of Payments.  Each prepayment
pursuant to Section 2.4(e) shall, (1) so long as no Application Event shall have
occurred and be continuing, be applied, first, to the outstanding principal
amount of the Revolving Loans until paid in full, and second, to cash
collateralize the Letters of Credit in an amount equal to 103% of the then
outstanding Letter of Credit Usage, and (2) if an Application Event shall have
occurred and be continuing, be applied in the manner set forth in
Section 2.4(b)(iii).

 

2.5                               Promise to Pay; Promissory Notes.

 

(a)                                 Borrowers agree to pay the Lender Group
Expenses on the earlier of (i) the first day of the month following the date on
which the applicable Lender Group Expenses were first incurred, or (ii) the date
on which demand therefor is made by Agent (it being acknowledged and agreed that
any charging of such costs, expenses or Lender Group Expenses to the Loan
Account pursuant to the provisions of Section 2.6(d) shall be deemed to
constitute a demand for payment thereof for the purposes of this subclause
(ii)).  Borrowers promise to pay all of the Obligations (including principal,
interest, premiums, if any, fees, costs, and expenses (including Lender Group
Expenses)) in full on the Maturity Date or, if earlier, on the date on which the
Obligations (other than the Bank Product Obligations) become due and payable
pursuant to the terms of this Agreement. Borrowers agree that their obligations
contained in the first sentence of this Section 2.5(a) shall survive payment or
satisfaction in full of all other Obligations.

 

(b)                                 Any Lender may request that any portion of
its Commitments or the Loans made by it be evidenced by one or more promissory
notes.  In such event, Borrowers shall execute and deliver to such Lender the
requested promissory notes payable to the order of such Lender in a form
furnished by Agent and reasonably satisfactory to Borrowers.  Thereafter, the
portion of the Commitments and Loans evidenced by such promissory notes and
interest thereon shall at all times be represented by one or more promissory
notes in such form payable to the order of the payee named therein.

 

2.6                               Interest Rates and Letter of Credit Fee: 
Rates, Payments, and Calculations.

 

(a)                                 Interest Rates.  Except as provided in
Section 2.6(c), all Obligations (except for undrawn Letters of Credit) that have
been charged to the Loan Account pursuant to the terms hereof shall bear
interest as follows:

 

(i)                                     if the relevant Obligation is a LIBOR
Rate Loan, at a per annum rate equal to the LIBOR Rate plus the Revolving Loan
LIBOR Rate Margin, and

 

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(ii)                                  otherwise, at a per annum rate equal to
the Base Rate plus the Revolving Loan Base Rate Margin.

 

(b)                                 Letter of Credit Fee.  Borrowers shall pay
Agent (for the ratable benefit of the Revolving Lenders), a Letter of Credit fee
(the “Letter of Credit Fee”) (which fee shall be in addition to the fronting
fees and commissions, other fees, charges and expenses set forth in
Section 2.11(k)) that shall accrue at a per annum rate equal to the Revolving
Loan LIBOR Rate Margin times the average amount of the Letter of Credit Usage
during the immediately preceding month.

 

(c)                                  Default Rate.  (i) Automatically upon the
occurrence and during the continuation of an Event of Default under Section 8.4
or 8.5 and (ii) upon the occurrence and during the continuation of any other
Event of Default (other than an Event of Default under Section 8.4 or 8.5), at
the direction of Agent or the Required Lenders, and upon written notice by Agent
to Borrowers of such direction (provided, that such notice shall not be required
for any Event of Default under Section 8.1), (A) all Loans and all Obligations
(except for undrawn Letters of Credit) that have been charged to the Loan
Account pursuant to the terms hereof shall bear interest at a per annum rate
equal to two percentage points above the per annum rate otherwise applicable
thereunder, and (B) the Letter of Credit Fee shall be increased to two
percentage points above the per annum rate otherwise applicable hereunder.

 

(d)                                 Payment.  Except to the extent provided to
the contrary in Section 2.10, Section 2.11(k) or Section 2.12(a), (i) all
interest and all other fees payable hereunder or under any of the other Loan
Documents (other than Letter of Credit Fees) shall be due and payable, in
arrears, on the first day of each month, (ii) all Letter of Credit Fees payable
hereunder, and all fronting fees and all commissions, other fees, charges and
expenses provided for in Section 2.11(k)  shall be due and payable, in arrears,
on the first Business Day of each month, and (iii) all costs and expenses
payable hereunder or under any of the other Loan Documents, and all other Lender
Group Expenses shall be due and payable on the earlier of (x) the first day of
the month following the date on which the applicable costs, expenses, or Lender
Group Expenses were first incurred, or (y) the date on which demand therefor is
made by Agent (it being acknowledged and agreed that any charging of such costs,
expenses or Lender Group Expenses to the Loan Account pursuant to the provisions
of the following sentence shall be deemed to constitute a demand for payment
thereof for the purposes of this subclause (y)).  Borrowers hereby authorize
Agent, from time to time without prior notice to Borrowers, to charge to the
Loan Account (A) on the first day of each month, all interest accrued during the
prior month on the Revolving Loans hereunder, (B) on the first Business Day of
each month, all Letter of Credit Fees accrued or chargeable hereunder during the
prior month, (C) as and when incurred or accrued, all fees and costs provided
for in Section 2.10(a) or (c), (D) on the first day of each month, the Unused
Line Fee accrued during the prior month pursuant to Section 2.10(b), (E) as and
when due and payable, all other fees payable hereunder or under any of the other
Loan Documents, (F) as and when incurred or accrued, all other Lender Group
Expenses, and (G) as and when due and payable all other payment obligations
payable under any Loan Document or any Bank Product Agreement (including any
amounts due and payable to the Bank Product Providers in respect of Bank
Products).  All amounts (including interest, fees, costs, expenses, Lender Group
Expenses, or other amounts payable hereunder or under any other Loan Document or
under any Bank Product Agreement) charged to the Loan Account shall thereupon
constitute Revolving Loans hereunder, shall constitute Obligations hereunder,
and shall initially accrue interest at the rate then applicable to Revolving
Loans that are Base Rate Loans (unless and until converted into LIBOR Rate Loans
in accordance with the terms of this Agreement).

 

(e)                                  Computation.  All interest and fees
chargeable under the Loan Documents shall be computed on the basis of a 360 day
year, in each case, for the actual number of days elapsed in the period during
which the interest or fees accrue. In the event the Base Rate is changed from
time to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.

 

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(f)                                   Intent to Limit Charges to Maximum Lawful
Rate.  In no event shall the interest rate or rates payable under this
Agreement, plus any other amounts paid in connection herewith, exceed the
highest rate permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable.  Borrowers and the Lender
Group, in executing and delivering this Agreement, intend legally to agree upon
the rate or rates of interest and manner of payment stated within it; provided,
that anything contained herein to the contrary notwithstanding, if such rate or
rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto, as of the date of this Agreement, Borrowers
are and shall be liable only for the payment of such maximum amount as is
allowed by law, and payment received from Borrowers in excess of such legal
maximum, whenever received, shall be applied to reduce the principal balance of
the Obligations to the extent of such excess.

 

2.7                               Crediting Payments.  The receipt of any
payment item by Agent shall not be required to be considered a payment on
account unless such payment item is a wire transfer of immediately available
funds made to Agent’s Account or unless and until such payment item is honored
when presented for payment.  Should any payment item not be honored when
presented for payment, then Borrowers shall be deemed not to have made such
payment.  Anything to the contrary contained herein notwithstanding, any payment
item shall be deemed received by Agent only if it is received into Agent’s
Account on a Business Day on or before 1:30 p.m.  If any payment item is
received into Agent’s Account on a non-Business Day or after 1:30 p.m. on a
Business Day (unless Agent, in its sole discretion, elects to credit it on the
date received), it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.

 

2.8                               Designated Account.  Agent is authorized to
make the Revolving Loans, and Issuing Bank is authorized to issue the Letters of
Credit, under this Agreement based upon telephonic or other instructions
received from anyone purporting to be an Authorized Person or, without
instructions, if pursuant to Section 2.6(d).  Borrowers agree to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Revolving Loans requested by Borrowers and made
by Agent or the Lenders hereunder.  Unless otherwise agreed by Agent and
Borrowers, any Revolving Loan or Swing Loan requested by Borrowers and made by
Agent or the Lenders hereunder shall be made to the Designated Account.

 

2.9                               Maintenance of Loan Account; Statements of
Obligations.  Agent shall maintain an account on its books in the name of
Borrowers (the “Loan Account”) on which Borrowers will be charged with all
Revolving Loans (including Extraordinary Advances and Swing Loans) made by
Agent, Swing Lender, or the Lenders to Borrowers or for Borrowers’ account, the
Letters of Credit issued or arranged by Issuing Bank for Borrowers’ account, and
with all other payment Obligations hereunder or under the other Loan Documents,
including, accrued interest, fees and expenses, and Lender Group Expenses.  In
accordance with Section 2.7, the Loan Account will be credited with all payments
received by Agent from Borrowers or for Borrowers’ account.  Agent shall make
available to Borrowers monthly statements regarding the Loan Account, including
the principal amount of the Revolving Loans, interest accrued hereunder, fees
accrued or charged hereunder or under the other Loan Documents, and a summary
itemization of all charges and expenses constituting Lender Group Expenses
accrued hereunder or under the other Loan Documents, and each such statement,
absent manifest error, shall be conclusively presumed to be correct and accurate
and constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after Agent first makes such a statement available to Borrowers,
Borrowers shall deliver to Agent written objection thereto describing the error
or errors contained in such statement.

 

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2.10                        Fees.

 

(a)                                 Agent Fees.  Borrowers shall pay to Agent,
for the account of Agent, as and when due and payable under the terms of the Fee
Letter, the fees set forth in the Fee Letter.

 

(b)                                 Unused Line Fee.  Borrowers shall pay to
Agent, for the ratable account of the Revolving Lenders, an unused line fee (the
“Unused Line Fee”) in an amount equal to 0.25% per annum times the result of
(i) the aggregate amount of the Revolver Commitments, less (ii) the Average
Revolver Usage during the immediately preceding month (or portion thereof),
which Unused Line Fee shall be due and payable, in arrears, on the first day of
each month from and after the Closing Date up to the first day of the month
prior to the date on which the Obligations are paid in full and on the date on
which the Obligations are paid in full.

 

(c)                                  Field Examination and Other Fees.  Subject
to any applicable limitations contained in Section 5.7(c), Borrowers shall pay
to Agent, field examination, appraisal, and valuation fees and charges, as and
when incurred or chargeable, as follows (i) a fee of $1,000 per day, per
examiner, plus out-of-pocket expenses (including travel, meals, and lodging) for
each field examination of any Loan Party or its Subsidiaries performed by or on
behalf of Agent, and (ii) the fees, charges or expenses paid or incurred by
Agent if it elects to employ the services of one or more third Persons to
perform field exams, to appraise the Collateral, or any portion thereof, or to
assess any Loan Party’s or its Subsidiaries’ business valuation; provided that
so long as no Event of Default shall have and be continuing, Borrowers shall not
be obligated to reimburse Agent for more than two (2) field exams during any
calendar year.

 

2.11                        Letters of Credit.

 

(a)                                 Subject to the terms and conditions of this
Agreement, upon the request of Borrowers made in accordance herewith, and prior
to the Maturity Date, Issuing Bank agrees to issue a requested standby Letter of
Credit or a sight commercial Letter of Credit for the account of Borrowers.  By
submitting a request to Issuing Bank for the issuance of a Letter of Credit,
Borrowers shall be deemed to have requested that Issuing Bank issue the
requested Letter of Credit.  Each request for the issuance of a Letter of
Credit, or the amendment, renewal, or extension of any outstanding Letter of
Credit, shall be (i) irrevocable and made in writing by an Authorized Person,
(ii) delivered to Agent and Issuing Bank via telefacsimile or other electronic
method of transmission reasonably acceptable to Agent and Issuing Bank and
reasonably in advance of the requested date of issuance, amendment, renewal, or
extension, and (iii) subject to Issuing Bank’s authentication procedures with
results satisfactory to Issuing Bank.  Each such request shall be in form and
substance reasonably satisfactory to Agent and Issuing Bank and (i) shall
specify (A) the amount of such Letter of Credit, (B) the date of issuance,
amendment, renewal, or extension of such Letter of Credit, (C) the proposed
expiration date of such Letter of Credit, (D) the name and address of the
beneficiary of the Letter of Credit, and (E) such other information (including,
the conditions to drawing, and, in the case of an amendment, renewal, or
extension, identification of the Letter of Credit to be so amended, renewed, or
extended) as shall be necessary to prepare, amend, renew, or extend such Letter
of Credit, and (ii) shall be accompanied by such Issuer Documents as Agent or
Issuing Bank may request or require, to the extent that such requests or
requirements are consistent with the Issuer Documents that Issuing Bank
generally requests for Letters of Credit in similar circumstances.  Issuing
Bank’s records of the content of any such request will be conclusive.  Anything
contained herein to the contrary notwithstanding, Issuing Bank may, but shall
not be obligated to, issue a Letter of Credit that supports the obligations of a
Loan Party or one of its Subsidiaries in respect of (x) a lease of real
property, or (y) an employment contract.

 

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(b)                                 Issuing Bank shall have no obligation to
issue a Letter of Credit if any of the following would result after giving
effect to the requested issuance:

 

(i)                                     the Letter of Credit Usage would exceed
the Letter of Credit Sublimit, or

 

(ii)                                  the Letter of Credit Usage would exceed
the Maximum Revolver Amount less the outstanding amount of Revolving Loans
(including Swing Loans), or

 

(iii)                               the Letter of Credit Usage would exceed the
Borrowing Base at such time less the outstanding principal balance of the
Revolving Loans (inclusive of Swing Loans) at such time.

 

(c)                                  In the event there is a Defaulting Lender
as of the date of any request for the issuance of a Letter of Credit, Issuing
Bank shall not be required to issue or arrange for such Letter of Credit to the
extent (i) the Defaulting Lender’s Letter of Credit Exposure with respect to
such Letter of Credit may not be reallocated pursuant to Section 2.3(g)(ii), or
(ii) Issuing Bank has not otherwise entered into arrangements reasonably
satisfactory to it and Borrowers to eliminate Issuing Bank’s risk with respect
to the participation in such Letter of Credit of the Defaulting Lender, which
arrangements may include Borrowers cash collateralizing such Defaulting Lender’s
Letter of Credit Exposure in accordance with Section 2.3(g)(ii). 
Additionally, Issuing Bank shall have no obligation to issue or extend a Letter
of Credit if (A) any order, judgment, or decree of any Governmental Authority or
arbitrator shall, by its terms, purport to enjoin or restrain Issuing Bank from
issuing such Letter of Credit, or any law applicable to Issuing Bank or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over Issuing Bank shall prohibit or
request that Issuing Bank refrain from the issuance of letters of credit
generally or such Letter of Credit in particular, (B) the issuance of such
Letter of Credit would violate one or more policies of Issuing Bank applicable
to letters of credit generally, or (C) if amounts demanded to be paid under any
Letter of Credit will not or may not be in United States Dollars.

 

(d)                                 Any Issuing Bank (other than Wells Fargo or
any of its Affiliates) shall notify Agent in writing no later than the Business
Day prior to the Business Day on which such Issuing Bank issues any Letter of
Credit.  In addition, each Issuing Bank (other than Wells Fargo or any of its
Affiliates) shall, on the first Business Day of each week, submit to Agent a
report detailing the daily undrawn amount of each Letter of Credit issued by
such Issuing Bank during the prior calendar week.  Each Letter of Credit shall
be in form and substance reasonably acceptable to Issuing Bank, including the
requirement that the amounts payable thereunder must be payable in Dollars.  If
Issuing Bank makes a payment under a Letter of Credit, Borrowers shall pay to
Agent an amount equal to the applicable Letter of Credit Disbursement on the
Business Day such Letter of Credit Disbursement is made and, in the absence of
such payment, the amount of the Letter of Credit Disbursement immediately and
automatically shall be deemed to be a Revolving Loan hereunder (notwithstanding
any failure to satisfy any condition precedent set forth in Section 3) and,
initially, shall bear interest at the rate then applicable to Revolving Loans
that are Base Rate Loans. If a Letter of Credit Disbursement is deemed to be a
Revolving Loan hereunder, Borrowers’ obligation to pay the amount of such Letter
of Credit Disbursement to Issuing Bank shall be automatically converted into an
obligation to pay the resulting Revolving Loan.  Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to Issuing Bank or, to the extent that Revolving Lenders
have made payments pursuant to Section 2.11(e) to reimburse Issuing Bank, then
to such Revolving Lenders and Issuing Bank as their interests may appear.

 

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(e)                                  Promptly following receipt of a notice of a
Letter of Credit Disbursement pursuant to Section 2.11(d), each Revolving Lender
agrees to fund its Pro Rata Share of any Revolving Loan deemed made pursuant to
Section 2.11(d) on the same terms and conditions as if Borrowers had requested
the amount thereof as a Revolving Loan and Agent shall promptly pay to Issuing
Bank the amounts so received by it from the Revolving Lenders.  By the issuance
of a Letter of Credit (or an amendment, renewal, or extension of a Letter of
Credit) and without any further action on the part of Issuing Bank or the
Revolving Lenders, Issuing Bank shall be deemed to have granted to each
Revolving Lender, and each Revolving Lender shall be deemed to have purchased, a
participation in each Letter of Credit issued by Issuing Bank, in an amount
equal to its Pro Rata Share of such Letter of Credit, and each such Revolving
Lender agrees to pay to Agent, for the account of Issuing Bank, such Revolving
Lender’s Pro Rata Share of any Letter of Credit Disbursement made by Issuing
Bank under the applicable Letter of Credit.  In consideration and in furtherance
of the foregoing, each Revolving Lender hereby absolutely and unconditionally
agrees to pay to Agent, for the account of Issuing Bank, such Revolving Lender’s
Pro Rata Share of each Letter of Credit Disbursement made by Issuing Bank and
not reimbursed by Borrowers on the date due as provided in Section 2.11(d), or
of any reimbursement payment that is required to be refunded (or that Agent or
Issuing Bank elects, based upon the advice of counsel, to refund) to Borrowers
for any reason.  Each Revolving Lender acknowledges and agrees that its
obligation to deliver to Agent, for the account of Issuing Bank, an amount equal
to its respective Pro Rata Share of each Letter of Credit Disbursement pursuant
to this Section 2.11(e) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in
Section 3.  If any such Revolving Lender fails to make available to Agent the
amount of such Revolving Lender’s Pro Rata Share of a Letter of Credit
Disbursement as provided in this Section, such Revolving Lender shall be deemed
to be a Defaulting Lender and Agent (for the account of Issuing Bank) shall be
entitled to recover such amount on demand from such Revolving Lender together
with interest thereon at the Defaulting Lender Rate until paid in full.

 

(f)                                   Each Borrower agrees to indemnify, defend
and hold harmless each member of the Lender Group (including Issuing Bank and
its branches, Affiliates, and correspondents) and each such Person’s respective
directors, officers, employees, attorneys and agents (each, including Issuing
Bank, a “Letter of Credit Related Person”) (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages,
and all reasonable fees and disbursements of attorneys, experts, or consultants
and all other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), which may be incurred by
or awarded against any such Letter of Credit Related Person (other than Taxes,
which shall be governed by Section 16) (the “Letter of Credit Indemnified
Costs”), and which arise out of or in connection with, or as a result of:

 

(i)                                     any Letter of Credit or any pre-advice
of its issuance;

 

(ii)                                  any transfer, sale, delivery, surrender or
endorsement (or lack thereof) of any Drawing Document at any time(s) held by any
such Letter of Credit Related Person in connection with any Letter of Credit;

 

(iii)                               any action or proceeding arising out of, or
in connection with, any Letter of Credit (whether administrative, judicial or in
connection with arbitration), including any action or proceeding to compel or
restrain any presentation or payment under any Letter of Credit, or for the
wrongful dishonor of, or honoring a presentation under, any Letter of Credit;

 

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(iv)                              any independent undertakings issued by the
beneficiary of any Letter of Credit;

 

(v)                                 any unauthorized instruction or request made
to Issuing Bank in connection with any Letter of Credit or requested Letter of
Credit, or any error, omission, interruption or delay in such instruction or
request, whether transmitted by mail, courier, electronic transmission, SWIFT,
or any other telecommunication including communications through a correspondent;

 

(vi)                              an adviser, confirmer or other nominated
person seeking to be reimbursed, indemnified or compensated;

 

(vii)                           any third party seeking to enforce the rights of
an applicant, beneficiary, nominated person, transferee, assignee of Letter of
Credit proceeds or holder of an instrument or document;

 

(viii)                        the fraud, forgery or illegal action of parties
other than the Letter of Credit Related Person;

 

(ix)                              any prohibition on payment or delay in payment
of any amount payable by Issuing Bank to a beneficiary or transferee beneficiary
of a Letter of Credit arising out of Anti-Corruption Laws, Anti-Money Laundering
Laws, or Sanctions;

 

(x)                                 Issuing Bank’s performance of the
obligations of a confirming institution or entity that wrongfully dishonors a
confirmation;

 

(xi)                              any foreign language translation provided to
Issuing Bank in connection with any Letter of Credit;

 

(xii)                           any foreign law or usage as it relates to
Issuing Bank’s issuance of a Letter of Credit in support of a foreign guaranty
including without limitation the expiration of such guaranty after the related
Letter of Credit expiration date and any resulting drawing paid by Issuing Bank
in connection therewith; or

 

(xiii)                        the acts or omissions, whether rightful or
wrongful, of any present or future de jure or de facto governmental or
regulatory authority or cause or event beyond the control of the Letter of
Credit Related Person;

 

provided, that such indemnity shall not be available to any Letter of Credit
Related Person claiming indemnification under clauses (i) through (x) above to
the extent that such Letter of Credit Indemnified Costs may be finally
determined in a final, non-appealable judgment of a court of competent
jurisdiction to have resulted directly from the gross negligence or willful
misconduct of the Letter of Credit Related Person claiming indemnity.  Borrowers
hereby agree to pay the Letter of Credit Related Person claiming indemnity on
demand from time to time all amounts owing under this Section 2.11(f).  If and
to the extent that the obligations of Borrowers under this Section 2.11(f) are
unenforceable for any reason, Borrowers agree to make the maximum contribution
to the Letter of Credit Indemnified Costs permissible under applicable law. 
This indemnification provision shall survive termination of this Agreement and
all Letters of Credit.

 

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(g)                                  The liability of Issuing Bank (or any other
Letter of Credit Related Person) under, in connection with or arising out of any
Letter of Credit (or pre-advice), regardless of the form or legal grounds of the
action or proceeding, shall be limited to direct damages suffered by Borrowers
that are caused directly by Issuing Bank’s gross negligence or willful
misconduct in (i) honoring a presentation under a Letter of Credit that on its
face does not at least substantially comply with the terms and conditions of
such Letter of Credit, (ii) failing to honor a presentation under a Letter of
Credit that strictly complies with the terms and conditions of such Letter of
Credit, or (iii) retaining Drawing Documents presented under a Letter of
Credit.  Borrowers’ aggregate remedies against Issuing Bank and any Letter of
Credit Related Person for wrongfully honoring a presentation under any Letter of
Credit or wrongfully retaining honored Drawing Documents shall in no event
exceed the aggregate amount paid by Borrowers to Issuing Bank in respect of the
honored presentation in connection with such Letter of Credit under
Section 2.11(d), plus interest at the rate then applicable to Base Rate Loans
hereunder.  Borrowers shall take action to avoid and mitigate the amount of any
damages claimed against Issuing Bank or any other Letter of Credit Related
Person, including by enforcing its rights against the beneficiaries of the
Letters of Credit.  Any claim by Borrowers under or in connection with any
Letter of Credit shall be reduced by an amount equal to the sum of (x) the
amount (if any) saved by Borrowers as a result of the breach or alleged wrongful
conduct complained of, and (y) the amount (if any) of the loss that would have
been avoided had Borrowers taken all reasonable steps to mitigate any loss, and
in case of a claim of wrongful dishonor, by specifically and timely authorizing
Issuing Bank to effect a cure.

 

(h)                                 Borrowers are responsible for the final text
of the Letter of Credit as issued by Issuing Bank, irrespective of any
assistance Issuing Bank may provide such as drafting or recommending text or by
Issuing Bank’s use or refusal to use text submitted by Borrowers. Borrowers
understand that the final form of any Letter of Credit may be subject to such
revisions and changes as are deemed necessary or appropriate by Issuing Bank,
and Borrowers hereby consent to such revisions and changes not materially
different from the application executed in connection therewith. Borrowers are
solely responsible for the suitability of the Letter of Credit for Borrowers’
purposes.  If Borrowers request Issuing Bank to issue a Letter of Credit for an
affiliated or unaffiliated third party (an “Account Party”), (i) such Account
Party shall have no rights against Issuing Bank; (ii) Borrowers shall be
responsible for the application and obligations under this Agreement; and
(iii) communications (including notices) related to the respective Letter of
Credit shall be among Issuing Bank and Borrowers.  Borrowers will examine the
copy of the Letter of Credit and any other documents sent by Issuing Bank in
connection therewith and shall promptly notify Issuing Bank (not later than 3
Business Days following Borrowers’ receipt of documents from Issuing Bank) of
any non-compliance with Borrowers’ instructions and of any discrepancy in any
document under any presentment or other irregularity.  Borrowers understand and
agree that Issuing Bank is not required to extend the expiration date of any
Letter of Credit for any reason. With respect to any Letter of Credit containing
an “automatic amendment” to extend the expiration date of such Letter of
Credit, Issuing Bank, in its sole and absolute discretion, may give notice of
nonrenewal of such Letter of Credit and, if Borrowers do not at any time want
the then current expiration date of such Letter of Credit to be extended,
Borrowers will so notify Agent and Issuing Bank at least 15 calendar days before
Issuing Bank is required to notify the beneficiary of such Letter of Credit or
any advising bank of such non-extension pursuant to the terms of such Letter of
Credit.

 

(i)                                     Borrowers’ reimbursement and payment
obligations under this Section 2.11 are absolute, unconditional and irrevocable
and shall be performed strictly in accordance with the terms of this Agreement
under any and all circumstances whatsoever, including:

 

(i)                                     any lack of validity, enforceability or
legal effect of any Letter of Credit, any Issuer Document, this Agreement, or
any Loan Document, or any term or provision therein or herein;

 

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(ii)                                  payment against presentation of any draft,
demand or claim for payment under any Drawing Document that does not comply in
whole or in part with the terms of the applicable Letter of Credit or which
proves to be fraudulent, forged or invalid in any respect or any statement
therein being untrue or inaccurate in any respect, or which is signed, issued or
presented by a Person or a transferee of such Person purporting to be a
successor or transferee of the beneficiary of such Letter of Credit;

 

(iii)                               Issuing Bank or any of its branches or
Affiliates being the beneficiary of any Letter of Credit;

 

(iv)                              Issuing Bank or any correspondent honoring a
drawing against a Drawing Document up to the amount available under any Letter
of Credit even if such Drawing Document claims an amount in excess of the amount
available under the Letter of Credit;

 

(v)                                 the existence of any claim, set-off, defense
or other right that any Loan Party or any of its Subsidiaries may have at any
time against any beneficiary or transferee beneficiary, any assignee of
proceeds, Issuing Bank or any other Person;

 

(vi)                              Issuing Bank or any correspondent honoring a
drawing upon receipt of an electronic presentation under a Letter of Credit
requiring the same, regardless of whether the original Drawing Documents arrive
at Issuing Bank’s counters or are different from the electronic presentation;

 

(vii)                           any other event, circumstance or conduct
whatsoever, whether or not similar to any of the foregoing that might, but for
this Section 2.11(i), constitute a legal or equitable defense to or discharge
of, or provide a right of set-off against, any Borrower’s or any of its
Subsidiaries’ reimbursement and other payment obligations and liabilities,
arising under, or in connection with, any Letter of Credit, whether against
Issuing Bank, the beneficiary or any other Person; or

 

(viii)                        the fact that any Default or Event of Default
shall have occurred and be continuing;

 

provided, that subject to Section 2.11(g) above, the foregoing shall not release
Issuing Bank from such liability to Borrowers as may be finally determined in a
final, non-appealable judgment of a court of competent jurisdiction against
Issuing Bank following reimbursement or payment of the obligations and
liabilities, including reimbursement and other payment obligations, of Borrowers
to Issuing Bank arising under, or in connection with, this Section 2.11 or any
Letter of Credit.

 

(j)                                    Without limiting any other provision of
this Agreement, Issuing Bank and each other Letter of Credit Related Person (if
applicable) shall not be responsible to Borrowers for, and Issuing Bank’s rights
and remedies against Borrowers and the obligation of Borrowers to reimburse
Issuing Bank for each drawing under each Letter of Credit shall not be impaired
by:

 

(i)                                     honor of a presentation under any Letter
of Credit that on its face substantially complies with the terms and conditions
of such Letter of Credit, even if the Letter of Credit requires strict
compliance by the beneficiary;

 

(ii)                                  honor of a presentation of any Drawing
Document that appears on its face to have been signed, presented or issued
(A) by any purported successor or transferee of any beneficiary or other Person
required to sign, present or issue such Drawing Document or (B) under a new name
of the beneficiary;

 

(iii)                               acceptance as a draft of any written or
electronic demand or request for payment under a Letter of Credit, even if
nonnegotiable or not in the form of a draft or notwithstanding any requirement
that such draft, demand or request bear any or adequate reference to the Letter
of Credit;

 

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(iv)                              the identity or authority of any presenter or
signer of any Drawing Document or the form, accuracy, genuineness or legal
effect of any Drawing Document (other than Issuing Bank’s determination that
such Drawing Document appears on its face substantially to comply with the terms
and conditions of the Letter of Credit);

 

(v)                                 acting upon any instruction or request
relative to a Letter of Credit or requested Letter of Credit that Issuing Bank
in good faith believes to have been given by a Person authorized to give such
instruction or request;

 

(vi)                              any errors, omissions, interruptions or delays
in transmission or delivery of any message, advice or document (regardless of
how sent or transmitted) or for errors in interpretation of technical terms or
in translation or any delay in giving or failing to give notice to any Borrower;

 

(vii)                           any acts, omissions or fraud by, or the
insolvency of, any beneficiary, any nominated person or entity or any other
Person or any breach of contract between any beneficiary and any Borrower or any
of the parties to the underlying transaction to which the Letter of Credit
relates;

 

(viii)                        assertion or waiver of any provision of the ISP or
UCP that primarily benefits an issuer of a letter of credit, including any
requirement that any Drawing Document be presented to it at a particular hour or
place;

 

(ix)                              payment to any presenting bank (designated or
permitted by the terms of the applicable Letter of Credit) claiming that it
rightfully honored or is entitled to reimbursement or indemnity under Standard
Letter of Credit Practice applicable to it;

 

(x)                                 acting or failing to act as required or
permitted under Standard Letter of Credit Practice applicable to where Issuing
Bank has issued, confirmed, advised or negotiated such Letter of Credit, as the
case may be;

 

(xi)                              honor of a presentation after the expiration
date of any Letter of Credit notwithstanding that a presentation was made prior
to such expiration date and dishonored by Issuing Bank if subsequently Issuing
Bank or any court or other finder of fact determines such presentation should
have been honored;

 

(xii)                           dishonor of any presentation that does not
strictly comply or that is fraudulent, forged or otherwise not entitled to
honor; or

 

(xiii)                        honor of a presentation that is subsequently
determined by Issuing Bank to have been made in violation of international,
federal, state or local restrictions on the transaction of business with certain
prohibited Persons.

 

(k)                                 Borrowers shall pay immediately upon demand
to Agent for the account of Issuing Bank as non-refundable fees, commissions,
and charges (it being acknowledged and agreed that any charging of such fees,
commissions, and charges to the Loan Account pursuant to the provisions of
Section 2.6(d) shall be deemed to constitute a demand for payment thereof for
the purposes of this Section 2.11(k)):  (i) a fronting fee which shall be
imposed by Issuing Bank equal to.125% per annum times the average amount of the
Letter of Credit Usage during the immediately preceding month, plus (ii) any and
all other customary commissions, fees and charges then in effect imposed by, and
any and all expenses incurred by, Issuing Bank, or by any adviser, confirming
institution or entity or other nominated person, relating to Letters of Credit,
at the time of issuance of any Letter of Credit and upon the occurrence of any
other activity with respect to any Letter of Credit (including transfers,
assignments of proceeds, amendments, drawings, renewals or cancellations).

 

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(l)                                     If by reason of (x) any Change in Law,
or (y) compliance by Issuing Bank or any other member of the Lender Group with
any direction, request, or requirement (irrespective of whether having the force
of law) of any Governmental Authority or monetary authority including,
Regulation D of the Board of Governors as from time to time in effect (and any
successor thereto):

 

(i)                                     any reserve, deposit, or similar
requirement is or shall be imposed or modified in respect of any Letter of
Credit issued or caused to be issued hereunder or hereby, or any Loans or
obligations to make Loans hereunder or hereby, or

 

(ii)                                  there shall be imposed on Issuing Bank or
any other member of the Lender Group any other condition regarding any Letter of
Credit, Loans, or obligations to make Loans hereunder,

 

and the result of the foregoing is to increase, directly or indirectly, the cost
to Issuing Bank or any other member of the Lender Group of issuing, making,
participating in, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof, then, and in any such case, Agent may, at any
time within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify Borrowers, and Borrowers shall pay within 30
days after demand therefor, such amounts as Agent may specify to be necessary to
compensate Issuing Bank or any other member of the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder; provided, that (A) Borrowers shall not
be required to provide any compensation pursuant to this Section 2.11(l) for any
such amounts incurred more than 180 days prior to the date on which the demand
for payment of such amounts is first made to Borrowers, and (B) if an event or
circumstance giving rise to such amounts is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.  The determination by Agent of any amount due pursuant to this
Section 2.11(l), as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.

 

(m)                             Each standby Letter of Credit shall expire not
later than the date that is 12 months after the date of the issuance of such
Letter of Credit; provided, that any standby Letter of Credit may provide for
the automatic extension thereof for any number of additional periods each of up
to one year in duration; provided further, that with respect to any Letter of
Credit which extends beyond the Maturity Date, Letter of Credit
Collateralization shall be provided therefor on or before the date that is five
Business Days prior to the Maturity Date.  Each commercial Letter of Credit
shall expire on the earlier of (i) 120 days after the date of the issuance of
such commercial Letter of Credit and (ii) five Business Days prior to the
Maturity Date.

 

(n)                                 If (i) any Event of Default shall occur and
be continuing, or (ii) Availability shall at any time be less than zero, then on
the Business Day following the date when the Administrative Borrower receives
notice from Agent or the Required Lenders (or, if the maturity of the
Obligations has been accelerated, Revolving Lenders with Letter of Credit
Exposure representing greater than 50% of the total Letter Credit Exposure)
demanding Letter of Credit Collateralization pursuant to this
Section 2.11(n) upon such demand, Borrowers shall provide Letter of Credit
Collateralization with respect to the then existing Letter of Credit Usage.  If
Borrowers are required to provide Letter of Credit Collateralization hereunder
as a result of the occurrence of an Event of Default, any cash collateral held
by Agent as a result of such Letter of Credit Collateralization shall be
returned by Agent to Borrowers promptly, but in

 

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no event later than seven Business Days, after such Event of Default has been
cured or waived in accordance with this Agreement.  If Borrowers fail to provide
Letter of Credit Collateralization as required by this Section 2.11(n), the
Revolving Lenders may (and, upon direction of Agent, shall) advance, as
Revolving Loans the amount of the cash collateral required pursuant to the
Letter of Credit Collateralization provision so that the then existing Letter of
Credit Usage is cash collateralized in accordance with the Letter of Credit
Collateralization provision (whether or not the Revolver Commitments have
terminated, an Overadvance exists or the conditions in Section 3 are satisfied).

 

(o)                                 Unless otherwise expressly agreed by Issuing
Bank and Borrowers when a Letter of Credit is issued, (i) the rules of the ISP
shall apply to each standby Letter of Credit, and (ii) the rules of the UCP
shall apply to each commercial Letter of Credit.

 

(p)                                 Issuing Bank shall be deemed to have acted
with due diligence and reasonable care if Issuing Bank’s conduct is in
accordance with Standard Letter of Credit Practice or in accordance with this
Agreement.

 

(q)                                 In the event of a direct conflict between
the provisions of this Section 2.11 and any provision contained in any Issuer
Document, it is the intention of the parties hereto that such provisions be read
together and construed, to the fullest extent possible, to be in concert with
each other.  In the event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, the terms and provisions of this Section 2.11 shall
control and govern.

 

(r)                                    The provisions of this Section 2.11 shall
survive the termination of this Agreement and the repayment in full of the
Obligations with respect to any Letters of Credit that remain outstanding.

 

(s)                                   At Borrowers’ costs and expense, Borrowers
shall execute and deliver to Issuing Bank such additional certificates,
instruments and/or documents and take such additional action as may be
reasonably requested by Issuing Bank to enable Issuing Bank to issue any Letter
of Credit pursuant to this Agreement and related Issuer Document, to protect,
exercise and/or enforce Issuing Banks’ rights and interests under this Agreement
or to give effect to the terms and provisions of this Agreement or any Issuer
Document.  Each Borrower irrevocably appoints Issuing Bank as its
attorney-in-fact and authorizes Issuing Bank, without notice to Borrowers, to
execute and deliver ancillary documents and letters customary in the letter of
credit business that may include but are not limited to advisements,
indemnities, checks, bills of exchange and issuance documents.  The power of
attorney granted by the Borrowers is limited solely to such actions related to
the issuance, confirmation or amendment of any Letter of Credit and to ancillary
documents or letters customary in the letter of credit business.  This
appointment is coupled with an interest.

 

2.12                        LIBOR Option.

 

(a)                                 Interest and Interest Payment Dates.  In
lieu of having interest charged at the rate based upon the Base Rate, Borrowers
shall have the option, subject to Section 2.12(b) below (the “LIBOR Option”) to
have interest on all or a portion of the Revolving Loans be charged (whether at
the time when made (unless otherwise provided herein), upon conversion from a
Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a LIBOR Rate Loan
as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR Rate.  Interest
on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the
Interest Period applicable thereto; provided, that subject to the following
clauses (ii) and (iii), in the case of any Interest Period greater than three
months in duration, interest shall be payable at three month intervals after the
commencement of the applicable Interest Period and on the last day of such
Interest Period), (ii) the date on which all or any portion of the Obligations
are accelerated pursuant to the terms

 

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hereof, or (iii) the date on which this Agreement is terminated pursuant to the
terms hereof.  On the last day of each applicable Interest Period, unless
Borrowers have properly exercised the LIBOR Option with respect thereto, the
interest rate applicable to such LIBOR Rate Loan automatically shall convert to
the rate of interest then applicable to Base Rate Loans of the same type
hereunder.  At any time that an Event of Default has occurred and is continuing,
at the written election of Agent or the Required Lenders, Borrowers no longer
shall have the option to request that Revolving Loans bear interest at a rate
based upon the LIBOR Rate.

 

(b)                                 LIBOR Election.

 

(i)                                     Borrowers may, at any time and from time
to time, so long as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. at least three
Business Days prior to the commencement of the proposed Interest Period (the
“LIBOR Deadline”). Notice of Borrowers’ election of the LIBOR Option for a
permitted portion of the Revolving Loans and an Interest Period pursuant to this
Section shall be made by delivery to Agent of a LIBOR Notice received by Agent
before the LIBOR Deadline.  Promptly upon its receipt of each such LIBOR Notice,
Agent shall provide a copy thereof to each of the affected Lenders.

 

(ii)                                  Each LIBOR Notice shall be irrevocable and
binding on Borrowers.  In connection with each LIBOR Rate Loan, each Borrower
shall indemnify, defend, and hold Agent and the Lenders harmless against any
loss, cost, or expense actually incurred by Agent or any Lender as a result of
(A) the payment or required assignment of any principal of any LIBOR Rate Loan
other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (B) the conversion of any LIBOR Rate Loan
other than on the last day of the Interest Period applicable thereto, or (C) the
failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date
specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, or
expenses, “Funding Losses”).  A certificate of Agent or a Lender delivered to
Borrowers setting forth in reasonable detail any amount or amounts that Agent or
such Lender is entitled to receive pursuant to this Section 2.12 shall be
conclusive absent manifest error.  Borrowers shall pay such amount to Agent or
the Lender, as applicable, within 30 days of the date of its receipt of such
certificate.  If a payment of a LIBOR Rate Loan on a day other than the last day
of the applicable Interest Period would result in a Funding Loss, Agent may, in
its sole discretion at the request of Borrowers, hold the amount of such payment
as cash collateral in support of the Obligations until the last day of such
Interest Period and apply such amounts to the payment of the applicable LIBOR
Rate Loan on such last day, it being agreed that Agent has no obligation to so
defer the application of payments to any LIBOR Rate Loan and that, in the event
that Agent does not defer such application, Borrowers shall be obligated to pay
any resulting Funding Losses.

 

(iii)                               Unless Agent, in its sole discretion, agrees
otherwise, Borrowers shall have not more than five LIBOR Rate Loans in effect at
any given time.  Borrowers may only exercise the LIBOR Option for proposed LIBOR
Rate Loans of at least $1,000,000.

 

(c)                                  Conversion; Prepayment.  Borrowers may
convert LIBOR Rate Loans to Base Rate Loans or prepay LIBOR Rate Loans at any
time; provided, that in the event that LIBOR Rate Loans are converted or prepaid
on any date that is not the last day of the Interest Period applicable thereto,
including as a result of any prepayment through the required application by
Agent of any payments or proceeds of Collateral in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold
Agent and the Lenders and their Participants harmless against any and all
Funding Losses in accordance with Section 2.12 (b)(ii).

 

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(d)                                 Special Provisions Applicable to LIBOR Rate.

 

(i)                                     The LIBOR Rate may be adjusted by Agent
with respect to any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or obtaining any
eurodollar deposits or increased costs (other than Taxes which shall be governed
by Section 16), in each case, due to changes in applicable law occurring
subsequent to the commencement of the then applicable Interest Period, including
any Changes in Law and changes in the reserve requirements imposed by the Board
of Governors, which additional or increased costs would increase the cost of
funding or maintaining loans bearing interest at the LIBOR Rate.  In any such
event, the affected Lender shall give Borrowers and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the notice to
each other Lender and, upon its receipt of the notice from the affected Lender, 
Borrowers may, by notice to such affected Lender (A) require such Lender to
furnish to Borrowers a statement setting forth in reasonable detail the basis
for adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (B) repay the LIBOR Rate Loans of such Lender with respect to
which such adjustment is made (together with any amounts due under
Section 2.12(b)(ii)).

 

(ii)                                  In the event that any change in market
conditions or any Change in Law shall at any time after the date hereof, in the
reasonable opinion of any Lender, make it unlawful or impractical for such
Lender to fund or maintain LIBOR Rate Loans or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and Borrowers
and Agent promptly shall transmit the notice to each other Lender and (y) in the
case of any LIBOR Rate Loans of such Lender that are outstanding, the date
specified in such Lender’s notice shall be deemed to be the last day of the
Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
of such Lender thereafter shall accrue interest at the rate then applicable to
Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR
Option until such Lender determines that it would no longer be unlawful or
impractical to do so.

 

(e)                                  No Requirement of Matched Funding. 
Anything to the contrary contained herein notwithstanding, neither Agent, nor
any Lender, nor any of their Participants, is required actually to acquire
eurodollar deposits to fund or otherwise match fund any Obligation as to which
interest accrues at the LIBOR Rate.

 

2.13                        Capital Requirements.

 

(a)                                 If, after the date hereof, Issuing Bank or
any Lender determines that (i) any Change in Law regarding capital, liquidity or
reserve requirements for banks or bank holding companies, or (ii) compliance by
Issuing Bank or such Lender, or their respective parent bank holding companies,
with any guideline, request or directive of any Governmental Authority regarding
capital adequacy or liquidity requirements (whether or not having the force of
law), has the effect of reducing the return on Issuing Bank’s, such Lender’s, or
such holding companies’ capital or liquidity as a consequence of Issuing Bank’s
or such Lender’s commitments, Loans, participations or other obligations
hereunder to a level below that which Issuing Bank, such Lender, or such holding
companies could have achieved but for such Change in Law or compliance (taking
into consideration Issuing Bank’s, such Lender’s, or such holding companies’
then existing policies with respect to capital adequacy or liquidity
requirements and assuming the full utilization of such entity’s capital) by any
amount deemed by Issuing Bank or such Lender to be material, then Issuing Bank
or such Lender may notify Borrowers and Agent thereof.  Following receipt of
such notice, Borrowers agree to pay Issuing Bank or such Lender on demand the
amount of such reduction of return of capital as and when such reduction is
determined, payable within 30 days after presentation by Issuing Bank or such
Lender of a statement in the amount and setting forth in

 

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reasonable detail Issuing Bank’s or such Lender’s calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error).  In determining such
amount, Issuing Bank or such Lender may use any reasonable averaging and
attribution methods.  Failure or delay on the part of Issuing Bank or any Lender
to demand compensation pursuant to this Section shall not constitute a waiver of
Issuing Bank’s or such Lender’s right to demand such compensation; provided,
that Borrowers shall not be required to compensate Issuing Bank or a Lender
pursuant to this Section for any reductions in return incurred more than 180
days prior to the date that Issuing Bank or such Lender notifies Borrowers of
such Change in Law giving rise to such reductions and of such Lender’s intention
to claim compensation therefor; provided further, that if such claim arises by
reason of the Change in Law that is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.

 

(b)                                 If Issuing Bank or any Lender requests
additional or increased costs referred to in Section 2.11(l) or
Section 2.12(d)(i) or amounts under Section 2.13(a) or sends a notice under
Section 2.12(d)(ii) relative to changed circumstances (such Issuing Bank or
Lender, an “Affected Lender”), then, at the request of Administrative Borrower,
such Affected Lender shall use reasonable efforts to promptly designate a
different one of its lending offices or to assign its rights and obligations
hereunder to another of its offices or branches, if (i) in the reasonable
judgment of such Affected Lender, such designation or assignment would eliminate
or reduce amounts payable pursuant to Section 2.11(l), Section 2.12(d)(i) or
Section 2.13(a), as applicable, or would eliminate the illegality or
impracticality of funding or maintaining LIBOR Rate Loans, and (ii) in the
reasonable judgment of such Affected Lender, such designation or assignment
would not subject it to any material unreimbursed cost or expense and would not
otherwise be materially disadvantageous to it.  Borrowers agree to pay all
reasonable out-of-pocket costs and expenses incurred by such Affected Lender in
connection with any such designation or assignment.  If, after such reasonable
efforts, such Affected Lender does not so designate a different one of its
lending offices or assign its rights to another of its offices or branches so as
to eliminate Borrowers’ obligation to pay any future amounts to such Affected
Lender pursuant to Section 2.11(l), Section 2.12(d)(i) or Section 2.13(a), as
applicable, or to enable Borrowers to obtain LIBOR Rate Loans, then Borrowers
(without prejudice to any amounts then due to such Affected Lender under
Section 2.11(l), Section 2.12(d)(i) or Section 2.13(a), as applicable) may,
unless prior to the effective date of any such assignment the Affected Lender
withdraws its request for such additional amounts under Section 2.11(l), 
Section 2.12(d)(i) or Section 2.13(a), as applicable, or indicates that it is no
longer unlawful or impractical to fund or maintain LIBOR Rate Loans, may
designate a different Issuing Bank or substitute a Lender or prospective Lender,
in each case,  reasonably acceptable to Agent to purchase the Obligations owed
to such Affected Lender and such Affected Lender’s commitments hereunder (a
“Replacement Lender”), and if such Replacement Lender agrees to such purchase,
such Affected Lender shall assign to the Replacement Lender its Obligations and
commitments, and upon such purchase by the Replacement Lender, which such
Replacement Lender shall be deemed to be “Issuing Bank” or a “Lender” (as the
case may be) for purposes of this Agreement and such Affected Lender shall cease
to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this
Agreement.

 

(c)                                  Notwithstanding anything herein to the
contrary, the protection of Sections 2.11(l), 2.12(d), and 2.13 shall be
available to Issuing Bank and each Lender (as applicable) regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, judicial ruling, judgment, guideline, treaty or other change or
condition which shall have occurred or been imposed, so long as it shall be
customary for issuing banks or lenders affected thereby to comply therewith. 
Notwithstanding any other provision herein, neither Issuing Bank nor any Lender
shall demand compensation pursuant to this Section 2.13 if it shall not at the
time be the general policy or practice of Issuing Bank or such Lender (as the
case may be) to demand such compensation in similar circumstances under
comparable provisions of other credit agreements, if any.

 

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2.14                        Incremental Facilities.

 

(a)                                 At any time from and after the Closing Date,
at the option of Borrowers (but subject to the conditions set forth in clause
(b) below), the Revolver Commitments and the Maximum Revolver Amount may be
increased by an amount in the aggregate for all such increases of the Revolver
Commitments and the Maximum Revolver Amount not to exceed the Available Increase
Amount (each such increase, an “Increase”); provided, that in no event shall the
Revolver Commitments and the Maximum Revolver Amount be increased by an amount
in excess of the Available Revolver Increase Amount.  Agent shall invite each
Lender to increase its Revolver Commitments (it being understood that no Lender
shall be obligated to increase its Revolver Commitments) in connection with a
proposed Increase at the interest margin proposed by Borrowers, and if
sufficient Lenders do not agree to increase their Revolver Commitments in
connection with such proposed Increase, then Agent or Borrowers may invite any
prospective lender who is reasonably satisfactory to Agent and Borrowers to
become a Lender in connection with a proposed Increase.  Any Increase shall be
in an amount of at least $5,000,000 and integral multiples of $5,000,000 in
excess thereof.  In no event may the Revolver Commitments and the Maximum
Revolver Amount be increased pursuant to this Section 2.14 on more than 3
occasions in the aggregate for all such Increases.  Additionally, for the
avoidance of doubt, it is understood and agreed that in no event shall the
aggregate amount of the Increases to the Revolver Commitments exceed
$25,000,000.

 

(b)                                 Each of the following shall be conditions
precedent to any Increase of the Revolver Commitments and the Maximum Revolver
Amount in connection therewith:

 

(i)                                     Agent or Borrowers have obtained the
commitment of one or more Lenders (or other prospective lenders) reasonably
satisfactory to Agent and Borrowers to provide the applicable Increase and any
such Lenders (or prospective lenders), Borrowers, and Agent have signed a
joinder agreement to this Agreement (an “Increase Joinder”), in form and
substance reasonably satisfactory to Agent, to which such Lenders (or
prospective lenders), Borrowers, and Agent are party,

 

(ii)                                  each of the conditions precedent set forth
in Section 3.2 are satisfied,

 

(iii)                               in connection with any Increase, if any Loan
Party or any of its Subsidiaries owns or will acquire any Margin Stock,
Borrowers shall deliver to Agent an updated Form U-1 (with sufficient additional
originals thereof for each Lender), duly executed and delivered by the
Borrowers, together with such other documentation as Agent shall reasonably
request, in order to enable Agent and the Lenders to comply with any of the
requirements under Regulations T, U or X of the Federal Reserve Board,

 

(iv)                              Borrowers have delivered to Agent updated pro
forma Projections (after giving effect to the applicable Increase) for the Loan
Parties and their Subsidiaries evidencing compliance on a pro forma basis with
Section 7 for the twelve months (on a month-by-month basis) immediately
following the proposed date of the applicable Increase and

 

(v)                                 Borrowers shall have reached agreement with
the Lenders (or prospective lenders) agreeing to the increased Revolver
Commitments with respect to the interest margins applicable to Revolving Loans
to be made pursuant to the increased Revolver Commitments (which interest
margins may be with respect to Revolving Loans made pursuant to the increased
Revolver Commitments, higher than or equal to the interest margins applicable to
Revolving Loans set forth in this Agreement immediately prior to the date of the
increased Revolver Commitments (the date of the effectiveness of the increased
Revolver Commitments and the Maximum Revolver Amount, the “Increase Date”)) and
shall have communicated the amount of such interest margins to Agent.  Any
Increase

 

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Joinder may, with the consent of Agent, Borrowers and the Lenders or prospective
lenders agreeing to the proposed Increase, effect such amendments to this
Agreement and the other Loan Documents as may be necessary to effectuate the
provisions of this Section 2.14 (including any amendment necessary to effectuate
the interest margins for the Revolving Loans to be made pursuant to the
increased Revolver Commitments).  Anything to the contrary contained herein
notwithstanding, if the all-in yield (including interest margins, interest
floors, and any original issue discount or similar yield-related discounts or
payments, but excluding any arrangement, underwriting, or similar fees payable
in connection therewith that are not paid to all Lenders providing the Increase
to the Revolver Commitment) that is to be applicable to the Revolving Loans to
be made pursuant to the increased Revolver Commitments is higher than the all-in
yield (including interest margins, interest floors, and any original issue
discount or similar yield-related discounts or payments, but excluding any
arrangement, underwriting, or similar fees payable in connection therewith that
are not paid to all Lenders providing the Increase to the Revolver Commitment)
applicable to the Revolving Loans immediately prior to the applicable Increase
Date (the amount by which all-in yield is higher, the “Excess”), then the
interest margin applicable to the Revolving Loans immediately prior to the
Increase Date shall be increased by the amount of the Excess, effective on the
applicable Increase Date, and without the necessity of any action by any party
hereto.

 

(c)                                  Unless otherwise specifically provided
herein, all references in this Agreement and any other Loan Document to
Revolving Loans shall be deemed, unless the context otherwise requires, to
include Revolving Loans made pursuant to the increased Revolver Commitments and
Maximum Revolver Amount pursuant to this Section 2.14.

 

(d)                                 Each of the Lenders having a Revolver
Commitment prior to the Increase Date (the “Pre-Increase Revolver Lenders”)
shall assign to any Lender which is acquiring a new or additional Revolver
Commitment on the Increase Date (the “Post-Increase Revolver Lenders”), and such
Post-Increase Revolver Lenders shall purchase from each Pre-Increase Revolver
Lender, at the principal amount thereof, such interests in the Revolving Loans
and participation interests in Letters of Credit on such Increase Date as shall
be necessary in order that, after giving effect to all such assignments and
purchases, such Revolving Loans and participation interests in Letters of Credit
will be held by Pre-Increase Revolver Lenders and Post-Increase Revolver Lenders
ratably in accordance with their Pro Rata Share after giving effect to such
increased Revolver Commitments.

 

(e)                                  The Revolving Loans, Revolver Commitments,
and Maximum Revolver Amount established pursuant to this Section 2.14 shall
constitute Revolving Loans, Revolver Commitments, and Maximum Revolver Amount
under, and shall be entitled to all the benefits afforded by, this Agreement and
the other Loan Documents, and shall, without limiting the foregoing, benefit
equally and ratably from any guarantees and the security interests created by
the Loan Documents.  Borrowers shall take any actions reasonably required by
Agent to ensure and demonstrate that the Liens and security interests granted by
the Loan Documents continue to be perfected under the Code or otherwise after
giving effect to the establishment of any such new Revolver Commitments and
Maximum Revolver Amount.

 

2.15                        Joint and Several Liability of Borrowers.

 

(a)                                 Each Borrower is accepting joint and several
liability hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Lender Group under this
Agreement, for the mutual benefit, directly and indirectly, of each Borrower and
in consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.

 

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(b)                                 Each Borrower, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to
the payment and performance of all of the Obligations (including any Obligations
arising under this Section 2.15), it being the intention of the parties hereto
that all the Obligations shall be the joint and several obligations of each
Borrower without preferences or distinction among them.  Accordingly, each
Borrower hereby waives any and all suretyship defenses that would otherwise be
available to such Borrower under applicable law.

 

(c)                                  If and to the extent that any Borrower
shall fail to make any payment with respect to any of the Obligations as and
when due, whether upon maturity, acceleration, or otherwise, or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Borrowers will make such payment with respect to, or perform, such
Obligations until such time as all of the Obligations are paid in full, and
without the need for demand, protest, or any other notice or formality.

 

(d)                                 The Obligations of each Borrower under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Borrower enforceable against each Borrower to the
full extent of its properties and assets, irrespective of the validity,
regularity or enforceability of the provisions of this Agreement (other than
this Section 2.15(d)) or any other circumstances whatsoever.

 

(e)                                  Without limiting the generality of the
foregoing and except as otherwise expressly provided in this Agreement, each
Borrower hereby waives presentments, demands for performance, protests and
notices, including notices of acceptance of its joint and several liability,
notice of any Revolving Loans or any Letters of Credit issued under or pursuant
to this Agreement, notice of the occurrence of any Default, Event of Default,
notices of nonperformance, notices of protest, notices of dishonor, notices of
acceptance of this Agreement, notices of the existence, creation, or incurring
of new or additional Obligations or other financial accommodations or of any
demand for any payment under this Agreement, notice of any action at any time
taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any right to proceed against any other Borrower or any other
Person, to proceed against or exhaust any security held from any other Borrower
or any other Person, to protect, secure, perfect, or insure any security
interest or Lien on any property subject thereto or exhaust any right to take
any action against any other Borrower, any other Person, or any collateral, to
pursue any other remedy in any member of the Lender Group’s or any Bank Product
Provider’s power whatsoever, any requirement of diligence or to mitigate damages
and, generally, to the extent permitted by applicable law, all demands, notices
and other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement), any right to assert against any member of
the Lender Group or any Bank Product Provider, any defense (legal or equitable),
set-off, counterclaim, or claim which each Borrower may now or at any time
hereafter have against any other Borrower or any other party liable to any
member of the Lender Group or any Bank Product Provider, any defense, set-off,
counterclaim, or claim, of any kind or nature, arising directly or indirectly
from the present or future lack of perfection, sufficiency, validity, or
enforceability of the Obligations or any security therefor, and any right or
defense arising by reason of any claim or defense based upon an election of
remedies by any member of the Lender Group or any Bank Product Provider
including any defense based upon an impairment or elimination of such Borrower’s
rights of subrogation, reimbursement, contribution, or indemnity of such
Borrower against any other Borrower.  Without limiting the generality of the
foregoing, each Borrower hereby assents to, and waives notice of, any extension
or postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or Lenders at any time or times in respect of any default by any Borrower
in the performance or satisfaction of any term, covenant, condition or provision
of this Agreement, any and all other indulgences whatsoever by Agent or Lenders

 

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in respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any Borrower.  Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on the
part of any Agent or Lender with respect to the failure by any Borrower to
comply with any of its respective Obligations, including any failure strictly or
diligently to assert any right or to pursue any remedy or to comply fully with
applicable laws or regulations thereunder, which might, but for the provisions
of this Section 2.15 afford grounds for terminating, discharging or relieving
any Borrower, in whole or in part, from any of its Obligations under this
Section 2.15, it being the intention of each Borrower that, so long as any of
the Obligations hereunder remain unsatisfied, the Obligations of each Borrower
under this Section 2.15 shall not be discharged except by performance and then
only to the extent of such performance.  The Obligations of each Borrower under
this Section 2.15 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any other Borrower or any Agent or Lender.  Each of
the Borrowers waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
hereof.  Any payment by any Borrower or other circumstance which operates to
toll any statute of limitations as to any Borrower shall operate to toll the
statute of limitations as to each of the Borrowers.  Each of the Borrowers
waives any defense based on or arising out of any defense of any Borrower or any
other Person, other than payment of the Obligations to the extent of such
payment, based on or arising out of the disability of any Borrower or any other
Person, or the validity, legality, or unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
any Borrower other than payment of the Obligations to the extent of such
payment.  Agent may, at the election of the Required Lenders, foreclose upon any
Collateral held by Agent by one or more judicial or nonjudicial sales or other
dispositions, whether or not every aspect of any such sale is commercially
reasonable or otherwise fails to comply with applicable law or may exercise any
other right or remedy Agent, any other member of the Lender Group, or any Bank
Product Provider may have against any Borrower or any other Person, or any
security, in each case, without affecting or impairing in any way the liability
of any of the Borrowers hereunder except to the extent the Obligations have been
paid.

 

(f)                                   Each Borrower represents and warrants to
Agent and Lenders that such Borrower is currently informed of the financial
condition of Borrowers and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Obligations. 
Each Borrower further represents and warrants to Agent and Lenders that such
Borrower has read and understands the terms and conditions of the Loan
Documents.  Each Borrower hereby covenants that such Borrower will continue to
keep informed of Borrowers’ financial condition and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Obligations.

 

(g)                                  The provisions of this Section 2.15 are
made for the benefit of Agent, each member of the Lender Group, each Bank
Product Provider, and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all Borrowers as often
as occasion therefor may arise and without requirement on the part of Agent, any
member of the Lender Group, any Bank Product Provider, or any of their
successors or assigns first to marshal any of its or their claims or to exercise
any of its or their rights against any Borrower or to exhaust any remedies
available to it or them against any Borrower or to resort to any other source or
means of obtaining payment of any of the Obligations hereunder or to elect any
other remedy.  The provisions of this Section 2.15 shall remain in effect until
all of the Obligations shall have been paid in full or otherwise fully
satisfied.  If at any time, any payment, or any part thereof, made in respect of
any of the Obligations, is rescinded or must otherwise be restored or returned
by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any
Borrower, or otherwise, the provisions of this Section 2.15 will forthwith be
reinstated in effect, as though such payment had not been made.

 

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(h)                                 Each Borrower hereby agrees that it will not
enforce any of its rights that arise from the existence, payment, performance or
enforcement of the provisions of this Section 2.15,  including rights of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of Agent, any other member of the
Lender Group, or any Bank Product Provider against any Borrower, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including the right to take or receive from any Borrower, directly
or indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until such time as all of the Obligations have been paid in full in cash.  Any
claim which any Borrower may have against any other Borrower with respect to any
payments to any Agent or any member of the Lender Group hereunder or under any
of the Bank Product Agreements are hereby expressly made subordinate and junior
in right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.  If any amount
shall be paid to any Borrower in violation of the immediately preceding
sentence, such amount shall be held in trust for the benefit of Agent, for the
benefit of the Lender Group and the Bank Product Providers, and shall forthwith
be paid to Agent to be credited and applied to the Obligations and all other
amounts payable under this Agreement, whether matured or unmatured, in
accordance with the terms of this Agreement, or to be held as Collateral for any
Obligations or other amounts payable under this Agreement thereafter arising. 
Notwithstanding anything to the contrary contained in this Agreement, no
Borrower may exercise any rights of subrogation, contribution, indemnity,
reimbursement or other similar rights against, and may not proceed or seek
recourse against or with respect to any property or asset of, any other Borrower
(the “Foreclosed Borrower”), including after payment in full of the Obligations,
if all or any portion of the Obligations have been satisfied in connection with
an exercise of remedies in respect of the Equity Interests of such Foreclosed
Borrower whether pursuant to this Agreement or otherwise.

 

(i)                                     Each of the Borrowers hereby
acknowledges and affirms that it understands that to the extent the Obligations
are secured by Real Property located in California, the Borrowers shall be
liable for the full amount of the liability hereunder notwithstanding the
foreclosure on such Real Property by trustee sale or any other reason impairing
such Borrower’s right to proceed against any other Loan Party.  In accordance
with Section 2856 of the California Civil Code or any similar laws of any other
applicable jurisdiction, each of the Borrowers hereby waives until such time as
the Obligations have been paid in full:

 

(i)                                     all rights of subrogation,
reimbursement, indemnification, and contribution and any other rights and
defenses that are or may become available to the Borrowers by reason of
Sections 2787 to 2855, inclusive, 2899, and 3433 of the California Civil Code or
any similar laws of any other applicable jurisdiction;

 

(ii)                                  all rights and defenses that the Borrowers
may have because the Obligations are secured by Real Property located in
California, meaning, among other things, that:  (A) Agent, the other members of
the Lender Group, and the Bank Product Providers may collect from the Borrowers
without first foreclosing on any real or personal property collateral pledged by
any Loan Party, and (B) if Agent, on behalf of the Lender Group, forecloses on
any Real Property Collateral pledged by any Loan Party, (1) the amount of the
Obligations may be reduced only by the price for which that collateral is sold
at the foreclosure sale, even if the collateral is worth more than the sale
price, and (2) the Lender Group may collect from the Loan Parties even if, by
foreclosing on the Real Property Collateral,

 

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Agent or the other members of the Lender Group have destroyed or impaired any
right the Borrowers may have to collect from any other Loan Party, it being
understood that this is an unconditional and irrevocable waiver of any rights
and defenses the Borrowers may have because the Obligations are secured by Real
Property (including, without limitation, any rights or defenses based upon
Sections 580a, 580d, or 726 of the California Code of Civil Procedure or any
similar laws of any other applicable jurisdiction); and

 

(iii)                               all rights and defenses arising out of an
election of remedies by Agent, the other members of the Lender Group, and the
Bank Product Providers, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for the Obligations, has
destroyed the Borrowers’ rights of subrogation and reimbursement against any
other Loan Party by the operation of Section 580d of the California Code of
Civil Procedure or any similar laws of any other applicable jurisdiction or
otherwise.

 

3.                                      CONDITIONS; TERM OF AGREEMENT.

 

3.1                               Conditions Precedent to the Initial Extension
of Credit.  The obligation of each Lender to make the initial extensions of
credit provided for hereunder is subject to the fulfillment, to the satisfaction
of Agent and each Lender, of each of the conditions precedent set forth on
Schedule 3.1 to this Agreement (the making of such initial extensions of credit
by a Lender being conclusively deemed to be its satisfaction or waiver of the
conditions precedent).

 

3.2                               Conditions Precedent to all Extensions of
Credit.  The obligation of the Lender Group (or any member thereof) to make any
Revolving Loans hereunder (or to extend any other credit hereunder) at any time
shall be subject to the following conditions precedent:

 

(a)                                 the representations and warranties of each
Loan Party or its Subsidiaries contained in this Agreement or in the other Loan
Documents shall be true and correct in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects (except that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of such earlier date); and

 

(b)                                 no Default or Event of Default shall have
occurred and be continuing on the date of such extension of credit, nor shall
either result from the making thereof.

 

3.3                               Maturity.  The Commitments shall continue in
full force and effect for a term ending on the Maturity Date (unless terminated
earlier in accordance with the terms hereof).

 

3.4                               Effect of Maturity.  On the Maturity Date, all
commitments of the Lender Group to provide additional credit hereunder shall
automatically be terminated and all of the Obligations (other than Hedge
Obligations) immediately shall become due and payable without notice or demand
and Borrowers shall be required to repay all of the Obligations (other than
Hedge Obligations) in full.  No termination of the obligations of the Lender
Group (other than payment in full of the Obligations and termination of the
Commitments) shall relieve or discharge any Loan Party of its duties,
obligations, or covenants hereunder or under any other Loan Document and Agent’s
Liens in the Collateral shall continue to secure the Obligations and shall
remain in effect until all Obligations have been paid in full.  When all of the
Obligations have been paid in full, Agent will, at Borrowers’ sole expense,
execute and deliver any termination statements, lien releases, discharges of
security interests, and other similar discharge or release documents (and, if
applicable, in recordable form) as are reasonably necessary to release, as of
record, Agent’s Liens and all notices of security interests and liens previously
filed by Agent.

 

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3.5                               Early Termination by Borrowers.  Borrowers
have the option, at any time upon five (5) Business Days prior written notice to
Agent, to repay all of the Obligations in full and terminate the Commitments. 
The foregoing notwithstanding, (a) Borrowers may rescind termination notices or
make such notices conditional upon the consummation of an acquisition or sale
transaction or upon the effect thereof of other credit facilitates or the
receipt of proceeds from the issuance of Indebtedness, equity or other
transaction relative to proposed payments in full of the Obligations with the
proceeds of third party Indebtedness if the closing for such issuance or
incurrence does not happen on or before the date of the proposed termination (in
which case, a new notice shall be required to be sent in connection with any
subsequent termination), and (b) Borrowers may extend the date of termination at
any time with the consent of Agent (which consent shall not be unreasonably
withheld or delayed).

 

3.6                               Conditions Subsequent.  The obligation of the
Lender Group (or any member thereof) to continue to make Revolving Loans (or
otherwise extend credit hereunder) is subject to the fulfillment, on or before
the date applicable thereto, of the conditions subsequent set forth on Schedule
3.6 to this Agreement (the failure by Borrowers to so perform or cause to be
performed such conditions subsequent as and when required by the terms thereof
(unless such date is extended, in writing, by Agent, which Agent may do without
obtaining the consent of the other members of the Lender Group), shall
constitute an Event of Default).

 

4.                                      REPRESENTATIONS AND WARRANTIES.

 

In order to induce the Lender Group to enter into this Agreement, each Borrower
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), as of the Closing Date, and shall be true, correct, and complete, in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof), as of the date of the making of
each Revolving Loan (or other extension of credit) made thereafter, as though
made on and as of the date of such Revolving Loan (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date, in which case such representations and warranties shall be true
and correct in all material respects (except that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) as of such earlier
date), and such representations and warranties shall survive the execution and
delivery of this Agreement:

 

4.1                               Due Organization and Qualification;
Subsidiaries.

 

(a)                                 Each Loan Party and each of its Subsidiaries
(i) is duly organized and existing and in good standing under the laws of the
jurisdiction of its organization, (ii) is qualified to do business in any state
where the failure to be so qualified could reasonably be expected to result in a
Material Adverse Effect, and (iii) has all requisite power and authority to own
and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents to which it is a
party and to carry out the transactions contemplated thereby.

 

(b)                                 [Reserved].

 

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(c)                                  Set forth on Schedule 4.1(c) of the
Disclosure Letter (as such Schedule may be updated from time to time to reflect
changes resulting from transactions permitted under this Agreement), is a
complete and accurate list of the Loan Parties’ direct and indirect
Subsidiaries, showing: (i) the number of shares of each class of common and
preferred Equity Interests authorized for each of such Subsidiaries, and
(ii) the number and the percentage of the outstanding shares of each such class
and the number of shares of each such class owned directly or indirectly by such
Loan Party.  All of the outstanding Equity Interests of each such Subsidiary has
been validly issued and is fully paid and non-assessable.

 

(d)                                 Except as set forth on Schedule 4.1(d) of
the Disclosure Letter, as of the Closing Date, there are no subscriptions,
options, warrants, or calls relating to any shares of any Loan Party’s or any of
its Subsidiaries’ Equity Interests, including any right of conversion or
exchange under any outstanding security or other instrument.  No Loan Party is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its Equity Interests or any security convertible
into or exchangeable for any of its Equity Interests.

 

4.2                               Due Authorization; No Conflict.

 

(a)                                 As to each Loan Party, the execution,
delivery, and performance by such Loan Party of the Loan Documents to which it
is a party have been duly authorized by all necessary action on the part of such
Loan Party.

 

(b)                                 As to each Loan Party, the execution,
delivery, and performance by such Loan Party of the Loan Documents to which it
is a party do not and will not (i) violate any material provision of federal,
state, or local law or regulation applicable to any Loan Party or its
Subsidiaries, the Governing Documents of any Loan Party or its Subsidiaries, or
any order, judgment, or decree of any court or other Governmental Authority
binding on any Loan Party or its Subsidiaries, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material agreement of any Loan Party or its Subsidiaries where any
such conflict, breach or default could individually or in the aggregate
reasonably be expected to have a Material Adverse Effect, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
assets of any Loan Party, other than Permitted Liens, or (iv) require any
approval of any holder of Equity Interests of a Loan Party or any approval or
consent of any Person under any material agreement of any Loan Party, other than
consents or approvals that have been obtained and that are still in force and
effect and except, in the case of material agreements, for consents or
approvals, the failure to obtain could not individually or in the aggregate
reasonably be expected to cause a Material Adverse Effect.

 

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4.3                               Governmental Consents.  The execution,
delivery, and performance by each Loan Party of the Loan Documents to which such
Loan Party is a party and the consummation of the transactions contemplated by
the Loan Documents do not and will not require any registration with, consent,
or approval of, or notice to, or other action with or by, any Governmental
Authority, except for (i) registrations, consents, approvals, notices, or other
actions (a) where the failure to obtain or perform the same could not reasonably
be expected to have a Material Adverse Effect or (b) that have been obtained or
performed and that are still in force and effect and (ii) filings and recordings
with respect to the Collateral to be made, or otherwise delivered to Agent for
filing or recordation, as of the Closing Date, (iii) filings and recordings
permitted to be made after the Closing Date pursuant to Section 3.6 and (iv) SEC
filings required to be made in connection with the consummation of the
transactions contemplated by this Agreement.

 

4.4                               Binding Obligations; Perfected Liens.

 

(a)                                 Each Loan Document has been duly executed
and delivered by each Loan Party that is a party thereto and is the legally
valid and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors’ rights generally.

 

(b)                                 Agent’s Liens are validly created, perfected
(other than (i) in respect of motor vehicles that are subject to a certificate
of title, (ii) money, (iii) letter-of-credit rights (other than supporting
obligations), (iv) commercial tort claims (other than those that, by the terms
of the Guaranty and Security Agreement, are required to be perfected), (v) any
Deposit Accounts and Securities Accounts not subject to a Control Agreement as
permitted by Section 7(k)(iv) of the Guaranty and Security Agreement and
(vi) Liens that are not required to be perfected pursuant to the Guaranty and
Security Agreement or Section 3.6, and subject only to the filing of financing
statements and in each case, in the appropriate filing offices), and first
priority Liens, subject only to Permitted Liens which are non-consensual
Permitted Liens, permitted purchase money Liens, or the interests of lessors
under Capital Leases and Liens described under clauses (e), (h), (i), (j), (l),
(n), (o), (q) and (s) of the definition of Permitted Liens.

 

4.5                               Title to Assets; No Encumbrances.  Each of the
Loan Parties and its Subsidiaries has (a) good, sufficient and legal title to
(in the case of fee interests in Real Property), (b) valid leasehold interests
in (in the case of leasehold interests in real or personal property), and
(c) good and marketable title to (in the case of all other personal property),
all of their respective assets reflected in their most recent financial
statements delivered pursuant to Section 5.1, in each case except for assets
disposed of since the date of such financial statements to the extent permitted
hereby.  All of such assets are free and clear of Liens except for Permitted
Liens.

 

4.6                               Litigation.

 

(a)                                 Except as set forth on Schedule 4.6(a) of
the Disclosure Letter, there are no actions, suits, or proceedings pending or,
to the knowledge of any Borrower, after due inquiry, threatened in writing
against a Loan Party or any of its Subsidiaries that either individually or in
the aggregate could reasonably be expected to result in a Material Adverse
Effect.

 

(b)                                 Schedule 4.6(b) of the Disclosure Letter
sets forth a complete and accurate description of each of the actions, suits, or
proceedings with asserted liabilities in excess of, or that could reasonably be
expected to result in liabilities in excess of, $5,000,000 that, as of the
Closing Date, is pending or, to the knowledge of any Borrower, after due
inquiry, threatened in writing against a Loan

 

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Party or any of its Subsidiaries, of (i) the parties to such actions, suits or
proceedings, (ii) the nature of the dispute that is the subject of such actions,
suits or proceedings, (iii) the procedural status, as of the Closing Date, with
respect to such actions, suits, or proceedings, and (iv) whether any liability
of the Loan Parties’  and their Subsidiaries in connection with such actions,
suits, or proceedings is covered by insurance.

 

4.7                               Compliance with Laws.  No Loan Party nor any
of its Subsidiaries (a) is in violation of any applicable laws, rules,
regulations, executive orders, or codes (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or (b) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.

 

4.8                               No Material Adverse Effect.  All historical
financial statements relating to the Loan Parties and their Subsidiaries that
have been delivered by Borrowers to Agent have been prepared in accordance with
GAAP (except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and present fairly in
all material respects, the Loan Parties’ and their Subsidiaries’ consolidated
financial condition as of the date thereof and results of operations for the
period then ended.  Since December 31, 2016, no event, circumstance, or change
has occurred that has or could reasonably be expected to result in a Material
Adverse Effect.

 

4.9                               Solvency.

 

(a)                                 After the incurrence of all Obligations
being incurred hereunder, Administrative Borrower is Solvent and the Loan
Parties, taken as a whole, are Solvent.

 

(b)                                 No transfer of property is being made by any
Loan Party and no obligation is being incurred by any Loan Party in connection
with the transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future creditors
of such Loan Party.

 

4.10                        Employee Benefits.  No Loan Party, none of their
Subsidiaries, nor any of their ERISA Affiliates maintains or contributes to any
Benefit Plan.

 

4.11                        Environmental Condition.  Except as set forth on
Schedule 4.11 of the Disclosure Letter, (a) to each Borrower’s knowledge, no
Loan Party’s nor any of its Subsidiaries’ properties or assets has ever been
used by a Loan Party, its Subsidiaries, or by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such disposal, production, storage, handling,
treatment, release or transport was in violation, in any material respect, of
any applicable Environmental Law, (b) to each Borrower’s knowledge, after due
inquiry, no Loan Party’s nor any of its Subsidiaries’ properties or assets has
ever been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) no Loan Party nor
any of its Subsidiaries has received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by a Loan Party or its Subsidiaries, and (d) no Loan Party nor any of
its Subsidiaries nor any of their respective facilities or operations is subject
to any outstanding written order, consent decree, or settlement agreement with
any Person relating to any Environmental Law or Environmental Liability that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.

 

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4.12                        Complete Disclosure.  All factual information taken
as a whole (other than forward-looking information and projections and
information of a general economic nature and general information about the
industry of any Loan Party or its Subsidiaries) furnished by or on behalf of a
Loan Party or its Subsidiaries in writing to Agent or any Lender (including all
information contained in the Schedules hereto or in the other Loan Documents)
for purposes of or in connection with this Agreement or the other Loan
Documents, and all other such factual information taken as a whole (other than
forward-looking information and projections and information of a general
economic nature and general information about the industry of any Loan Party or
its Subsidiaries) hereafter furnished by or on behalf of a Loan Party or its
Subsidiaries in writing to Agent or any Lender will be, true and accurate, in
all material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided.  The Projections delivered to Agent on August 3, 2017 represent, and
as of the date on which any other Projections are delivered to Agent, such
additional Projections represent, Borrowers’ good faith estimate, on the date
such Projections are delivered, of the Loan Parties’ and their Subsidiaries’
future performance for the periods covered thereby based upon assumptions
believed by Borrowers to be reasonable at the time of the delivery thereof to
Agent (it being understood that such Projections are subject to significant
uncertainties and contingencies, many of which are beyond the control of the
Loan Parties and their Subsidiaries, and no assurances can be given that such
Projections will be realized, and although reflecting Borrowers’ good faith
estimate, projections or forecasts based on methods and assumptions which
Borrowers believed to be reasonable at the time such Projections were prepared,
are not to be viewed as facts, and that actual results during the period or
periods covered by the Projections may differ materially from projected or
estimated results).

 

4.13                        Patriot Act.  To the extent applicable, each Loan
Party is in compliance, in all material respects, with the (a) Trading with the
Enemy Act, as amended, and each of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other enabling legislation or executive order relating thereto, and
(b) Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA Patriot Act of 2001, as amended) (the
“Patriot Act”).

 

4.14                        Indebtedness.  Set forth on Schedule 4.14 of the
Disclosure Letter is a true and complete list of all Indebtedness of each Loan
Party and each of its Subsidiaries outstanding immediately prior to the Closing
Date that is to remain outstanding immediately after giving effect to the
closing hereunder on the Closing Date and such Schedule accurately sets forth
the aggregate principal amount of such Indebtedness as of the Closing Date.

 

4.15                        Payment of Taxes.  Except as otherwise permitted
under Section 5.5, all income and other material Tax returns and reports of each
Loan Party and its Subsidiaries required to be filed by any of them have been
timely filed, and all material Taxes shown on such Tax returns to be due and
payable and all other material Taxes levied upon a Loan Party and its
Subsidiaries and upon their respective assets, income, businesses and franchises
that are due and payable have been paid when due and payable.  Each Loan Party
and each of its Subsidiaries have made adequate provision in accordance with
GAAP for all Taxes not yet due and payable.  No Borrower knows of any delinquent
and unpaid Tax assessment against a Loan Party or any of its Subsidiaries that
is not being actively contested by such Loan Party or such Subsidiary
diligently, in good faith, and by appropriate proceedings and that if such
contest is adversely determined, could reasonably be expected to result in a
Material Adverse Effect; provided, that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.

 

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4.16                        Margin Stock.  Neither any Loan Party nor any of its
Subsidiaries owns any Margin Stock or is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock.  No part of the proceeds of the loans
made to Borrowers will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock or for any purpose that violates the provisions of Regulation T, U or X of
the Board of Governors.  Neither any Loan Party nor any of its Subsidiaries
expects to acquire any Margin Stock.

 

4.17                        Governmental Regulation.  No Loan Party nor any of
its Subsidiaries is subject to regulation under the Federal Power Act or the
Investment Company Act of 1940 or under any other federal or state statute or
regulation which may limit its ability to incur Indebtedness or which may
otherwise render all or any portion of the Obligations unenforceable.  No Loan
Party nor any of its Subsidiaries is a “registered investment company” or a
company “controlled” by a “registered investment company” or a “principal
underwriter” of a “registered investment company” as such terms are defined in
the Investment Company Act of 1940.

 

4.18                        OFAC; Sanctions; Anti-Corruption Laws; Anti-Money
Laundering Laws.  No Loan Party or any of its Subsidiaries is in violation of
any Sanctions.  No Loan Party nor any of its Subsidiaries nor, to the knowledge
of such Loan Party, any director, officer, employee, agent or Affiliate of such
Loan Party or such Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity,
(b) has any assets located in Sanctioned Entities, or (c) derives revenues from
investments in, or transactions with Sanctioned Persons or Sanctioned Entities. 
Each of the Loan Parties and its Subsidiaries has implemented and maintains in
effect policies and procedures designed to ensure compliance with all Sanctions,
Anti-Corruption Laws and Anti-Money Laundering Laws.  Each of the Loan Parties
and its Subsidiaries, and to the knowledge of each such Loan Party, each
director, officer, employee, agent and Affiliate of each such Loan Party and
each such Subsidiary, is in compliance with all Sanctions, Anti-Corruption Laws
and Anti-Money Laundering Laws.  No proceeds of any Loan made or Letter of
Credit issued hereunder will be used to fund any operations in, finance any
investments or activities in, or make any payments to, a Sanctioned Person or a
Sanctioned Entity, or otherwise used in any manner that would result in a
violation of any Sanction, Anti-Corruption Law or Anti-Money Laundering Law by
any Person (including any Lender, Bank Product Provider, or other individual or
entity participating in any transaction).

 

4.19                        Employee and Labor Matters.  There is (i) no unfair
labor practice complaint pending or, to the knowledge of any Borrower,
threatened against any Loan Party or its Subsidiaries before any Governmental
Authority and no grievance or arbitration proceeding pending or threatened
against any Loan Party or its Subsidiaries which arises out of or under any
collective bargaining agreement and that could reasonably be expected to result
in a material liability, (ii) no strike, labor dispute, slowdown, stoppage or
similar action or grievance pending or threatened in writing against any Loan
Party or its Subsidiaries that could reasonably be expected to result in a
material liability, or (iii) to the knowledge of any Borrower, after due
inquiry, no union representation question existing with respect to the employees
of any Loan Party or its Subsidiaries and no union organizing activity taking
place with respect to any of the employees of any Loan Party or its
Subsidiaries, in each case, that would be reasonably expected to have a Material
Adverse Effect.  None of any Loan Party or its Subsidiaries has incurred any
liability or obligation under the Worker Adjustment and Retraining Notification
Act or similar state law, which remains unpaid or unsatisfied.  The hours worked
and payments made to employees of each Loan Party and its Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable legal
requirements, except to the extent such violations could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect. 
All material payments due from any Loan Party or its Subsidiaries on account of
wages and employee health and welfare insurance and other benefits have been
paid or accrued as a liability on the books of Borrowers, except where the
failure to do so could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

 

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4.20                        Immaterial Subsidiaries.  Set forth on Schedule 4.20
of the Disclosure Letter (as such Schedule may be updated from time to time to
reflect changes resulting from transactions permitted under this Agreement) is a
complete and accurate description of all Immaterial Subsidiaries.

 

4.21                        Leases.  Each Loan Party and its Subsidiaries enjoy
peaceful and undisturbed possession under all leases material to their business
and to which they are parties or under which they are operating, and, subject to
Permitted Protests, all of such material leases are valid and subsisting and no
material default by the applicable Loan Party or its Subsidiaries exists under
any of them.

 

4.22                        Eligible Accounts.  As to each Account that is
identified by Borrowers as an Eligible Tier 1 Account or Eligible Tier 2 Account
in a Borrowing Base Certificate submitted to Agent, such Account is (a) a bona
fide existing payment obligation of the applicable Account Debtor organized in a
Tier 1 Country or a Tier 2 Country, as applicable, created by the sale and
delivery of Inventory or the rendition of services to such Account Debtor in the
ordinary course of a Borrower’s business, (b) owed to a Borrower without any
known defenses, disputes, offsets, counterclaims, or rights of return or
cancellation, and (c) not excluded as ineligible by virtue of one or more of the
excluding criteria (other than any Agent-discretionary criteria) set forth in
the definition of Eligible Accounts.

 

4.23                        Hedge Agreements.  On each date that any Hedge
Agreement is executed by any Hedge Provider, Borrower and each other Loan Party
satisfy all eligibility, suitability and other requirements under the Commodity
Exchange Act (7 U.S.C. § 1, et seq., as in effect from time to time) and the
Commodity Futures Trading Commission regulations.

 

4.24                        Material Contracts.  Set forth on Schedule 4.24 of
the Disclosure Letter (as such Schedule may be updated from time to time in
accordance herewith) is a reasonably detailed description of the Material
Contracts of each Loan Party and its Subsidiaries as of the most recent date on
which Administrative Borrower provided the Compliance Certificate pursuant to
Section 5.1; provided, that Borrowers may amend Schedule 4.24 to add additional
Material Contracts so long as such amendment occurs by written notice to Agent
on the date that Administrative Borrower provides the Compliance Certificate. 
Except for matters which, either individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, each Material
Contract (other than those that have expired at the end of their normal terms)
(a) is in full force and effect and is binding upon and enforceable against the
applicable Loan Party or its Subsidiary and, to each Borrower’s knowledge, after
due inquiry, each other Person that is a party thereto in accordance with its
terms, (b) has not been otherwise amended or modified (other than amendments or
modifications permitted by Section 6.6(b)), and (c) is not in default due to the
action or inaction of the applicable Loan Party or its Subsidiary.

 

5.                                      AFFIRMATIVE COVENANTS.

 

Each Borrower covenants and agrees that, until the termination of all of the
Commitments and payment in full of the Obligations:

 

5.1                               Financial Statements, Reports, Certificates. 
Borrowers (a) will deliver to Agent, with copies to each Lender, each of the
financial statements, reports, and other items set forth on Schedule 5.1 to this
Agreement no later than the times specified therein, (b) agree that no
Subsidiary of a Loan Party will have a fiscal year different from that of
Administrative Borrower and (c) agree to maintain a system of accounting that
enables Borrowers to produce financial statements in accordance with GAAP, and
(d) agree that they will, and will cause each other Loan Party to, (i) keep a
reporting system that shows all

 

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additions, sales, claims, returns, and allowances with respect to their and
their Subsidiaries’ sales, and (ii) maintain their billing systems and practices
substantially as in effect as of the Closing Date and shall only make material
modifications thereto with notice to, and with the consent of, Agent.  Documents
required to be furnished pursuant to this Section 5.1 (to the extent any such
documents are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which Administrative Borrower posts such documents,
or provides a link thereto, on the Administrative Borrower’s website or (ii) on
which such documents are posted on the Administrative Borrower’s behalf on an
Internet or intranet website, if any, to which Agent and each Lender have access
(whether a commercial or public third-party website or whether sponsored by
Agent (including the website of the SEC at http://sec.gov)); provided that
(x) in each case, the Borrowers shall notify Agent of the posting of any such
documents and (y) in the case of documents required to be furnished pursuant to
clauses (a), (d), (e), (h), (i) and (j) of Schedule 5.1, at the request of
Agent, the Administrative Borrower shall furnish to Agent a hard copy of such
document.  Each Lender shall be solely responsible for timely accessing posted
documents and maintaining its copies of such documents.

 

5.2                               Reporting.  Borrowers (a) will deliver to
Agent (and if so requested by Agent, with copies for each Lender) each of the
reports set forth on Schedule 5.2 to this Agreement at the times specified
therein, and (b) agree to use commercially reasonable efforts in cooperation
with Agent to facilitate and implement a system of electronic collateral
reporting in order to provide electronic reporting of each of the items set
forth on such Schedule.

 

5.3                               Existence.  Except as otherwise permitted
under Section 6.3 or Section 6.4, each Loan Party will, and will cause each of
its Subsidiaries (other than the Immaterial Subsidiaries) to, at all times
preserve and keep in full force and effect such Person’s valid existence and
good standing in its jurisdiction of organization and, except as could not
reasonably be expected to result in a Material Adverse Effect, good standing
with respect to all other jurisdictions in which it is qualified to do business
and any rights, franchises, permits, licenses, accreditations, authorizations,
or other approvals material to their businesses.

 

5.4                               Maintenance of Properties.  Each Loan Party
will, and will cause each of its Subsidiaries to, maintain and preserve all of
its assets that are necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear, tear, casualty, and
condemnation and Permitted Dispositions excepted (and except where the failure
to so maintain and preserve assets could not reasonably be expected to result in
a Material Adverse Effect).

 

5.5                               Taxes.  Each Loan Party will, and will cause
each of its Subsidiaries to, pay in full before delinquency or before the
expiration of any extension period all Taxes imposed, levied, or assessed
against it, or any of its assets or in respect of any of its income, businesses,
or franchises, other than Taxes not in excess of $250,000 outstanding at any
time and other than to the extent that the validity of such Tax is the subject
of a Permitted Protest.

 

5.6                               Insurance.  Each Loan Party will, and will
cause each of its Subsidiaries to, at Borrowers’ expense, maintain insurance
respecting each of each Loan Party’s and its Subsidiaries’ assets wherever
located, covering liabilities, losses or damages as are customarily are insured
against by other Persons engaged in same or similar businesses and similarly
situated and located.  All such policies of insurance shall be with financially
sound and reputable insurance companies acceptable to Agent (it being agreed
that, as of the Closing Date, Zurich American Insurance Company is acceptable to
Agent) and in such amounts as is carried generally in accordance with sound
business practice by companies in similar businesses similarly situated and
located and, in any event, in amount, adequacy, and scope reasonably
satisfactory to Agent (it being agreed that the amount, adequacy, and scope of
the policies of insurance of

 

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Borrowers in effect as of the Closing Date are acceptable to Agent).  All
property insurance policies are to be made payable to Agent for the benefit of
Agent and the Lenders, as their interests may appear, in case of loss, pursuant
to a standard lender’s loss payable endorsement with a standard non-contributory
“lender” or “secured party” clause and are to contain such other provisions as
Agent may reasonably require to fully protect the Lenders’ interest in the
Collateral and to any payments to be made under such policies.  All certificates
of property and general liability insurance are to be delivered to Agent, with
the lender’s loss payable and additional insured endorsements in favor of Agent
and shall provide for not less than thirty days (ten days in the case of
non-payment) prior written notice to Agent of the exercise of any right of
cancellation.  If any Loan Party or its Subsidiaries fails to maintain such
insurance, Agent may arrange for such insurance, but at Borrowers’ expense and
without any responsibility on Agent’s part for obtaining the insurance, the
solvency of the insurance companies, the adequacy of the coverage, or the
collection of claims.  Borrowers shall give Agent prompt notice of any loss
exceeding $500,000 covered by the casualty or business interruption insurance of
any Loan Party or its Subsidiaries.  Upon the occurrence and during the
continuance of an Event of Default, Agent shall have the sole right to file
claims under any property and general liability insurance policies in respect of
the Collateral, to receive, receipt and give acquittance for any payments that
may be payable thereunder, and to execute any and all endorsements, receipts,
releases, assignments, reassignments or other documents that may be necessary to
effect the collection, compromise or settlement of any claims under any such
insurance policies.

 

5.7                               Inspection.

 

(a)                                 Each Loan Party will, and will cause each of
its Subsidiaries to, permit Agent, any Lender, and each of their respective duly
authorized representatives or agents to visit any of its properties and inspect
any of its assets or books and records, to examine and make copies of its books
and records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees (provided, that an
authorized representative of a Borrower shall be allowed to be present) at such
reasonable times and intervals as Agent or any Lender, as applicable, may
designate and, so long as no Default or Event of Default has occurred and is
continuing, with reasonable prior notice to Borrowers and during regular
business hours, at Borrowers’ expense in accordance with the provisions of the
Fee Letter, subject to the limitations set forth below in Section 5.7(c).

 

(b)                                 Each Loan Party will, and will cause each of
its Subsidiaries to, permit Agent and each of its duly authorized
representatives or agents to conduct field examinations, appraisals or
valuations at such reasonable times and intervals as Agent may designate upon
prior reasonable written notice, at Borrowers’ expense in accordance with the
provisions of the Fee Letter, subject to the limitations set forth below in
Section 5.7(c).

 

(c)                                  So long as no Event of Default shall have
occurred and be continuing during a calendar year, Borrowers shall not be
obligated to reimburse Agent for more than 2 field examinations in such calendar
year, except for field examinations and appraisals conducted in connection with
a proposed Permitted Acquisition (whether or not consummated).

 

5.8                               Compliance with Laws.  Each Loan Party will,
and will cause each of its Subsidiaries to, comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

 

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5.9                               Environmental.  Each Loan Party will, and will
cause each of its Subsidiaries to,

 

(a)                                 Keep any property either owned or operated
by any Loan Party or its Subsidiaries free of any Environmental Liens or post
bonds or other financial assurances sufficient to satisfy the obligations or
liability evidenced by such Environmental Liens,

 

(b)                                 Comply, in all material respects, with
Environmental Laws and provide to Agent documentation of such compliance which
Agent reasonably requests,

 

(c)                                  Promptly notify Agent of any release of
which any Loan Party has knowledge of a Hazardous Material in any reportable
quantity from or onto property owned or operated by any Loan Party or its
Subsidiaries and take any Remedial Actions required to abate said release or
otherwise to come into compliance, in all material respects, with applicable
Environmental Law, and

 

(d)                                 Promptly, but in any event within five
Business Days of its receipt thereof, provide Agent with written notice of any
of the following:  (i) notice that an Environmental Lien has been filed against
any of the real or personal property of a Loan Party or its Subsidiaries,
(ii) commencement of any Environmental Action or written notice that an
Environmental Action will be filed against a Loan Party or its Subsidiaries, and
(iii) written notice of a violation, citation, or other administrative order
from a Governmental Authority.

 

5.10                        Disclosure Updates.  Each Loan Party will, promptly
and in no event later than five Business Days after obtaining knowledge thereof,
notify Agent if any written information, exhibit, or report furnished to Agent
or the Lenders contained, at the time it was furnished, any untrue statement of
a material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made.  The foregoing to the contrary notwithstanding, any notification
pursuant to the foregoing provision will not cure or remedy the effect of the
prior untrue statement of a material fact or omission of any material fact nor
shall any such notification have the effect of amending or modifying this
Agreement or any of the Schedules hereto.

 

5.11                        Formation of Subsidiaries.  Each Loan Party will, at
the time that any Loan Party forms any direct or indirect Subsidiary,  acquires
any direct or indirect Subsidiary after the Closing Date, or at any time when
any direct or indirect Subsidiary of a Loan Party that previously was an
Immaterial Subsidiary becomes a Material Subsidiary, within 30 days of such
event (or such later date as permitted by Agent in its sole discretion)
(a) unless such Subsidiary is an Excluded Subsidiary, cause such new Subsidiary
(i) if such Subsidiary is a Domestic Subsidiary and Administrative Borrower
requests, subject to the consent of Agent, that such Domestic Subsidiary be
joined as a Borrower hereunder, to provide to Agent a Joinder to this Agreement,
and (ii) to provide to Agent a joinder to the Guaranty and Security Agreement,
in each case, together with such other security agreements (including Mortgages
with respect to any Real Property owned in fee of such new Subsidiary with a
fair market value of greater than $2,000,000), as well as appropriate financing
statements (and with respect to all property subject to a Mortgage, fixture
filings), all in form and substance reasonably satisfactory to Agent (including
being sufficient to grant Agent a first priority Lien (subject to Permitted
Liens) in and to the assets of such newly formed or acquired Subsidiary),
(b) provide, or cause the applicable Loan Party to provide, to Agent a pledge
agreement (or an addendum to the Guaranty and Security Agreement) and
appropriate certificates and powers or financing statements, pledging all of the
direct or beneficial ownership interest in such new Subsidiary in form and
substance reasonably satisfactory to Agent; provided, that only 65% of the total
outstanding voting Equity Interests of any first tier Subsidiary of a Loan Party
that is a CFC or a Disregarded Person (and none of the Equity Interests of any
Subsidiary of such CFC or Disregarded Person) shall be required to be pledged,
and (c) provide to Agent all other documentation, including the Governing
Documents of such Subsidiary and one or more opinions of counsel reasonably
satisfactory to Agent, which, in its opinion, is appropriate with respect to the
execution and delivery of the applicable

 

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documentation referred to above (including policies of title insurance, flood
certification documentation or other documentation with respect to all Real
Property owned in fee and subject to a mortgage).  Any document, agreement, or
instrument executed or issued pursuant to this Section 5.11 shall constitute a
Loan Document.

 

5.12                        Further Assurances.  Each Loan Party will, and will
cause each of the other Loan Parties to, at any time upon the reasonable request
of Agent, execute or deliver to Agent any and all financing statements, fixture
filings, security agreements, pledges, assignments, mortgages, deeds of trust,
opinions of counsel, and all other documents (the “Additional Documents”) that
Agent may reasonably request in form and substance reasonably satisfactory to
Agent, to create, perfect, and continue perfected or to better perfect Agent’s
Liens in all of the assets of each of the Loan Parties (whether now owned or
hereafter arising or acquired, tangible or intangible, real or personal) (other
than any assets expressly excluded from the Collateral (as defined in the
Guaranty and Security Agreement) pursuant to Section 3 of the Guaranty and
Security Agreement), to create and perfect Liens in favor of Agent in any Real
Property acquired by any other Loan Party with a fair market value in excess of
$2,000,000, and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents; provided, that the
foregoing shall not apply to any Excluded Subsidiary.  To the maximum extent
permitted by applicable law, if any Borrower or any other Loan Party refuses or
fails to execute or deliver any reasonably requested Additional Documents within
a reasonable period of time not to exceed 10 Business Days following the request
to do so, each Borrower and each other Loan Party hereby authorizes Agent to
execute any such Additional Documents in the applicable Loan Party’s name and
authorizes Agent to file such executed Additional Documents in any appropriate
filing office.  In furtherance of, and not in limitation of, the foregoing, each
Loan Party shall take such actions as Agent may reasonably request from time to
time to ensure that the Obligations are guaranteed by the Guarantors and are
secured by substantially all of the assets of the Loan Parties, including all of
the outstanding capital Equity Interests of each Borrower and its Subsidiaries
(in each case, other than with respect to any assets expressly excluded from the
Collateral (as defined in the Guaranty and Security Agreement) pursuant to
Section 3 of the Guaranty and Security Agreement).

 

5.13                        Lender Meetings.  Borrowers will, within 90 days
after the close of each fiscal year of Administrative Borrower, at the request
of Agent or of the Required Lenders and upon reasonable prior notice, hold a
meeting (at a mutually agreeable location and time or, at the option of Agent,
by conference call) with all Lenders who choose to attend such meeting at which
meeting shall be reviewed the financial results of the previous fiscal year and
the financial condition of the Loan Parties and their Subsidiaries and the
projections presented for the current fiscal year of Administrative Borrower.

 

5.14                        Location of Collateral; Chief Executive Office. 
Each Loan Party will keep their respective chief executive offices and the
location of their books and records only at the locations identified on Schedule
7 to the Guaranty and Security Agreement unless 10 day prior written notice is
given to Agent.  Each Loan Party will use their commercially reasonable efforts
to obtain Collateral Access Agreements for each respective chief executive
offices and locations where their books and records are kept.

 

5.15                        OFAC; Sanctions; Anti-Corruption Laws; Anti-Money
Laundering Laws.  Each Loan Party will, and will cause each of its Subsidiaries
to comply with all applicable Sanctions, Anti-Corruption Laws and Anti-Money
Laundering Laws.  Each of the Loan Parties and its Subsidiaries shall implement
and maintain in effect policies and procedures designed to ensure compliance by
the Loan Parties and their Subsidiaries and their respective directors,
officers, employees, agents and Affiliates with all Sanctions, Anti-Corruption
Laws and Anti-Money Laundering Laws.  Each of the Loan Parties shall and shall
cause their respective Subsidiaries to comply with all Sanctions,
Anti-Corruption Laws and Anti-Money Laundering Laws.

 

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5.16                        Material Contracts.  Contemporaneously with the
delivery of each Compliance Certificate pursuant to Section 5.1, Borrowers will
provide Agent with copies of (a) each Material Contract entered into since the
delivery of the previous Compliance Certificate, and (b) each material amendment
or modification of any Material Contract entered into since the delivery of the
previous Compliance Certificate.

 

5.17                        Bank Products.  On or before the 120th day (or such
longer period as agreed to by Agent in its reasonable sole discretion) after the
Closing Date, the Loan Parties shall establish their primary depository and
treasury management relationships with Wells Fargo or one or more of its
Affiliates and will maintain such depository and treasury management
relationships at all times during the term of the Agreement.

 

6.                                      NEGATIVE COVENANTS.

 

Each Borrower covenants and agrees that, until the termination of all of the
Commitments and the payment in full of the Obligations:

 

6.1                               Indebtedness.  Each Loan Party will not, and
will not permit any of its Subsidiaries to, create, incur, assume, suffer to
exist, guarantee, or otherwise become or remain, directly or indirectly, liable
with respect to any Indebtedness, except for Permitted Indebtedness.

 

6.2                               Liens.  Each Loan Party will not, and will not
permit any of its Subsidiaries to, create, incur, assume, or suffer to exist,
directly or indirectly, any Lien on or with respect to any of its assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens.

 

6.3                               Restrictions on Fundamental Changes.  Each
Loan Party will not, and will not permit any of its Subsidiaries to,

 

(a)                                 Other than in order to consummate a
Permitted Acquisition, enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Equity Interests, except for (i) any merger
between Loan Parties; provided, that a Borrower must be the surviving entity of
any such merger to which it is a party, (ii) any merger between a Loan Party and
a Subsidiary of such Loan Party that is not a Loan Party so long as such Loan
Party is the surviving entity of any such merger, and (iii) any merger between
Subsidiaries of any Loan Party that are not Loan Parties, and

 

(b)                                 liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution), except for (i) the liquidation or
dissolution of non-operating Immaterial Subsidiaries of any Loan Party, (ii) the
liquidation or dissolution of a Loan Party (other than any Borrower) so long as
(1) all of the assets (including any interest in any Equity Interests) of such
liquidating or dissolving Loan Party are transferred to a Loan Party that is not
liquidating or dissolving or (2) if the Borrower determines in good faith that
such liquidation or dissolution is in the best interests of the Borrower in
order to reduce costs and administrative burden and such dissolution or
liquidation is a Permitted Disposition, so long as no Default or Event of
Default has occurred and is continuing or would result therefrom, or (iii) the
liquidation or dissolution of a Subsidiary that is not a Loan Party (other than
any such Subsidiary the Equity Interests of which (or any portion thereof) is
subject to a Lien in favor of Agent) so long as all of the assets of such
liquidating or dissolving Subsidiary are transferred to a Subsidiary or a Loan
Party that is not liquidating or dissolving,

 

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(c)                                  suspend or cease operating a substantial
portion of its or their business, except as permitted pursuant to clauses (a) or
(b) above or in connection with a transaction permitted under Section 6.4, or

 

(d)                                 change its classification/status for U.S.
federal income tax purposes.

 

6.4                               Disposal of Assets.  Other than Permitted
Dispositions or transactions expressly permitted by Sections 6.3 or 6.9, each
Loan Party will not, and will not permit any of its Subsidiaries to, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of its or
their assets.  Notwithstanding the foregoing, if the most recent Borrowing Base
Certificate received by Agent includes Qualified Cash, the Loan Parties shall
not transfer any Qualified Cash out of a Controlled Account if after giving
effect to such transfer the amount of Qualified Cash remaining in such
Controlled Account is less than the amount of Qualified Cash shown in the most
recent Borrowing Base Certificate unless the Borrower delivers an updated
Borrowing Base Certificate demonstrating that after giving effect to such
transfer the Loan Parties are in compliance with the terms of this Agreement and
no payment would then be due under Section 2.4(e) of this Agreement.

 

6.5                               Nature of Business.  Each Loan Party will not,
and will not permit any of its Subsidiaries to, make any material change in the
nature of its or their business as of the date of the Closing Date or acquire
any properties or assets that are not reasonably related to the conduct of such
business activities or business activities that are reasonably related,
ancillary or complementary thereto; provided, that the foregoing shall not
prevent any Loan Party and its Subsidiaries from engaging in any business that
is reasonably related, complementary or ancillary to its or their business.

 

6.6                               Prepayments and Amendments.  Each Loan Party
will not, and will not permit any of its Subsidiaries to,

 

(a)                                 Except in connection with Refinancing
Indebtedness permitted by Section 6.1,

 

(i)                                     optionally prepay, redeem, defease,
purchase, or otherwise acquire any Indebtedness of any Loan Party or its
Subsidiaries, other than (A) the Obligations in accordance with this Agreement,
(B) Hedge Obligations, or (C) Permitted Intercompany Advances, or

 

(ii)                                  make any payment on account of
Subordinated Indebtedness that has been contractually subordinated in right of
payment to the Obligations if such payment is not permitted at such time under
the subordination terms and conditions, or

 

(b)                                 Directly or indirectly, amend, modify, or
change any of the terms or provisions of:

 

(i)                                     any agreement, instrument, document,
indenture, or other writing evidencing or concerning Permitted Indebtedness
other than (A) the Obligations in accordance with this Agreement, (B) Hedge
Obligations, (C) Permitted Intercompany Advances, and (D) Indebtedness permitted
under clauses (c), (h), (j) and (k) of the definition of Permitted Indebtedness
and any Refinancing Indebtedness with respect thereto, except to the extent that
such amendment, modification, or change could not, individually or in the
aggregate, reasonably be expected to be materially adverse to the interests of
the Lenders,

 

(ii)                                  any Material Contract except to the extent
that such amendment, modification, or change could not, individually or in the
aggregate, reasonably be expected to be materially adverse to the interests of
the Lenders, or

 

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(iii)                               the Governing Documents of any Loan Party or
any of its Subsidiaries if the effect thereof, either individually or in the
aggregate, could reasonably be expected to be materially adverse to the
interests of the Lenders.

 

6.7                               Restricted Payments.  Each Loan Party will
not, and will not permit any of its Subsidiaries to, make any Restricted
Payment; provided, that so long as it is permitted by law,

 

(a)                                 so long as no Event of Default shall have
occurred and be continuing or would result therefrom, Administrative Borrower
may make distributions to former or current employees, officers, consultants or
directors of Administrative Borrower (or any spouses, ex-spouses, or estates of
any of the foregoing) on account of redemptions of Equity Interests of
Administrative Borrower held by such Persons; provided, that the aggregate
amount of such redemptions (other than redemptions made in connection with tax
payments) made by Administrative Borrower during the term of this Agreement plus
the amount of Indebtedness outstanding under clause (l) of the definition of
Permitted Indebtedness and purchase under clause e(ii) of this definition, does
not exceed $2,500,000 in the aggregate,

 

(b)                                 so long as no Event of Default shall have
occurred and be continuing or would result therefrom, Administrative Borrower
may make distributions to former employees, officers, consultants or directors
of Administrative Borrower (or any spouses, ex-spouses, or estates of any of the
foregoing), solely in the form of forgiveness of Indebtedness of such Persons
owing to Administrative Borrower on account of repurchases of the Equity
Interests of Administrative Borrower held by such Persons; provided, that such
Indebtedness was incurred by such Persons solely to acquire Equity Interests of
Administrative Borrower and the amount of Indebtedness forgiven does not exceed
$1,000,000,

 

(c)                                  [Intentionally omitted.]

 

(d)                                 Subsidiaries of a Loan Party may make
distributions to a Loan Party,

 

(e)                                  (i) repurchase Equity Interests from
stockholders owning less than 1% of the outstanding equity securities for
aggregate consideration of less than $1,000,000 in any twelve month period and
$200,000 in each instance and (ii) make other purchases of Equity Interests in
aggregate with distributions under clause (a) of this definition and
Indebtedness outstanding under clause (l) of the definition of Permitted
Indebtedness not greater than $2,500,000 per Fiscal Year, provided, that no
Event of Default has occurred and is continuing (both before and after giving
effect thereto), at the time of the repurchase,

 

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

 

(g)                                  so long as no Event of Default shall have
occurred and be continuing or would result therefrom, a Borrower may distribute
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, in the ordinary course of business consistent with past practice,
employment arrangements, stock options, equity compensation awards, and other
benefit plans to employees, officers, consultants or directors, or

 

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

 

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6.8                               Accounting Methods.  Each Loan Party will not,
and will not permit any of its Subsidiaries to, modify or change its fiscal year
or its method of accounting (other than as may be required to conform to GAAP).

 

6.9                               Investments.  Each Loan Party will not, and
will not permit any of its Subsidiaries to, directly or indirectly, make or
acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment except for Permitted
Investments.

 

6.10                        Transactions with Affiliates.  Each Loan Party will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction with any Affiliate of any Loan
Party or any of its Subsidiaries except for:

 

(a)                                 transactions (other than the payment of
management, consulting, monitoring, or advisory fees) between such Loan Party or
its Subsidiaries, on the one hand, and any Affiliate of such Loan Party or its
Subsidiaries, on the other hand, so long as such transactions are no less
favorable, taken as a whole, to such Loan Party or its Subsidiaries, as
applicable, than would be obtained in an arm’s length transaction with a
non-Affiliate,

 

(b)                                 any fees or indemnities provided for the
benefit of employees, officers, directors (or comparable managers) or
consultants of a Loan Party or one of its Subsidiaries,

 

(c)                                  (i) the payment of compensation, severance,
or employee benefit arrangements to employees, officers, consultants and
directors of a Loan Party or one of its Subsidiaries in the ordinary course of
business in accordance with applicable law and (ii) loans or advances to
employees, officers or other directors of a Loan Party that would otherwise be
Permitted Investments,

 

(d)                                 (i) transactions solely among the Loan
Parties, (ii) transactions solely among Subsidiaries of Loan Parties that are
not Loan Parties, and (iii) transactions pursuant to agreements listed on
Schedule 6.10 of the Disclosure Letter substantially as such agreements are in
effect on the Closing Date or as specifically approved in writing by Agent,

 

(e)                                  transactions permitted by Section 6.3,
Section 6.7, or Section 6.9,

 

(f)                                   sale of Qualified Equity Interests to
Affiliates, and

 

(g)                                  any payments or other transactions pursuant
to any tax sharing agreement in existence on the Closing Date or specifically
approved in writing by Agent.

 

6.11                        Use of Proceeds.  Each Loan Party will not, and will
not permit any of its Subsidiaries to, use the proceeds of any Loan made
hereunder for any purpose other than (a) on the Closing Date, (i) to repay, in
full, the outstanding principal, accrued interest, and accrued fees and expenses
owing under or in connection with the Existing Credit Facility, and (ii) to pay
the fees, costs, and expenses incurred in connection with this Agreement, the
other Loan Documents, and the transactions contemplated hereby and thereby, in
each case, as set forth in the Flow of Funds Agreement, and (b) thereafter,
consistent with the terms and conditions hereof, for lawful and permitted
general corporate purposes; provided that (x) no part of the proceeds of the
Loans will be used to purchase or carry any such Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any such Margin Stock
or for any purpose that violates the provisions of Regulation T, U or X of the
Board of Governors, (y) no part of the proceeds of any Loan or Letter of Credit
will be used, directly or indirectly, to make any payments to a Sanctioned
Entity or a Sanctioned Person, to fund any investments, loans or contributions
in, or otherwise make such proceeds available to, a Sanctioned Entity or a
Sanctioned Person, to fund any operations, activities or

 

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business of a Sanctioned Entity or a Sanctioned Person, or in any other manner
that would result in a violation of Sanctions by any Person, and (z) that no
part of the proceeds of any Loan or Letter of Credit will be used, directly or
indirectly, in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving of money, or anything else of value, to
any Person in violation of any Sanctions, Anti-Corruption Laws or Anti-Money
Laundering Laws.

 

7.                                      FINANCIAL COVENANTS.

 

Each Borrower covenants and agrees that, until the termination of all of the
Commitments and the payment in full of the Obligations, Borrowers will not
permit Liquidity to be less than $20,000,000, of which at least $5,000,000 shall
be comprised of Excess Availability.  No Qualified Cash included in the
Borrowing Base and thereby included in the calculation of Excess Availability
shall be otherwise included as Qualified Cash for purposes of determining
Liquidity.

 

8.                                      EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

 

8.1                               Payments.  If Borrowers fail to pay when due
and payable, or when declared due and payable, (a) all or any portion of the
Obligations consisting of interest, fees, or charges due the Lender Group,
reimbursement of Lender Group Expenses, or other amounts (other than any portion
thereof constituting principal) constituting Obligations (including any portion
thereof that accrues after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), and such failure continues for a period of three
Business Days, (b) all or any portion of the principal of the Loans, or (c) any
amount payable to Issuing Bank in reimbursement of any drawing under a Letter of
Credit;

 

8.2                               Covenants.  If any Loan Party or any of its
Subsidiaries:

 

(a)                                 fails to perform or observe any covenant or
other agreement contained in any of (i) Sections 3.6, 5.1, 5.2, 5.3 (solely if
any Borrower is not in good standing in its jurisdiction of organization), 5.6,
5.7 (solely if any Borrower refuses to allow Agent or its representatives or
agents to visit any Borrower’s properties, inspect its assets or books or
records, examine and make copies of its books and records, or discuss Borrowers’
affairs, finances, and accounts with officers and employees of any Borrower),
5.10, 5.11, 5.13, 5.14, 5.15, 5.16, or 5.17 of this Agreement, (ii) Section 6 of
this Agreement, (iii) Section 7 of this Agreement, or (iv) Section 7 of the
Guaranty and Security Agreement;

 

(b)                                 fails to perform or observe any covenant or
other agreement contained in any of Sections 5.3 (other than if any Borrower is
not in good standing in its jurisdiction of organization), 5.4, 5.5, 5.8, and
5.12 of this Agreement and such failure continues for a period of ten days after
the earlier of (i) the date on which such failure shall first become known to
any officer of any Borrower, or (ii) the date on which written notice thereof is
given to Borrowers by Agent; or

 

(c)                                  fails to perform or observe any covenant or
other agreement contained in this Agreement, or in any of the other Loan
Documents, in each case, other than any such covenant or agreement that is the
subject of another provision of this Section 8 (in which event such other
provision of this Section 8 shall govern), and such failure continues for a
period of thirty days after the earlier of (i) the date on which such failure
shall first become known to any officer of any Borrower, or (ii) the date on
which written notice thereof is given to Borrowers by Agent;

 

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8.3                               Judgments.  If one or more judgments, orders,
or awards for the payment of money involving an aggregate amount of $2,500,000,
or more (except to the extent fully covered (other than to the extent of
customary deductibles) by insurance pursuant to which the insurer has not denied
coverage) is entered or filed against a Loan Party or any of its Subsidiaries,
or with respect to any of their respective assets, and either (a) there is a
period of 30 consecutive days at any time after the entry of any such judgment,
order, or award during which (i) the same is not discharged, satisfied, vacated,
or bonded pending appeal, or (ii) a stay of enforcement thereof is not in
effect, or (b) enforcement proceedings are commenced upon such judgment, order,
or award;

 

8.4                               Voluntary Bankruptcy, etc.  If an Insolvency
Proceeding is commenced by a Loan Party or any of its Subsidiaries;

 

8.5                               Involuntary Bankruptcy, etc.  If an Insolvency
Proceeding is commenced against a Loan Party or any of its Subsidiaries and any
of the following events occur: (a) such Loan Party or such Subsidiary consents
to the institution of such Insolvency Proceeding against it, (b) the petition
commencing the Insolvency Proceeding is not timely controverted, (c) the
petition commencing the Insolvency Proceeding is not dismissed within sixty
calendar days of the date of the filing thereof, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
such Loan Party or its Subsidiary, or (e) an order for relief shall have been
issued or entered therein;

 

8.6                               Default Under Other Agreements.  If there is a
default in one or more agreements to which a Loan Party or any of its
Subsidiaries is a party with one or more third Persons relative to a Loan
Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate amount
of $2,500,000 or more, and such default (i) occurs at the final maturity of the
obligations thereunder, or (ii) results in a right by such third Person,
irrespective of whether exercised, to accelerate the maturity of such Loan
Party’s or its Subsidiary’s obligations thereunder;

 

8.7                               Representations, etc.  If any warranty,
representation, certificate, statement, or Record made herein or in any other
Loan Document or delivered in writing to Agent or any Lender in connection with
this Agreement or any other Loan Document proves to be untrue in any material
respect (except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed
making thereof;

 

8.8                               Guaranty.  If the obligation of any Guarantor
under the guaranty contained in the Guaranty and Security Agreement is limited
or terminated by operation of law or by such Guarantor (other than in accordance
with the terms of this Agreement) or if any Guarantor repudiates or revokes or
purports to repudiate or revoke any such guaranty;

 

8.9                               Security Documents.  If the Guaranty and
Security Agreement or any other Loan Document that purports to create a Lien,
shall, for any reason, fail or cease to create a valid and perfected and (except
to the extent of Permitted Liens which are non-consensual Permitted Liens,
permitted purchase money Liens or the interests of lessors under Capital Leases)
first priority Lien on the Collateral covered thereby, except (a) as a result of
a disposition of the applicable Collateral in a transaction permitted under this
Agreement, (b) with respect to Collateral the aggregate value of which, for all
such Collateral, does not exceed at any time, $250,000;

 

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8.10                        Loan Documents.  The validity or enforceability of
any Loan Document shall at any time for any reason  (other than solely as the
result of an action or failure to act on the part of Agent) be declared to be
null and void, or a proceeding shall be commenced by a Loan Party or its
Subsidiaries, or by any Governmental Authority having jurisdiction over a Loan
Party or its Subsidiaries, seeking to establish the invalidity or
unenforceability thereof, or a Loan Party or its Subsidiaries shall deny that
such Loan Party or its Subsidiaries has any liability or obligation purported to
be created under any Loan Document; or

 

8.11                        Change of Control.  A Change of Control shall occur.

 

9.                                      RIGHTS AND REMEDIES.

 

9.1                               Rights and Remedies.  Upon the occurrence and
during the continuation of an Event of Default, Agent may, and, at the
instruction of the Required Lenders, shall, in addition to any other rights or
remedies provided for hereunder or under any other Loan Document or by
applicable law, do any one or more of the following:

 

(a)                                 by written notice to Borrowers, (i) declare
the principal of, and any and all accrued and unpaid interest and fees in
respect of, the Loans and all other Obligations (other than the Bank Product
Obligations), whether evidenced by this Agreement or by any of the other Loan
Documents to be immediately due and payable, whereupon the same shall become and
be immediately due and payable and Borrowers shall be obligated to repay all of
such Obligations in full, without presentment, demand, protest, or further
notice or other requirements of any kind, all of which are hereby expressly
waived by each Borrower, and (ii) direct Borrowers to provide (and Borrowers
agree that upon receipt of such notice Borrowers will provide) Letter of Credit
Collateralization to Agent to be held as security for Borrowers’ reimbursement
obligations for drawings that may subsequently occur under issued and
outstanding Letters of Credit;

 

(b)                                 by written notice to Borrowers, declare the
Commitments terminated, whereupon the Commitments shall immediately be
terminated together with (i) any obligation of any Revolving Lender to make
Revolving Loans, (ii) the obligation of the Swing Lender to make Swing Loans,
and (iii) the obligation of Issuing Bank to issue Letters of Credit; and

 

(c)                                  exercise all other rights and remedies
available to Agent or the Lenders under the Loan Documents, under applicable
law, or in equity.

 

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrowers or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations (other than the Bank Product Obligations), inclusive of the
principal of, and any and all accrued and unpaid interest and fees in respect
of, the Loans and all other Obligations (other than the Bank Product
Obligations), whether evidenced by this Agreement or by any of the other Loan
Documents, shall automatically become and be immediately due and payable and
Borrowers shall automatically be obligated to repay all of such Obligations in
full (including Borrowers being obligated to provide (and Borrowers agree that
they will provide) (1) Letter of Credit Collateralization to Agent to be held as
security for Borrowers’ reimbursement obligations in respect of drawings that
may subsequently occur under issued and outstanding Letters of Credit and
(2) Bank Product Collateralization to be held as security for Borrowers’ or
their Subsidiaries’ obligations in respect of outstanding Bank Products),
without presentment, demand, protest, or notice or other requirements of any
kind, all of which are expressly waived by Borrowers.

 

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9.2                               Remedies Cumulative.  The rights and remedies
of the Lender Group under this Agreement, the other Loan Documents, and all
other agreements shall be cumulative.  The Lender Group shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity.  No exercise by the Lender Group of one right or remedy shall
be deemed an election, and no waiver by the Lender Group of any Default or Event
of Default shall be deemed a continuing waiver.  No delay by the Lender Group
shall constitute a waiver, election, or acquiescence by it.

 

10.                               WAIVERS; INDEMNIFICATION.

 

10.1                        Demand; Protest; etc.  Each Borrower waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which any Borrower may in any way be liable.

 

10.2                        The Lender Group’s Liability for Collateral.  Each
Borrower hereby agrees that:  (a) so long as Agent complies with its
obligations, if any, under the Code, the Lender Group shall not in any way or
manner be liable or responsible for:  (i) the safekeeping of the Collateral,
(ii) any loss or damage thereto occurring or arising in any manner or fashion
from any cause, (iii) any diminution in the value thereof, or (iv) any act or
default of any carrier, warehouseman, bailee, processor, forwarding agency, or
other Person, and (b) all risk of loss, damage, or destruction of the Collateral
shall be borne by the Loan Parties.

 

10.3                        Indemnification.  Each Borrower shall pay,
indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons, the Issuing Bank, and each Participant (each, an “Indemnified Person”)
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, liabilities,
fines, costs, penalties, and damages, and all reasonable fees and disbursements
of attorneys, experts, or consultants and all other costs and expenses actually
incurred in connection therewith or in connection with the enforcement of this
indemnification (as and when they are incurred and irrespective of whether suit
is brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution and
delivery (provided, that Borrowers shall not be liable for costs and expenses
(including attorneys’ fees) of any Lender (other than Wells Fargo) incurred in
advising, structuring, drafting, reviewing, administering or syndicating the
Loan Documents), enforcement, performance, or administration (including any
restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Borrowers’ and their Subsidiaries’ compliance with the terms of
the Loan Documents (provided, that the indemnification in this clause (a) shall
not extend to (i) disputes solely between or among the Lenders that do not
involve any acts or omissions of any Loan Party, or (ii) disputes solely between
or among the Lenders and their respective Affiliates that do not involve any
acts or omissions of any Loan Party; it being understood and agreed that the
indemnification in this clause (a) shall extend to Agent (but not the Lenders
unless the dispute involves an act or omission of a Loan Party) relative to
disputes between or among Agent on the one hand, and one or more Lenders, or one
or more of their Affiliates, on the other hand, (b) with respect to any actual
or prospective investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, the making of any Loans or issuance of any
Letters of Credit hereunder, or the use of the proceeds of the Loans or the
Letters of Credit provided hereunder (irrespective of whether any Indemnified
Person is a party thereto), or any act, omission, event, or circumstance in any
manner related thereto, and (c) in connection with or arising out of any
presence or release of Hazardous Materials at, on, under, to or from any assets
or properties owned, leased or operated by any Loan Party or any of its
Subsidiaries or any Environmental Actions, Environmental Liabilities or Remedial
Actions related in any way to any such assets or properties of any Loan Party or
any of its Subsidiaries (each and all of the foregoing, the “Indemnified
Liabilities”).  This Section 10.3 shall not apply with respect to Taxes which
shall be governed by Section 16 other than any Taxes that represent losses,
claims, damages, etc. arising from any non-Tax claim.  The foregoing to the
contrary

 

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notwithstanding, no Borrower shall have any obligation to any Indemnified Person
under this Section 10.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person or its officers,
directors, employees, attorneys, or agents.  This provision shall survive the
termination of this Agreement and the repayment in full of the Obligations.  If
any Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto.  WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY
TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF
SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

11.                               NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or telefacsimile.  In the case of notices or
demands to any Loan Party or Agent, as the case may be, they shall be sent to
the respective address set forth below:

 

If to any Loan Party:

c/o Administrative Borrower

 

NEOPHOTONICS CORPORATION

 

2911 Zanker Road

 

San Jose, CA 95134

 

Attn: General Counsel

 

Email: judi.otteson@neophotonics.com

 

 

with copies to:

COOLEY LLP

 

3175 Hanover Street

 

Palo Alto, CA 94304

 

Attn: Jordan Sellers

 

Email:

 

 

If to Agent:

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

2450 Colorado Avenue

 

Suite 3000 West

 

Santa Monica, California 90404

 

Attn: Supremna Cole

 

Fax No.: 310-453-7413

 

Email: Supremna.Cole@wellsfargo.com

 

 

with copies to:

MORGAN, LEWIS & BOCKIUS LLP

 

300 S. Grand Avenue, Twenty-Second Floor

 

Los Angeles, CA 90071-3132

 

Attn: Marshall Stoddard, Jr., Esq.

 

Fax No.: 213-612-2501

 

Email: marshall.stoddard@morganlewis.com

 

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Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party.  All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or three Business
Days after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received,
(b) notices by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient) and (c) notices by electronic mail shall be deemed received
upon the sender’s receipt of an acknowledgment from the intended recipient (such
as by the “return receipt requested” function, as available, return email or
other written acknowledgment).

 

12.                               CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER;
JUDICIAL REFERENCE PROVISION.

 

(a)                                 THE VALIDITY OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, THE RIGHTS OF
THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO, AND ANY CLAIMS, CONTROVERSIES OR
DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.

 

(b)                                 THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA; PROVIDED, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH BORROWER AND EACH MEMBER
OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 12(b).

 

(c)                                  TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE
THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY,
DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF
ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A “CLAIM”).  EACH BORROWER AND EACH
MEMBER OF

 

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THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

(d)                                 EACH BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF CALIFORNIA AND THE STATE OF CALIFORNIA, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT.  EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
SHALL AFFECT ANY RIGHT THAT AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY
LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(e)                                  NO CLAIM MAY BE MADE BY ANY LOAN PARTY
AGAINST AGENT, THE SWING LENDER, ANY OTHER LENDER, ISSUING BANK, OR ANY
AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR
ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL,
PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN RESPECT OF ANY CLAIM FOR BREACH OF
CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY
HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES,
WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS
FAVOR.

 

(f)                                   IN THE EVENT ANY LEGAL PROCEEDING IS FILED
IN A COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY
HERETO IN CONNECTION WITH ANY CLAIM AND THE WAIVER SET FORTH IN CLAUSE (C) ABOVE
IS NOT ENFORCEABLE IN SUCH PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:

 

(i)                           WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN
SUBCLAUSE (ii) BELOW, ANY CLAIM SHALL BE DETERMINED BY A GENERAL REFERENCE
PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL
PROCEDURE SECTIONS 638 THROUGH 645.1.  THE PARTIES INTEND THIS GENERAL REFERENCE
AGREEMENT TO BE SPECIFICALLY ENFORCEABLE.  VENUE FOR THE REFERENCE PROCEEDING
SHALL BE IN THE COUNTY OF LOS ANGELES, CALIFORNIA.

 

(ii)                        THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A
GENERAL REFERENCE PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY
INTERESTS IN REAL OR PERSONAL PROPERTY, (B) EXERCISE OF SELF-

 

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HELP REMEDIES (INCLUDING SET-OFF OR RECOUPMENT), (C) APPOINTMENT OF A RECEIVER,
AND (D) TEMPORARY, PROVISIONAL, OR ANCILLARY REMEDIES (INCLUDING WRITS OF
ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS, OR PRELIMINARY
INJUNCTIONS).  THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE
OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY
SUCH EXERCISE OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE
IN A REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER
MATTER.

 

(iii)                     UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES
SHALL SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE.  IF THE
PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN DAYS OF SUCH WRITTEN REQUEST,
THEN, ANY PARTY SHALL HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE
PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B).  THE REFEREE
SHALL BE APPOINTED TO SIT WITH ALL OF THE POWERS PROVIDED BY LAW.  PENDING
APPOINTMENT OF THE REFEREE, THE COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR
PROVISIONAL REMEDIES.

 

(iv)                    EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
REFEREE SHALL DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS
CONDUCTED INCLUDING THE TIME AND PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF
EVIDENCE, AND ALL OTHER QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE
REFERENCE PROCEEDING.  ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE
REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT
WHEN ANY PARTY SO REQUESTS A COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT
REPORTER SHALL BE USED AND THE REFEREE SHALL BE PROVIDED A COURTESY COPY OF THE
TRANSCRIPT.  THE PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE
FOR AND PAY THE COSTS OF THE COURT REPORTER; PROVIDED, THAT SUCH COSTS, ALONG
WITH THE REFEREE’S FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT
PREVAIL, AS DETERMINED BY THE REFEREE.

 

(v)                       THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING
CONFERENCES.  THE PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE
SHALL OVERSEE DISCOVERY IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL
ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN
PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA.

 

(vi)                    THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE
TO PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES
IN ACCORDANCE WITH CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW.  THE REFEREE SHALL
BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION
WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR
SUMMARY JUDGMENT.  THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT
SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF

 

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LAW.  THE REFEREE SHALL ISSUE A DECISION AND PURSUANT TO CALIFORNIA CODE OF
CIVIL PROCEDURE, SECTION 644, THE REFEREE’S DECISION SHALL BE ENTERED BY THE
COURT AS A JUDGMENT IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE
COURT.  THE FINAL JUDGMENT OR ORDER FROM ANY APPEALABLE DECISION OR ORDER
ENTERED BY THE REFEREE SHALL BE FULLY APPEALABLE AS IF IT HAS BEEN ENTERED BY
THE COURT.

 

(vii)                 THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED
IN A GENERAL REFERENCE PROCEEDING PURSUANT HERETO 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 HERETO KNOWINGLY AND VOLUNTARILY
AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO
ANY DISPUTE BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS.

 

13.                               ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

13.1                        Assignments and Participations.

 

(a)                                 (i)  Subject to the conditions set forth in
clause (a)(ii) below, any Lender may assign and delegate all or any portion of
its rights and duties under the Loan Documents (including the Obligations owed
to it and its Commitments) to one or more assignees so long as such prospective
assignee is an Eligible Transferee (each, an “Assignee”), with the prior written
consent (such consent not be unreasonably withheld or delayed) of:

 

(A)                               Borrowers; provided, that no consent of
Borrowers shall be required (1)  if a Default or Event of Default has occurred
and is continuing or (2) in connection with an assignment to a Person that is a
Lender or an Affiliate (other than natural persons) of a Lender; provided
further, that Borrowers shall be deemed to have consented to a proposed
assignment unless they object thereto by written notice to Agent within five
Business Days after having received notice thereof; and

 

(B)                               Agent, Swing Lender, and Issuing Bank.

 

(ii)                                  Assignments shall be subject to the
following additional conditions:

 

(A)                               no assignment may be made (i) so long as no
Event of Default has occurred and is continuing, to a Disqualified Institution,
or (ii) to a natural person,

 

(B)                               no assignment may be made to a Loan Party or
an Affiliate of a Loan Party,

 

(C)                               the amount of the Commitments and the other
rights and obligations of the assigning Lender hereunder and under the other
Loan Documents subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to Agent)
shall be in a minimum amount (unless waived by Agent) of $5,000,000 (except such
minimum amount shall not apply to (I) an assignment or delegation by any Lender
to any other Lender, an Affiliate of any Lender, or a Related Fund of such
Lender, or (II) a group of new Lenders, each of which is an Affiliate of each
other or a Related Fund of such new Lender to the extent that the aggregate
amount to be assigned to all such new Lenders is at least $5,000,000),

 

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(D)          each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement,

 

(E)           the parties to each assignment shall execute and deliver to Agent
an Assignment and Acceptance; provided, that Borrowers and Agent may continue to
deal solely and directly with the assigning Lender in connection with the
interest so assigned to an Assignee until written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Borrowers and Agent by such Lender
and the Assignee,

 

(F)           unless waived by Agent, the assigning Lender or Assignee has paid
to Agent, for Agent’s separate account, a processing fee in the amount of
$3,500, and

 

(G)          the assignee, if it is not a Lender, shall deliver to Agent an
Administrative Questionnaire in a form approved by Agent (the “Administrative
Questionnaire”).

 

(b)           From and after the date that Agent receives the executed
Assignment and Acceptance and, if applicable, payment of the required processing
fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall be a “Lender” and shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assigning Lender
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 10.3) and be
released from any future obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto); provided,
that nothing contained herein shall release any assigning Lender from
obligations that survive the termination of this Agreement, including such
assigning Lender’s obligations under Section 15 and Section 17.9(a).

 

(c)           By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows:  (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (v) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent, by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto, and (vi) such Assignee
agrees that it will perform all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

 

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(d)           Immediately upon Agent’s receipt of the required processing fee,
if applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom.  The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.

 

(e)           Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons (a “Participant”) participating
interests in all or any portion of its Obligations, its Commitment, and the
other rights and interests of that Lender (the “Originating Lender”) hereunder
and under the other Loan Documents; provided, that (i) the Originating Lender
shall remain a “Lender” for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the Originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender (other than a
waiver of default interest), or (E) decreases the amount or postpones the due
dates of scheduled principal repayments or prepayments or premiums payable to
such Participant through such Lender, (v) no participation shall be sold to a
natural person, (vi) no participation shall be sold to a Loan Party or an
Affiliate of a Loan Party, and (vii) all amounts payable by Borrowers hereunder
shall be determined as if such Lender had not sold such participation, except
that, if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of set
off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement.  The rights of any
Participant only shall be derivative through the Originating Lender with whom
such Participant participates and no Participant shall have any rights under
this Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Borrowers, the Collateral, or otherwise in respect of the
Obligations.  No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves.

 

(f)            In connection with any such assignment or participation or
proposed assignment or participation or any grant of a security interest in, or
pledge of, its rights under and interest in this Agreement, a Lender may,
subject to the provisions of Section 17.9,  disclose all documents and
information which it now or hereafter may have relating to any Loan Party and
its Subsidiaries and their respective businesses.

 

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(g)           Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement to secure obligations of such
Lender, including any pledge in favor of any Federal Reserve Bank in accordance
with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR
§203.24, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law; provided, that no such
pledge shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

(h)           Agent (as a non-fiduciary agent on behalf of Borrowers) shall
maintain, or cause to be maintained, a register (the “Register”) on which it
enters the name and address of each Lender as the registered owner of the Loan
(and the principal amount thereof and stated interest thereon) held by such
Lender (each, a “Registered Loan”).  Other than in connection with an assignment
by a Lender of all or any portion of its portion of the Commitments to an
Affiliate of such Lender or a Related Fund of such Lender (i) a Registered Loan
(and the registered note, if any, evidencing the same) may be assigned or sold
in whole or in part only by registration of such assignment or sale on the
Register (and each registered note shall expressly so provide) and (ii) any
assignment or sale of all or part of such Registered Loan (and the registered
note, if any, evidencing the same) may be effected only by registration of such
assignment or sale on the Register, together with the surrender of the
registered note, if any, evidencing the same duly endorsed by (or accompanied by
a written instrument of assignment or sale duly executed by) the holder of such
registered note, whereupon, at the request of the designated assignee(s) or
transferee(s), one or more new registered notes in the same aggregate principal
amount shall be issued to the designated assignee(s) or transferee(s).  Prior to
the registration of assignment or sale of any Registered Loan (and the
registered note, if any evidencing the same), Borrowers shall treat the Person
in whose name such Registered Loan (and the registered note, if any, evidencing
the same) is registered as the owner thereof for the purpose of receiving all
payments thereon and for all other purposes, notwithstanding notice to the
contrary.  In the case of any assignment by a Lender of all or any portion of
its Commitment to an Affiliate of such Lender or a Related Fund of such Lender,
and which assignment is not recorded in the Register, the assigning Lender, on
behalf of Borrowers, shall maintain a register comparable to the Register.

 

(i)            In the event that a Lender sells participations in the Registered
Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall
maintain (or cause to be maintained) a register on which it enters the name of
all participants in the Registered Loans held by it (and the principal amount
(and stated interest thereon) of the portion of such Registered Loans that is
subject to such participations) (the “Participant Register”).  A Registered Loan
(and the Registered Note, if any, evidencing the same) may be participated in
whole or in part only by registration of such participation on the Participant
Register (and each registered note shall expressly so provide).  Any
participation of such Registered Loan (and the registered note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register. No Lender shall have any obligation
to disclose all or any portion of the Participant Register (including the
identity of any Participant or any information relating to a Participant’s
interest in any commitments, loans, letters of credit or its other obligations
under any Loan Document) to any Person except to the extent that such disclosure
is necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations.  The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary. 
For the avoidance of doubt, Agent (in its capacity as Agent) shall have no
responsibility for maintaining a Participant Register.

 

(j)            Agent shall make a copy of the Register (and each Lender shall
make a copy of its Participant Register to the extent it has one) available for
review by Borrowers from time to time as Borrowers may reasonably request.

 

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13.2        Successors.  This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, that no
Borrower may assign this Agreement or any rights or duties hereunder without the
Lenders’ prior written consent and any prohibited assignment shall be absolutely
void ab initio.  No consent to assignment by the Lenders shall release any
Borrower from its Obligations.  A Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 13.1 and, except as expressly required pursuant to Section 13.1, no
consent or approval by any Borrower is required in connection with any such
assignment.

 

14.          AMENDMENTS; WAIVERS.

 

14.1        Amendments and Waivers.

 

(a)           No amendment, waiver or other modification of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements or
the Fee Letter), and no consent with respect to any departure by any Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and the Loan Parties that are party thereto and then any such waiver or
consent shall be effective, but only in the specific instance and for the
specific purpose for which given; provided, that no such waiver, amendment, or
consent shall, unless in writing and signed by all of the Lenders directly and
adversely affected thereby and all of the Loan Parties that are party thereto,
do any of the following:

 

(i)         increase the amount of or extend the expiration date of any
Commitment of any Lender or amend, modify, or eliminate Section 2.4(c),

 

(ii)        postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

 

(iii)       reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document (except (y) in connection with the
waiver of applicability of Section 2.6(c) (which waiver shall be effective with
the written consent of the Required Lenders), and (z) that any amendment or
modification of defined terms used in the financial covenants in this Agreement
shall not constitute a reduction in the rate of interest or a reduction of fees
for purposes of this clause (iii)),

 

(iv)       amend, modify, or eliminate this Section or any provision of this
Agreement providing for consent or other action by all Lenders,

 

(v)        amend, modify, or eliminate Section 3.1 or 3.2,

 

(vi)       amend, modify, or eliminate Section 15.11,

 

(vii)      other than as permitted by Section 15.11, release or contractually
subordinated Agent’s Lien in and to any of the Collateral,

 

(viii)     amend, modify, or eliminate the definitions of “Required Lenders”,
Supermajority Lenders or “Pro Rata Share”,

 

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(ix)       other than in connection with a merger, liquidation, dissolution or
sale of such Person expressly permitted by the terms hereof or the other Loan
Documents, release any Borrower or any Guarantor from any obligation for the
payment of money or consent to the assignment or transfer by any Borrower or any
Guarantor of any of its rights or duties under this Agreement or the other Loan
Documents,

 

(x)        amend, modify, or eliminate any of the provisions of
Section 2.4(b)(i), (ii) or (iii), or

 

(xi)       amend, modify, or eliminate any of the provisions of Section 13.1
with respect to assignments to, or participations with, Persons who are Loan
Parties or Affiliates of a Loan Party;

 

(b)           No amendment, waiver, modification, or consent shall amend,
modify, waive, or eliminate,

 

(i)         the definition of, or any of the terms or provisions of, the Fee
Letter, without the written consent of Agent and Borrowers (and shall not
require the written consent of any of the Lenders),

 

(ii)        any provision of Section 15 pertaining to Agent, or any other rights
or duties of Agent under this Agreement or the other Loan Documents, without the
written consent of Agent, Borrowers, and the Required Lenders;

 

(c)           No amendment, waiver, modification, elimination, or consent shall
amend, without written consent of Agent, Borrowers and the Supermajority
Lenders, modify, or eliminate the definition of Borrowing Base or any of the
defined terms (including the definitions of Eligible Accounts) that are used in
such definition to the extent that any such change results in more credit being
made available to Borrowers based upon the Borrowing Base, but not otherwise, or
the definition of Maximum Revolver Amount, or change Section 2.1(c);

 

(d)           No amendment, waiver, modification, elimination, or consent shall
amend, modify, or waive any provision of this Agreement or the other Loan
Documents pertaining to Issuing Bank, or any other rights or duties of Issuing
Bank under this Agreement or the other Loan Documents, without the written
consent of Issuing Bank, Agent, Borrowers, and the Required Lenders;

 

(e)           No amendment, waiver, modification, elimination, or consent shall
amend, modify, or waive any provision of this Agreement or the other Loan
Documents pertaining to Swing Lender, or any other rights or duties of Swing
Lender under this Agreement or the other Loan Documents, without the written
consent of Swing Lender, Agent, Borrowers, and the Required Lenders; and

 

(f)            Anything in this Section 14.1 to the contrary notwithstanding,
(i) any amendment, modification, elimination, waiver, consent, termination, or
release of, or with respect to, any provision of this Agreement or any other
Loan Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of any Loan
Party, shall not require consent by or the agreement of any Loan Party, and
(ii) any amendment, waiver, modification, elimination, or consent of or with
respect to any provision of this Agreement or any other Loan Document may be
entered into without the consent of, or over the objection of, any Defaulting
Lender other than any of the matters governed by Section 14.1(a)(i) through
(iii) that affect such Lender.  In addition, Agent may, with the consent of the
Borrowers only, amend, modify or supplement this Agreement to cure any
ambiguity, omission, defect or inconsistency, so long as such amendment,
modification or supplement does not adversely affect the rights of Agent, any
Lender, any Bank Product Provider or the Issuing Bank.

 

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14.2        Replacement of Certain Lenders.

 

(a)           If (i) any action to be taken by the Lender Group or Agent
hereunder requires the consent, authorization, or agreement of all Lenders or
all Lenders affected thereby and if such action has received the consent,
authorization, or agreement of the Required Lenders but not of all Lenders or
all Lenders affected thereby, or (ii) any Lender makes a claim for compensation
under Section 16, then Borrowers or Agent, upon at least five Business Days
prior irrevocable notice, may permanently replace any Lender that failed to give
its consent, authorization, or agreement (a “Non-Consenting Lender”) or any
Lender that made a claim for compensation (a “Tax Lender”) with one or more
Replacement Lenders, and the Non-Consenting Lender or Tax Lender, as applicable,
shall have no right to refuse to be replaced hereunder.  Such notice to replace
the Non-Consenting Lender or Tax Lender, as applicable, shall specify an
effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.

 

(b)           Prior to the effective date of such replacement, the
Non-Consenting Lender or Tax Lender, as applicable, and each Replacement Lender
shall execute and deliver an Assignment and Acceptance, subject only to the
Non-Consenting Lender or Tax Lender, as applicable, being repaid in full its
share of the outstanding Obligations (without any premium or penalty of any kind
whatsoever, but including (i) all interest, fees and other amounts that may be
due in payable in respect thereof, (ii) an assumption of its Pro Rata Share of
participations in the Letters of Credit, and (iii) Funding Losses).  If the
Non-Consenting Lender or Tax Lender, as applicable, shall refuse or fail to
execute and deliver any such Assignment and Acceptance prior to the effective
date of such replacement, Agent may, but shall not be required to, execute and
deliver such Assignment and Acceptance in the name or and on behalf of the
Non-Consenting Lender or Tax Lender, as applicable, and irrespective of whether
Agent executes and delivers such Assignment and Acceptance, the Non-Consenting
Lender or Tax Lender, as applicable, shall be deemed to have executed and
delivered such Assignment and Acceptance.  The replacement of any Non-Consenting
Lender or Tax Lender, as applicable, shall be made in accordance with the terms
of Section 13.1.  Until such time as one or more Replacement Lenders shall have
acquired all of the Obligations, the Commitments, and the other rights and
obligations of the Non-Consenting Lender or Tax Lender, as applicable, hereunder
and under the other Loan Documents, the Non-Consenting Lender or Tax Lender, as
applicable, shall remain obligated to make the Non-Consenting Lender’s or Tax
Lender’s, as applicable, Pro Rata Share of Revolving Loans and to purchase a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of participations in such Letters of Credit.

 

14.3        No Waivers; Cumulative Remedies.  No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof.  No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated.  No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent’s and each
Lender’s rights thereafter to require strict performance by Borrowers of any
provision of this Agreement.  Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.

 

15.          AGENT; THE LENDER GROUP.

 

15.1        Appointment and Authorization of Agent.  Each Lender hereby
designates and appoints Wells Fargo as its agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes (and by
entering into a Bank Product Agreement, each Bank Product Provider shall be
deemed to designate, appoint, and authorize) Agent to execute and deliver each
of the other Loan Documents on its behalf and to take such other action on its
behalf under the provisions of this

 

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Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to Agent by the terms of this Agreement
or any other Loan Document, together with such powers as are reasonably
incidental thereto.  Agent agrees to act as agent for and on behalf of the
Lenders (and the Bank Product Providers) on the conditions contained in this
Section 15.  Any provision to the contrary contained elsewhere in this Agreement
or in any other Loan Document notwithstanding, Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in the other
Loan Documents, nor shall Agent have or be deemed to have any fiduciary
relationship with any Lender (or Bank Product Provider), and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent.  Without limiting the generality of the foregoing, the use of the
term “agent” in this Agreement or the other Loan Documents with reference to
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law.  Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only a representative relationship between independent contracting
parties.  Each Lender hereby further authorizes (and by entering into a Bank
Product Agreement, each Bank Product Provider shall be deemed to authorize)
Agent to act as the secured party under each of the Loan Documents that create a
Lien on any item of Collateral.  Except as expressly otherwise provided in this
Agreement, Agent shall have and may use its sole discretion with respect to
exercising or refraining from exercising any discretionary rights or taking or
refraining from taking any actions that Agent expressly is entitled to take or
assert under or pursuant to this Agreement and the other Loan Documents. 
Without limiting the generality of the foregoing, or of any other provision of
the Loan Documents that provides rights or powers to Agent, Lenders agree that
Agent shall have the right to exercise the following powers as long as this
Agreement remains in effect:  (a) maintain, in accordance with its customary
business practices, ledgers and records reflecting the status of the
Obligations, the Collateral, payments and proceeds of Collateral, and related
matters, (b) execute or file any and all financing or similar statements or
notices, amendments, renewals, supplements, documents, instruments, proofs of
claim, notices and other written agreements with respect to the Loan Documents,
or to take any other action with respect to any Collateral or Loan Documents
which may be necessary to perfect, and maintain perfected, the security
interests and Liens upon Collateral pursuant to the Loan Documents, (c) make
Revolving Loans, for itself or on behalf of Lenders, as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute payments and proceeds
of the Collateral as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes,
(f) perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to any Loan Party or its Subsidiaries, the
Obligations, the Collateral, or otherwise related to any of same as provided in
the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.

 

15.2        Delegation of Duties.  Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.  Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

 

15.3        Liability of Agent.  None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders (or Bank Product
Providers) for any recital, statement, representation or warranty made by any
Loan Party or any of its Subsidiaries or Affiliates, or any officer or director
thereof, contained in this Agreement or in any other Loan Document,

 

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or in any certificate, report, statement or other document referred to or
provided for in, or received by Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Loan Party or its Subsidiaries or any other
party to any Loan Document to perform its obligations hereunder or thereunder. 
No Agent-Related Person shall be under any obligation to any Lenders (or Bank
Product Providers) to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the books and records or
properties of any Loan Party or its Subsidiaries.  No Agent-Related Person shall
have any liability to any Lender, and Loan Party or any of their respective
Affiliates if any request for a Loan, Letter of Credit or other extension of
credit was not authorized by the applicable Borrower.  Agent shall not be
required to take any action that, in its opinion or in the opinion of its
counsel, may expose it to liability or that is contrary to any Loan Document or
applicable law or regulation.

 

15.4        Reliance by Agent.  Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrowers or counsel to any
Lender), independent accountants and other experts selected by Agent.  Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable.  If Agent so requests, it shall first be indemnified to its
reasonable satisfaction by the Lenders (and, if it so elects, the Bank Product
Providers) against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action.  Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders (and Bank Product
Providers).

 

15.5        Notice of Default or Event of Default.  Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrowers referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a “notice of default.”  Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge.  If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default.  Each Lender shall be solely responsible for giving any
notices to its Participants, if any.  Subject to Section 15.4, Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Section 9; provided, that unless and
until Agent has received any such request, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.

 

15.6        Credit Decision.  Each Lender (and Bank Product Provider)
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to it, and that no act by Agent hereinafter taken, including any
review of the affairs of any Loan Party and its Subsidiaries or Affiliates,
shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender (or Bank Product Provider).  Each Lender
represents (and by entering into a Bank Product Agreement,

 

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each Bank Product Provider shall be deemed to represent) to Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such due diligence, documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of each Borrower or
any other Person party to a Loan Document, and all applicable bank regulatory
laws relating to the transactions contemplated hereby, and made its own decision
to enter into this Agreement and to extend credit to Borrowers.  Each Lender
also represents (and by entering into a Bank Product Agreement, each Bank
Product Provider shall be deemed to represent) that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of each Borrower or
any other Person party to a Loan Document.  Except for notices, reports, and
other documents expressly herein required to be furnished to the Lenders by
Agent, Agent shall not have any duty or responsibility to provide any Lender (or
Bank Product Provider) with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of any Borrower or any other Person party to a Loan Document
that may come into the possession of any of the Agent-Related Persons.  Each
Lender acknowledges (and by entering into a Bank Product Agreement, each Bank
Product Provider shall be deemed to acknowledge) that Agent does not have any
duty or responsibility, either initially or on a continuing basis (except to the
extent, if any, that is expressly specified herein) to provide such Lender (or
Bank Product Provider) with any credit or other information with respect to any
Borrower, its Affiliates or any of their respective business, legal, financial
or other affairs, and irrespective of whether such information came into Agent’s
or its Affiliates’ or representatives’ possession before or after the date on
which such Lender became a party to this Agreement (or such Bank Product
Provider entered into a Bank Product Agreement).

 

15.7        Costs and Expenses; Indemnification.  Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys’ fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to this Agreement or otherwise. 
Agent is authorized and directed to deduct and retain sufficient amounts from
payments or proceeds of the Collateral received by Agent to reimburse Agent for
such out-of-pocket costs and expenses prior to the distribution of any amounts
to Lenders (or Bank Product Providers).  In the event Agent is not reimbursed
for such costs and expenses by the Loan Parties and their Subsidiaries, each
Lender hereby agrees that it is and shall be obligated to pay to Agent such
Lender’s ratable thereof.  Whether or not the transactions contemplated hereby
are consummated, each of the Lenders, on a ratable basis, shall indemnify and
defend the Agent-Related Persons (to the extent not reimbursed by or on behalf
of Borrowers and without limiting the obligation of Borrowers to do so) from and
against any and all Indemnified Liabilities; provided, that no Lender shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting solely from such Person’s gross negligence or
willful misconduct nor shall any Lender be liable for the obligations of any
Defaulting Lender in failing to make a Revolving Loan or other extension of
credit hereunder.  Without limitation of the foregoing, each Lender shall
reimburse Agent upon demand for such Lender’s ratable share of any costs or out
of pocket expenses (including attorneys, accountants, advisors, and consultants
fees and expenses) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment, or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement or any
other Loan Document to the extent that Agent is not reimbursed for such expenses
by or on behalf of Borrowers.  The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of
Agent.

 

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15.8                        Agent in Individual Capacity.  Wells Fargo and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, provide Bank Products to, acquire Equity Interests in, and
generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with any Loan Party and its Subsidiaries and
Affiliates and any other Person party to any Loan Document as though Wells Fargo
were not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group.  The other members of the Lender Group
acknowledge (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to acknowledge) that, pursuant to such activities,
Wells Fargo or its Affiliates may receive information regarding a Loan Party or
its Affiliates or any other Person party to any Loan Documents that is subject
to confidentiality obligations in favor of such Loan Party or such other Person
and that prohibit the disclosure of such information to the Lenders (or Bank
Product Providers), and the Lenders acknowledge (and by entering into a Bank
Product Agreement, each Bank Product Provider shall be deemed to acknowledge)
that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under any obligation to provide such
information to them.  The terms “Lender” and “Lenders” include Wells Fargo in
its individual capacity.

 

15.9                        Successor Agent.  Agent may resign as Agent upon 30
days (ten days if an Event of Default has occurred and is continuing) prior
written notice to the Lenders (unless such notice is waived by the Required
Lenders) and Borrowers (unless such notice is waived by Borrowers or a Default
or Event of Default has occurred and is continuing) and without any notice to
the Bank Product Providers.  If Agent resigns under this Agreement, the Required
Lenders shall be entitled, with (so long as no Event of Default has occurred and
is continuing) the consent of Borrowers (such consent not to be unreasonably
withheld, delayed, or conditioned), appoint a successor Agent for the Lenders
(and the Bank Product Providers).  If, at the time that Agent’s resignation is
effective, it is acting as Issuing Bank or the Swing Lender, such resignation
shall also operate to effectuate its resignation as Issuing Bank or the Swing
Lender, as applicable, and it shall automatically be relieved of any further
obligation to issue Letters of Credit, or to make Swing Loans.  If no successor
Agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with the Lenders and Borrowers, a successor
Agent.  If Agent has materially breached or failed to perform any material
provision of this Agreement or of applicable law, the Required Lenders may agree
in writing to remove and replace Agent with a successor Agent from among the
Lenders with (so long as no Event of Default has occurred and is continuing) the
consent of Borrowers (such consent not to be unreasonably withheld, delayed, or
conditioned).  In any such event, upon the acceptance of its appointment as
successor Agent hereunder, such successor Agent shall succeed to all the rights,
powers, and duties of the retiring Agent and the term “Agent” shall mean such
successor Agent and the retiring Agent’s appointment, powers, and duties as
Agent shall be terminated.  After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Section 15 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.  If no successor Agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.

 

15.10                 Lender in Individual Capacity.  Any Lender and its
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, provide Bank Products to, acquire Equity Interests in
and generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with any Loan Party and its Subsidiaries and
Affiliates and any other Person party to any

 

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Loan Documents as though such Lender were not a Lender hereunder without notice
to or consent of the other members of the Lender Group (or the Bank Product
Providers).  The other members of the Lender Group acknowledge (and by entering
into a Bank Product Agreement, each Bank Product Provider shall be deemed to
acknowledge) that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding a Loan Party or its Affiliates or
any other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of such Loan Party or such other Person and that prohibit
the disclosure of such information to the Lenders, and the Lenders acknowledge
(and by entering into a Bank Product Agreement, each Bank Product Provider shall
be deemed to acknowledge) that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver such Lender will use
its reasonable best efforts to obtain), such Lender shall not be under any
obligation to provide such information to them.

 

15.11                 Collateral Matters.

 

(a)                                 The Lenders hereby irrevocably authorize
(and by entering into a Bank Product Agreement, each Bank Product Provider shall
be deemed to authorize) Agent to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by the Loan
Parties and their Subsidiaries of all of the Obligations, (ii) constituting
property being sold or disposed of if a release is required or desirable in
connection therewith and if Borrowers certify to Agent that the sale or
disposition is permitted under Section 6.4 (and Agent may rely conclusively on
any such certificate, without further inquiry), (iii) constituting property in
which no Loan Party or any of its Subsidiaries owned any interest at the time
Agent’s Lien was granted nor at any time thereafter, (iv) constituting property
leased or licensed to a Loan Party or its Subsidiaries under a lease or license
that has expired or is terminated in a transaction permitted under this
Agreement, or (v) in connection with a credit bid or purchase authorized under
this Section 15.11.  The Loan Parties and the Lenders hereby irrevocably
authorize (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to authorize) Agent, based upon the instruction of the
Required Lenders, to (a) consent to the sale of, credit bid, or purchase (either
directly or indirectly through one or more entities) all or any portion of the
Collateral at any sale thereof conducted under the provisions of the Bankruptcy
Code, including Section 363 of the Bankruptcy Code, (b) credit bid or purchase
(either directly or indirectly through one or more entities) all or any portion
of the Collateral at any sale or other disposition thereof conducted under the
provisions of the Code, including pursuant to Sections 9-610 or 9-620 of the
Code, or (c) credit bid or purchase (either directly or indirectly through one
or more entities) all or any portion of the Collateral at any other sale or
foreclosure conducted or consented to by Agent in accordance with applicable law
in any judicial action or proceeding or by the exercise of any legal or
equitable remedy.  In connection with any such credit bid or purchase, (i) the
Obligations owed to the Lenders and the Bank Product Providers shall be entitled
to be, and shall be, credit bid on a ratable basis (with Obligations with
respect to contingent or unliquidated claims being estimated for such purpose if
the fixing or liquidation thereof would not impair or unduly delay the ability
of Agent to credit bid or purchase at such sale or other disposition of the
Collateral and, if such contingent or unliquidated claims cannot be estimated
without impairing or unduly delaying the ability of Agent to credit bid at such
sale or other disposition, then such claims shall be disregarded, not credit
bid, and not entitled to any interest in the Collateral that is the subject of
such credit bid or purchase) and the Lenders and the Bank Product Providers
whose Obligations are credit bid shall be entitled to receive interests (ratably
based upon the proportion of their Obligations credit bid in relation to the
aggregate amount of Obligations so credit bid) in the Collateral that is the
subject of such credit bid or purchase (or in the Equity Interests of the any
entities that are used to consummate such credit bid or purchase), and
(ii) Agent, based upon the instruction of the Required Lenders, may accept
non-cash consideration, including debt and equity securities issued by any
entities used to consummate such credit bid or purchase and in connection
therewith Agent may reduce the Obligations owed to the Lenders and the Bank
Product Providers (ratably based upon the proportion of

 

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their Obligations credit bid in relation to the aggregate amount of Obligations
so credit bid) based upon the value of such non-cash consideration; provided,
that Bank Product Obligations not entitled to the application set forth in
Section 2.4(b)(iii)(J) shall not be entitled to be, and shall not be, credit
bid, or used in the calculation of the ratable interest of the Lenders and Bank
Product Providers in the Obligations which are credit bid.  Except as provided
above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders (without
requiring the authorization of the Bank Product Providers), or (z) otherwise,
the Required Lenders (without requiring the authorization of the Bank Product
Providers).  Upon request by Agent or Borrowers at any time, the Lenders will
(and if so requested, the Bank Product Providers will) confirm in writing
Agent’s authority to release any such Liens on particular types or items of
Collateral pursuant to this Section 15.11; provided, that (1) anything to the
contrary contained in any of the Loan Documents notwithstanding, Agent shall not
be required to execute any document or take any action necessary to evidence
such release on terms that, in Agent’s opinion, could expose Agent to liability
or create any obligation or entail any consequence other than the release of
such Lien without recourse, representation, or warranty, and (2) such release
shall not in any manner discharge, affect, or impair the Obligations or any
Liens (other than those expressly released) upon (or obligations of Borrowers in
respect of) any and all interests retained by any Borrower, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.  Each Lender further hereby irrevocably authorize (and by entering
into a Bank Product Agreement, each Bank Product Provider shall be deemed to
irrevocably authorize) Agent, at its option and in its sole discretion, to
subordinate (by contract or otherwise) any Lien granted to or held by Agent on
any property under any Loan Document (a) to the holder of any Permitted Lien on
such property if such Permitted Lien secures purchase money Indebtedness
(including Capitalized Lease Obligations) which constitute Permitted
Indebtedness and (b) to the extent Agent has the authority under this
Section 15.11 to release its Lien on such property.

 

(b)                                 Agent shall have no obligation whatsoever to
any of the Lenders (or the Bank Product Providers) (i) to verify or assure that
the Collateral exists or is owned by a Loan Party or any of its Subsidiaries or
is cared for, protected, or insured or has been encumbered, (ii) to verify or
assure that Agent’s Liens have been properly or sufficiently or lawfully
created, perfected, protected, or enforced or are entitled to any particular
priority, (iii) to verify or assure that any particular items of Collateral meet
the eligibility criteria applicable in respect thereof, (iv) to impose,
maintain, increase, reduce, implement, or eliminate any particular reserve
hereunder or to determine whether the amount of any reserve is appropriate or
not, or (v) to exercise at all or in any particular manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent’s own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender (or Bank Product Provider) as to any of the foregoing,
except as otherwise expressly provided herein.

 

15.12                 Restrictions on Actions by Lenders; Sharing of Payments.

 

(a)                                 Each of the Lenders agrees that it shall
not, without the express written consent of Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the written request of Agent, set
off against the Obligations, any amounts owing by such Lender to any Loan Party
or its Subsidiaries or any deposit accounts of any Loan Party or its
Subsidiaries now or hereafter maintained with such Lender.  Each of the Lenders
further agrees that it shall not, unless specifically requested to do so in
writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings to enforce any Loan Document
against any Borrower or any Guarantor or to foreclose any Lien on, or otherwise
enforce any security interest in, any of the Collateral.

 

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(b)                                 If, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations, except for any such
proceeds or payments received by such Lender from Agent pursuant to the terms of
this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata
Share of all such distributions by Agent, such Lender promptly shall (A) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(B) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, that to the extent that such excess
payment received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.

 

15.13                 Agency for Perfection.  Agent hereby appoints each other
Lender (and each Bank Product Provider) as its agent (and each Lender hereby
accepts (and by entering into a Bank Product Agreement, each Bank Product
Provider shall be deemed to accept) such appointment) for the purpose of
perfecting Agent’s Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected by possession or
control.  Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent’s request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent’s instructions.

 

15.14                 Payments by Agent to the Lenders.  All payments to be made
by Agent to the Lenders (or Bank Product Providers) shall be made by bank wire
transfer of immediately available funds pursuant to such wire transfer
instructions as each party may designate for itself by written notice to Agent. 
Concurrently with each such payment, Agent shall identify whether such payment
(or any portion thereof) represents principal, premium, fees, or interest of the
Obligations.

 

15.15                 Concerning the Collateral and Related Loan Documents. 
Each member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents.  Each member of the Lender Group agrees
(and by entering into a Bank Product Agreement, each Bank Product Provider shall
be deemed to agree) that any action taken by Agent in accordance with the terms
of this Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Lenders (and such Bank Product Provider).

 

15.16                 Field Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.  By becoming a party to this Agreement,
each Lender:

 

(a)                                 is deemed to have requested that Agent
furnish such Lender, promptly after it becomes available, a copy of each field
examination report respecting any Loan Party or its Subsidiaries (each, a
“Report”) prepared by or at the request of Agent, and Agent shall so furnish
each Lender with such Reports,

 

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(b)                                 expressly agrees and acknowledges that Agent
does not (i) make any representation or warranty as to the accuracy of any
Report, and (ii) shall not be liable for any information contained in any
Report,

 

(c)                                  expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent or other party
performing any field examination will inspect only specific information
regarding the Loan Parties and their Subsidiaries and will rely significantly
upon Borrowers’ and their Subsidiaries’ books and records, as well as on
representations of Borrowers’ personnel,

 

(d)                                 agrees to keep all Reports and other
material, non-public information regarding the Loan Parties and their
Subsidiaries and their operations, assets, and existing and contemplated
business plans in a confidential manner in accordance with Section 17.9, and

 

(e)                                  without limiting the generality of any
other indemnification provision contained in this Agreement, agrees:  (i) to
hold Agent and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to
Borrowers, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of, a loan or loans of Borrowers, and (ii) to pay and protect,
and indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys’ fees and costs)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.

 

In addition to the foregoing,  (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by any Loan Party or its Subsidiaries to Agent that has not
been contemporaneously provided by such Loan Party or such Subsidiary to such
Lender, and, upon receipt of such request, Agent promptly shall provide a copy
of same to such Lender, (y) to the extent that Agent is entitled, under any
provision of the Loan Documents, to request additional reports or information
from any Loan Party or its Subsidiaries, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender’s
notice to Agent, whereupon Agent promptly shall request of Borrowers the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from such Loan Party or such Subsidiary, Agent promptly shall
provide a copy of same to such Lender, and (z) any time that Agent renders to
Borrowers a statement regarding the Loan Account, Agent shall send a copy of
such statement to each Lender.

 

15.17                 Several Obligations; No Liability.  Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such, and not by or in favor of
the Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments.  Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender.  Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender.  Except as provided in Section 15.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group.  No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender (or Bank Product Provider) to fulfill its obligations to
make credit available hereunder, nor to advance for such Lender (or Bank Product
Provider) or on its behalf, nor to take any other action on behalf of such
Lender (or Bank Product Provider) hereunder or in connection with the financing
contemplated herein.

 

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16.                               WITHHOLDING TAXES.

 

16.1                        Payments.  All payments made by any Loan Party under
any Loan Document will be made free and clear of, and without deduction or
withholding for, any Taxes, except as otherwise required by applicable law, and
in the event any deduction or withholding of Taxes is required, the applicable
Loan Party shall make the requisite withholding, promptly pay over to the
applicable Governmental Authority the withheld tax, and furnish to Agent as
promptly as possible after the date the payment of any such Tax is due pursuant
to applicable law, certified copies of tax receipts evidencing such payment by
the Loan Parties.   Furthermore, if any such Tax is an Indemnified Taxes or an
Indemnified Tax is so levied or imposed, the Loan Parties agree to pay the full
amount of such Indemnified Taxes and such additional amounts as may be necessary
so that every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 16.1 after
withholding or deduction for or on account of any Indemnified Taxes, will not be
less than the amount provided for herein.  The Loan Parties will promptly pay
any Other Taxes or reimburse Agent for such Other Taxes upon Agent’s demand. 
The Loan Parties shall jointly and severally indemnify each Recipient
(collectively a “Tax Indemnitee”) for the full amount of Indemnified Taxes
arising in connection with this Agreement or any other Loan Document or breach
thereof by any Loan Party (including, without limitation, any Indemnified Taxes
imposed or asserted on, or attributable to, amounts payable under this
Section 16) imposed on, or paid by, such Tax Indemnitee and all reasonable costs
and expenses related thereto (including fees and disbursements of attorneys and
other tax professionals), as and when they are incurred and irrespective of
whether suit is brought, whether or not such Indemnified Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority (other than
Indemnified Taxes and additional amounts that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or willful
misconduct of such Tax Indemnitee).  The obligations of the Loan Parties under
this Section 16 shall survive the termination of this Agreement, the resignation
and replacement of Agent, and the repayment of the Obligations.

 

16.2                        Exemptions.

 

(a)                                 If a Lender or Participant is entitled to
claim an exemption or reduction from United States withholding tax, such Lender
or Participant agrees with and in favor of Agent and the Loan Parties, to
deliver to Agent (or, in the case of a Participant, to the Lender granting the
participation only) and the Administrative Borrower on behalf of all Borrowers
one of the following before receiving its first payment under this Agreement:

 

(i)                                     if such Lender or Participant is
entitled to claim an exemption from United States withholding tax pursuant to
the portfolio interest exception, (A) a statement of the Lender or Participant,
signed under penalty of perjury, that it is not a (I) a “bank” as described in
Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Borrower (within
the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign
corporation related to Borrowers within the meaning of Section 864(d)(4) of the
IRC, and (B) a properly completed and executed IRS Form W-8BEN, Form W-8BEN-E or
Form W-8IMY (with proper attachments as applicable);

 

(ii)                                  if such Lender or Participant is entitled
to claim an exemption from, or a reduction of, withholding tax under a United
States tax treaty, a properly completed and executed copy of IRS Form W-8BEN or
Form W-8BEN-E, as applicable, claiming such treaty benefit;

 

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(iii)                               if such Lender or Participant is entitled to
claim that interest paid under this Agreement is exempt from United States
withholding tax because it is effectively connected with a United States trade
or business of such Lender, a properly completed and executed copy of IRS
Form W-8ECI;

 

(iv)                              if such Lender or Participant is entitled to
claim that interest paid under this Agreement is exempt from United States
withholding tax because such Lender or Participant serves as an intermediary, a
properly completed and executed copy of IRS Form W-8IMY (including a withholding
statement and copies of the tax certification documentation for its beneficial
owner(s) of the income paid to the intermediary, if required based on its status
provided on the Form W-8IMY); or

 

(v)                                 a properly completed and executed copy of
any other form or forms, including IRS Form W-9, as may be required under the
IRC or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding or backup withholding tax.

 

(b)                                 Each Lender or Participant shall provide new
forms (or successor forms) upon the expiration or obsolescence of any previously
delivered forms and will promptly notify Agent and Administrative Borrower (or,
in the case of a Participant, will promptly notify the Lender granting the
participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

 

(c)                                  If a Lender or Participant claims an
exemption from withholding tax in a jurisdiction other than the United States,
such Lender or such Participant agrees with and in favor of Agent and the Loan
Parties, to deliver to Agent and Administrative Borrower (or, in the case of a
Participant, to the Lender granting the participation only) any such form or
forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax
before receiving its first payment under this Agreement, but only if such Lender
or such Participant is legally able to deliver such forms, or the providing of
or delivery of such forms in the Lender’s reasonable judgment would not subject
such Lender to any material unreimbursed cost or expense or materially prejudice
the legal or commercial position of such Lender (or its Affiliates); provided,
that nothing in this Section 16.2(c) shall require a Lender or Participant to
disclose any information that it deems to be confidential (including without
limitation, its tax returns).  Each Lender and each Participant shall promptly
provide new forms (or successor forms) upon the expiration or obsolescence of
any previously delivered forms and will promptly notify Agent and Administrative
Borrower (or, in the case of a Participant, to the Lender granting the
participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

 

(d)                                 If a Lender or Participant claims exemption
from, or reduction of, withholding tax and such Lender or Participant sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of Borrowers to such Lender or Participant, such Lender or
Participant agrees to notify Agent and Administrative Borrower (or, in the case
of a sale of a participation interest, to the Lender granting the participation
only) of the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrowers to such Lender or Participant.  To the extent of such
percentage amount, Agent and Administrative Borrower will treat such Lender’s or
such Participant’s documentation provided pursuant to Section 16.2(a) or
16.2(c) as no longer valid.  With respect to such percentage amount, such
Participant or Assignee shall provide new documentation, pursuant to
Section 16.2(a) or 16.2(c), if applicable.  Borrowers agree that each
Participant shall be entitled to the benefits of this Section 16 with respect to
its participation in any portion of the Commitments and the Obligations so long
as such Participant complies with the obligations set forth in this Section 16
with respect thereto.

 

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(e)                                  If a payment made to a Recipient under any
Loan Document would be subject to U.S. federal withholding tax imposed by FATCA
if such Recipient were to fail to comply with the applicable due diligence and
reporting requirements of FATCA (including those contained in Section 1471(b) or
1472(b) of the IRC, as applicable), such Recipient shall deliver to Agent (or,
in the case of a Participant, to the Lender granting the participation only) and
Administrative Borrower at the time or times prescribed by law and at such time
or times reasonably requested by Agent (or, in the case of a Participant, the
Lender granting the participation) or Administrative Borrower such documentation
prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation
reasonably requested by Agent (or, in the case of a Participant, the Lender
granting the participation) or Administrative Borrower as may be necessary for
Agent or the Loan Parties to comply with their obligations under FATCA and to
determine that such Lender has complied with such Lender’s obligations under
FATCA or to determine the amount to deduct and withhold from such payment. 
Solely for purposes of this clause (e), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement.

 

(f)                                   On or prior to the date Agent, that is not
otherwise a Lender, becomes a party to this Agreement, Agent shall, in the event
that Agent is a U.S. Person, deliver an IRS Form W-9 to Administrative Borrower,
and in the event Agent is not a U.S. Person, deliver the appropriate IRS
Form W-8 certifying Agent’s exemption, if any, from U.S. withholding Taxes with
respect to amounts payable under any Loan Document.

 

16.3                        Reductions.

 

(a)                                 If a Lender or a Participant is subject to
an applicable withholding tax, Agent (or, in the case of a Participant, the
Lender granting the participation) may withhold from any payment to such Lender
or such Participant an amount equivalent to the applicable withholding tax.  If
the forms or other documentation required by Section 16.2(a) or 16.2(c) are not
delivered to Agent (or, in the case of a Participant, to the Lender granting the
participation), then Agent (or, in the case of a Participant, to the Lender
granting the participation) may withhold from any payment to such Lender or such
Participant not providing such forms or other documentation an amount equivalent
to the applicable withholding tax.

 

(b)                                 If the IRS or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that Agent
(or, in the case of a Participant, to the Lender granting the participation) did
not properly withhold tax from amounts paid to or for the account of any Lender
or any Participant due to a failure on the part of the Lender or any Participant
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Agent (or such Participant failed to notify
the Lender granting the participation) of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Lender shall indemnify and hold Agent harmless (or,
in the case of a Participant, such Participant shall indemnify and hold the
Lender granting the participation harmless) for all amounts paid, directly or
indirectly, by Agent (or, in the case of a Participant, to the Lender granting
the participation), as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
(or, in the case of a Participant, to the Lender granting the participation
only) under this Section 16, together with all costs and expenses (including
attorneys’ fees and expenses).  The obligation of the Lenders and the
Participants under this subsection shall survive the payment of all Obligations
and the resignation or replacement of Agent.

 

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16.4                        Refunds.  .  If Agent, a Lender or a Participant
determines, in its sole discretion, that it has received a refund of any
Indemnified Taxes with respect to which any Loan Party has paid additional
amounts pursuant to this Section 16, so long as no Default or Event of Default
has occurred and is continuing, it shall pay over such refund to the
Administrative Borrower on behalf of the Loan Parties (but only to the extent of
payments made, or additional amounts paid, by the Loan Parties under this
Section 16 with respect to Indemnified Taxes giving rise to such a refund), net
of all out-of-pocket expenses of Agent, such Lender or such Participant and
without interest (other than any interest paid by the applicable Governmental
Authority with respect to such a refund); provided, that the Loan Parties, upon
the request of Agent, such Lender or such Participant, agrees to repay the
amount paid over to the Administrative Borrower (plus any penalties, interest or
other charges, imposed by the applicable Governmental Authority, other than such
penalties, interest or other charges imposed as a result of the willful
misconduct or gross negligence of Agent, Lender or such Participant hereunder as
finally determined by a court of competent jurisdiction) to Agent, such Lender
or such Participant in the event Agent, such Lender or such Participant is
required to repay such refund to such Governmental Authority.  Notwithstanding
anything in this Agreement to the contrary, this Section 16 shall not be
construed to require Agent, any Lender or any Participant to make available its
tax returns (or any other information which it deems confidential) to Loan
Parties or any other Person or require Agent or any Lender to pay any amount to
an indemnifying party pursuant to Section 16.4, the payment of which would place
Agent or such Lender (or their Affiliates) in a less favorable net after-Tax
position than such Person would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid.

 

17.                               GENERAL PROVISIONS.

 

17.1                        Effectiveness.  This Agreement shall be binding and
deemed effective when executed by each Borrower, Agent, and each Lender whose
signature is provided for on the signature pages hereof.

 

17.2                        Section Headings.  Headings and numbers have been
set forth herein for convenience only.  Unless the contrary is compelled by the
context, everything contained in each Section applies equally to this entire
Agreement.

 

17.3                        Interpretation.  Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed against the Lender Group or
any Borrower, whether under any rule of construction or otherwise.  On the
contrary, this Agreement has been reviewed by all parties and shall be construed
and interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

 

17.4                        Severability of Provisions.  Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.

 

17.5                        Bank Product Providers.  Each Bank Product Provider
in its capacity as such shall be deemed a third party beneficiary hereof and of
the provisions of the other Loan Documents for purposes of any reference in a
Loan Document to the parties for whom Agent is acting.  Agent hereby agrees to
act as agent for such Bank Product Providers and, by virtue of entering into a
Bank Product Agreement, the applicable Bank Product Provider shall be
automatically deemed to have appointed Agent as its agent and to have accepted
the benefits of the Loan Documents.  It is understood and agreed that the rights
and benefits of each Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider’s being a beneficiary of the Liens and
security interests (and, if applicable, guarantees) granted to Agent and the
right to share in payments and collections out of the Collateral as more fully
set forth herein. In addition, each Bank Product Provider, by virtue of entering
into a Bank Product Agreement, shall be automatically deemed to have agreed that
Agent shall have the right, but shall have

 

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no obligation, to establish, maintain, relax, or release reserves in respect of
the Bank Product Obligations and that if reserves are established there is no
obligation on the part of Agent to determine or insure whether the amount of any
such reserve is appropriate or not.  In connection with any such distribution of
payments or proceeds of Collateral, Agent shall be entitled to assume no amounts
are due or owing to any Bank Product Provider unless such Bank Product Provider
has provided a written certification (setting forth a reasonably detailed
calculation) to Agent as to the amounts that are due and owing to it and such
written certification is received by Agent a reasonable period of time prior to
the making of such distribution.  Agent shall have no obligation to calculate
the amount due and payable with respect to any Bank Products, but may rely upon
the written certification of the amount due and payable from the applicable Bank
Product Provider.  In the absence of an updated certification, Agent shall be
entitled to assume that the amount due and payable to the applicable Bank
Product Provider is the amount last certified to Agent by such Bank Product
Provider as being due and payable (less any distributions made to such Bank
Product Provider on account thereof).  Borrowers may obtain Bank Products from
any Bank Product Provider, although Borrowers are not required to do so.  Each
Borrower acknowledges and agrees that no Bank Product Provider has committed to
provide any Bank Products and that the providing of Bank Products by any Bank
Product Provider is in the sole and absolute discretion of such Bank Product
Provider.  Notwithstanding anything to the contrary in this Agreement or any
other Loan Document, no provider or holder of any Bank Product shall have any
voting or approval rights hereunder (or be deemed a Lender) solely by virtue of
its status as the provider or holder of such agreements or products or the
Obligations owing thereunder, nor shall the consent of any such provider or
holder be required (other than in their capacities as Lenders, to the extent
applicable) for any matter hereunder or under any of the other Loan Documents,
including as to any matter relating to the Collateral or the release of
Collateral or Guarantors.

 

17.6                        Debtor-Creditor Relationship.  The relationship
between the Lenders and Agent, on the one hand, and the Loan Parties, on the
other hand, is solely that of creditor and debtor.  No member of the Lender
Group has (or shall be deemed to have) any fiduciary relationship or duty to any
Loan Party arising out of or in connection with the Loan Documents or the
transactions contemplated thereby, and there is no agency or joint venture
relationship between the members of the Lender Group, on the one hand, and the
Loan Parties, on the other hand, by virtue of any Loan Document or any
transaction contemplated therein.

 

17.7                        Counterparts; Electronic Execution.  This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement.  Delivery of an executed counterpart
of this Agreement by telefacsimile or other electronic method of transmission
shall be equally as effective as delivery of an original executed counterpart of
this Agreement.  Any party delivering an executed counterpart of this Agreement
by telefacsimile or other electronic method of transmission also shall deliver
an original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.  The foregoing shall apply to each other Loan
Document mutatis mutandis.

 

17.8                        Revival and Reinstatement of Obligations; Certain
Waivers.

 

(a)                                 If any member of the Lender Group or any
Bank Product Provider repays, refunds, restores, or returns in whole or in part,
any payment or property (including any proceeds of Collateral) previously paid
or transferred to such member of the Lender Group or such Bank Product Provider
in full or partial satisfaction of any Obligation or on account of any
other obligation of any Loan Party under any Loan Document or any Bank Product
Agreement, because the payment, transfer, or the

 

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incurrence of the obligation so satisfied is asserted or declared to be void,
voidable, or otherwise recoverable under any law relating to creditors’ rights,
including provisions of the Bankruptcy Code relating to fraudulent transfers,
preferences, or other voidable or recoverable obligations or transfers (each, a
“Voidable Transfer”), or because such member of the Lender Group or Bank Product
Provider elects to do so on the reasonable advice of its counsel in connection
with a claim that the payment, transfer, or incurrence is or may be a Voidable
Transfer, then, as to any such Voidable Transfer, or the amount thereof
that such member of the Lender Group or Bank Product Provider elects to repay,
restore, or return (including pursuant to a settlement of any claim in respect
thereof), and as to all reasonable costs, expenses, and attorneys’ fees of such
member of the Lender Group or Bank Product Provider related thereto, (i) the
liability of the Loan Parties with respect to the amount or property paid,
refunded, restored, or returned will automatically and immediately be revived,
reinstated, and restored and will exist, and (ii) Agent’s Liens securing such
liability shall be effective, revived, and remain in full force and effect, in
each case, as fully as if such Voidable Transfer had never been made.  If, prior
to any of the foregoing, (A) Agent’s Liens shall have been released or
terminated, or (B) any provision of this Agreement shall have been terminated
or cancelled, Agent’s Liens, or such provision of this Agreement, shall be
reinstated in full force and effect and such prior release, termination,
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect the obligation of any Loan Party in respect of such liability
or any Collateral securing such liability. This provision shall survive the
termination of this Agreement and the repayment in full of the Obligations.

 

(b)                                 Anything to the contrary contained herein
notwithstanding, if Agent or any Lender accepts a guaranty of only a portion of
the Obligations pursuant to any guaranty, each Borrower hereby waive its right
under Section 2822(a) of the California Civil Code or any similar laws of any
other applicable jurisdiction to designate the portion of the Obligations
satisfied by the applicable guarantor’s partial payment.

 

17.9                        Confidentiality.

 

(a)                                 Agent and Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information
regarding the Loan Parties and their Subsidiaries, their operations, assets, and
existing and contemplated business plans (“Confidential Information”) shall be
treated by Agent and the Lenders in a confidential manner, and shall not be
disclosed by Agent and the Lenders to Persons who are not parties to this
Agreement, except:  (i) to attorneys for and other advisors, accountants,
auditors, and consultants to any member of the Lender Group  and to employees,
directors and officers of any member of the Lender Group (the Persons in this
clause (i), “Lender Group Representatives”) on a “need to know” basis in
connection with this Agreement and the transactions contemplated hereby and on a
confidential basis, (ii) to Subsidiaries and Affiliates of any member of the
Lender Group (including the Bank Product Providers); provided, that any such
Subsidiary or Affiliate shall have agreed to receive such information hereunder
subject to the terms of this Section 17.9, (iii) as may be required by
regulatory authorities so long as such authorities are informed of the
confidential nature of such information, (iv) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation; provided,
that (x) prior to any disclosure under this clause (iv), the disclosing party
agrees to provide Borrowers with prior notice thereof, to the extent that it is
practicable to do so and to the extent that the disclosing party is permitted to
provide such prior notice to Borrowers pursuant to the terms of the applicable
statute, decision, or judicial or administrative order, rule, or regulation and
(y) any disclosure under this clause (iv) shall be limited to the portion of the
Confidential Information as may be required by such statute, decision, or
judicial or administrative order, rule, or regulation, (v) as may be agreed to
in advance in writing by Borrowers, (vi) as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process;
provided, that (x) prior to any disclosure under this clause (vi) the disclosing
party agrees to provide Borrowers with prior written notice thereof, to the

 

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extent that it is practicable to do so and to the extent that the disclosing
party is permitted to provide such prior written notice to Borrowers pursuant to
the terms of the subpoena or other legal process and (y) any disclosure under
this clause (vi) shall be limited to the portion of the Confidential Information
as may be required by such Governmental Authority pursuant to such subpoena or
other legal process, (vii) as to any such information that is or becomes
generally available to the public (other than as a result of prohibited
disclosure by Agent or the Lenders or the Lender Group Representatives),
(viii) in connection with any assignment, participation  or pledge of any
Lender’s interest under this Agreement; provided, that prior to receipt of
Confidential Information any such assignee, participant, or pledgee shall have
agreed in writing to receive such Confidential Information either subject to the
terms of this Section 17.9 or pursuant to confidentiality requirements
substantially similar to those contained in this Section 17.9 (and such Person
may disclose such Confidential Information to Persons employed or engaged by
them as described in clause (i) above), (ix) in connection with any litigation
or other adversary proceeding involving parties hereto which such litigation or
adversary proceeding involves claims related to the rights or duties of such
parties under this Agreement or the other Loan Documents; provided, that prior
to any disclosure to any Person (other than any Loan Party, Agent, any Lender,
any of their respective Affiliates, or their respective counsel) under this
clause (ix) with respect to litigation involving any Person (other than any
Borrower, Agent, any Lender, any of their respective Affiliates, or their
respective counsel), the disclosing party agrees to provide Borrowers with prior
written notice thereof, and (x) in connection with, and to the extent reasonably
necessary for, the exercise of any secured creditor remedy under this Agreement
or under any other Loan Document.

 

(b)                                 Anything in this Agreement to the contrary
notwithstanding, Agent may disclose information concerning the terms and
conditions of this Agreement and the other Loan Documents to loan syndication
and pricing reporting services or in its marketing or promotional materials,
with such information to consist of deal terms and other information customarily
found in such publications or marketing or promotional materials and may
otherwise use the name, logos, and other insignia of any Borrower or the other
Loan Parties and the Commitments provided hereunder in any “tombstone” or other
advertisements, on its website or in other marketing materials of Agent.

 

(c)                                  Each Loan Party agrees that Agent may make
available to the Lenders materials or information provided by or on behalf of
the Loan Parties hereunder (collectively, “Borrower Materials”) by posting the
Borrower Materials on IntraLinks, SyndTrak or a substantially similar secure
electronic transmission system (the “Platform”).  The Platform is provided “as
is” and “as available.”  Agent does not warrant the accuracy or completeness of
the Borrower Materials, or the adequacy of the Platform and expressly disclaim
liability for errors or omissions in the communications.  No warranty of any
kind, express, implied or statutory, including, without limitation, any warranty
of merchantability, fitness for a particular purpose, non-infringement of third
party rights or freedom from viruses or other code defects, is made by Agent in
connection with the Borrower Materials or the Platform.  In no event shall Agent
or any of the Agent-Related Persons have any liability to the Loan Parties, any
Lender or any other person for damages of any kind, including direct or
indirect, special, incidental or consequential damages, losses or expenses
(whether in tort, contract or otherwise) arising out of any Loan Party’s or
Agent’s transmission of communications through the Internet, except to the
extent the liability of such person is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from such person’s gross
negligence or willful misconduct.  Each Loan Party further agrees that certain
of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to the Loan Parties or
their securities) (each, a “Public Lender”).  The Loan Parties shall be deemed
to have authorized Agent and its Affiliates and the Lenders to treat Borrower
Materials marked “PUBLIC” or otherwise at any time filed with the SEC as not
containing any material non-public information with respect to the Loan Parties
or their securities for purposes of United States federal and state securities
laws.  All Borrower Materials marked “PUBLIC” are permitted to be made

 

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available through a portion of the Platform designated as “Public Investor” (or
another similar term).  Agent and its Affiliates and the Lenders shall be
entitled to treat any Borrower Materials that are not marked “PUBLIC” or that
are not at any time filed with the SEC as being suitable only for posting on a
portion of the Platform not marked as “Public Investor” (or such other similar
term).

 

17.10                 Survival.  All representations and warranties made by the
Loan Parties in the Loan Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of the Loan Documents and
the making of any Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that Agent, Issuing Bank, or any Lender may have had notice or knowledge of any
Default or Event of Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as
long as the principal of, or any accrued interest on, any Loan or any fee or any
other amount payable under this Agreement is outstanding or unpaid or any Letter
of Credit is outstanding and so long as the Commitments have not expired or been
terminated.

 

17.11                 Patriot Act; Due Diligence.  Each Lender that is subject
to the requirements of the Patriot Act hereby notifies the Loan Parties that
pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies each Loan Party, which information
includes the name and address of each Loan Party and other information that will
allow such Lender to identify each Loan Party in accordance with the Patriot
Act.  In addition, Agent and each Lender shall have the right to periodically
conduct due diligence on all Loan Parties, their senior management and key
principals and legal and beneficial owners.  Each Loan Party agrees to cooperate
in respect of the conduct of such due diligence and further agrees that the
reasonable costs and charges for any such due diligence by Agent shall
constitute Lender Group Expenses hereunder and be for the account of Borrowers.

 

17.12                 Integration.  This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.  The foregoing to
the contrary notwithstanding, all Bank Product Agreements, if any, are
independent agreements governed by the written provisions of such Bank Product
Agreements, which will remain in full force and effect, unaffected by any
repayment, prepayments, acceleration, reduction, increase, or change in the
terms of any credit extended hereunder, except as otherwise expressly provided
in such Bank Product Agreement.

 

17.13                 NeoPhotonics as Agent for Borrowers.  Each Borrower hereby
irrevocably appoints NeoPhotonics as the borrowing agent and attorney-in-fact
for all Borrowers (the “Administrative Borrower”) which appointment shall remain
in full force and effect unless and until Agent shall have received prior
written notice signed by each Borrower that such appointment has been revoked
and that another Borrower has been appointed Administrative Borrower.  Each
Borrower hereby irrevocably appoints and authorizes the Administrative Borrower
(a) to provide Agent with all notices with respect to Revolving Loans and
Letters of Credit obtained for the benefit of any Borrower and all other notices
and instructions under this Agreement and the other Loan Documents (and any
notice or instruction provided by Administrative Borrower shall be deemed to be
given by Borrowers hereunder and shall bind each Borrower), (b) to receive
notices and instructions from members of the Lender Group (and any notice or
instruction provided by any member of the Lender Group to the Administrative
Borrower in accordance with the terms hereof shall be deemed to have been given
to each Borrower), (c) to enter into Bank Product Provider Agreements on behalf
of Borrowers and their Subsidiaries, and (d) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Revolving
Loans and Letters of Credit and to exercise such other powers as are reasonably
incidental thereto to carry out the purposes of

 

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this Agreement.  It is understood that the handling of the Loan Account and
Collateral in a combined fashion, as more fully set forth herein, is done solely
as an accommodation to Borrowers in order to utilize the collective borrowing
powers of Borrowers in the most efficient and economical manner and at their
request, and that Lender Group shall not incur liability to any Borrower as a
result hereof.  Each Borrower expects to derive benefit, directly or indirectly,
from the handling of the Loan Account and the Collateral in a combined fashion
since the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group.  To induce the Lender Group to
do so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify each member of the Lender Group and hold each member of the
Lender Group harmless against any and all liability, expense, loss or claim of
damage or injury, made against the Lender Group by any Borrower or by any third
party whosoever, arising from or incurred by reason of (i) the handling of the
Loan Account and Collateral of Borrowers as herein provided, or (ii) the Lender
Group’s relying on any instructions of the Administrative Borrower, except that
Borrowers will have no liability to the relevant Agent-Related Person or
Lender-Related Person under this Section 17.13 with respect to any liability
that has been finally determined by a court of competent jurisdiction to have
resulted solely from the gross negligence or willful misconduct of such
Agent-Related Person or Lender-Related Person, as the case may be.

 

17.14                 Acknowledgement and Consent to Bail-In of EEA Financial
Institutions.  Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the Write-Down and Conversion Powers and agrees and
consents to, and acknowledges and agrees to be bound by:

 

(a)                                 the application of any Write-Down and
Conversion Powers to any such liabilities arising hereunder which may be payable
to it by any party hereto that is an EEA Financial Institution; and

 

(b)                                 the effects of any Bail-in Action on any
such liability, including, if applicable:

 

(i)                                     a reduction in full or in part or
cancellation of any such liability;

 

(ii)                                  a conversion of all, or a portion of, such
liability into shares or other instruments of ownership in such EEA Financial
Institution, its parent undertaking, or a bridge institution that may be issued
to it or otherwise conferred on it, and that such shares or other instruments of
ownership will be accepted by it in lieu of any rights with respect to any such
liability under this Agreement or any other Loan Document; or

 

(iii)                               the variation of the terms of such liability
in connection with the exercise of the Write-Down and Conversion Powers.

 

[Signature pages to follow.]

 

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

 

BORROWERS:

NEOPHOTONICS CORPORATION,
a Delaware corporation

 

 

 

 

 

By:

/s/ Elizabeth Eby

 

 

Name:

Elizabeth Eby

 

 

 

Title:

Chief Financial Officer

 

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association,
as Agent and as a Lender

 

 

 

 

 

By:

/s/ Nicholas Ply

 

Name:

Nicholas Ply

 

 

Its Authorized Signatory

 

[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

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