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Exhibit 10.1

$250,000,000

CREDIT AGREEMENT

dated as of

September 28, 2007

among

SCANSOURCE, INC.,

The Subsidiary Borrowers Party Hereto,

The Lenders Party Hereto

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent, Swingline Lender and Issuing Bank

WACHOVIA BANK, N.A.,

as Syndication Agent

REGIONS BANK

and

WELLS FARGO BANK, N.A.,

as Co-Documentation Agents

 

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J.P. MORGAN SECURITIES INC.,

as Sole Bookrunner and Sole Lead Arranger

 

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TABLE OF CONTENTS

 

          Page ARTICLE I Definitions    1

SECTION 1.01.

   Defined Terms    1

SECTION 1.02.

   Classification of Loans and Borrowings    21

SECTION 1.03.

   Terms Generally    21

SECTION 1.04.

   Accounting Terms; GAAP    22

SECTION 1.05.

   Foreign Currency Calculations    22

SECTION 1.06.

   Redenomination of Certain Foreign Currencies    22 ARTICLE II The Credits   
23

SECTION 2.01.

   Commitments    23

SECTION 2.02.

   Loans and Borrowings    23

SECTION 2.03.

   Requests for Revolving Borrowings    24

SECTION 2.04.

   [Intentionally Omitted]    25

SECTION 2.05.

   Swingline Loans    25

SECTION 2.06.

   Letters of Credit    27

SECTION 2.07.

   Funding of Borrowings    31

SECTION 2.08.

   Interest Elections    31

SECTION 2.09.

   Termination, Reduction and Increase of Commitments    33

SECTION 2.10.

   Repayment of Loans; Evidence of Debt    34

SECTION 2.11.

   Prepayment of Loans    35

SECTION 2.12.

   Fees    35

SECTION 2.13.

   Interest    36

SECTION 2.14.

   Alternate Rate of Interest    37

SECTION 2.15.

   Increased Costs    38

SECTION 2.16.

   Break Funding Payments    39

SECTION 2.17.

   Taxes    40

SECTION 2.18.

   Payments Generally; Pro Rata Treatment; Sharing of Set-offs    41

SECTION 2.19.

   Mitigation Obligations; Replacement of Lenders    43

SECTION 2.20.

   Subsidiary Borrowers.    43

SECTION 2.21.

   Additional Reserve Costs    44 ARTICLE III Representations and Warranties   
45

SECTION 3.01.

   Organization; Powers    45

SECTION 3.02.

   Authorization; Enforceability    45

SECTION 3.03.

   Governmental Approvals; No Conflicts    46

SECTION 3.04.

   Financial Condition; No Material Adverse Change    46

SECTION 3.05.

   Properties    46

SECTION 3.06.

   Litigation and Environmental Matters    46

SECTION 3.07.

   Compliance with Laws and Agreements    47

SECTION 3.08.

   Investment Company Status    47

SECTION 3.09.

   Taxes    47

SECTION 3.10.

   ERISA    47

SECTION 3.11.

   Disclosure    47

 

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SECTION 3.12.

   Security Documents    48

SECTION 3.13.

   Subsidiaries    48

SECTION 3.14.

   Regulation U.    48

SECTION 3.15.

   Solvency    48

SECTION 3.16.

   Material Agreements    48

SECTION 3.17.

   Foreign Pension Plan    48

SECTION 3.18.

   Labor Relations    49 ARTICLE IV Conditions    49

SECTION 4.01.

   Effective Date    49

SECTION 4.02.

   Each Credit Event    51 ARTICLE V Affirmative Covenants    52

SECTION 5.01.

   Financial Statements; Ratings Change and Other Information    52

SECTION 5.02.

   Notices of Material Events    53

SECTION 5.03.

   Existence; Conduct of Business    54

SECTION 5.04.

   Payment of Obligations    54

SECTION 5.05.

   Maintenance of Properties; Insurance    54

SECTION 5.06.

   Books and Records; Inspection Rights    54

SECTION 5.07.

   Compliance with Laws    55

SECTION 5.08.

   Use of Proceeds and Letters of Credit    55

SECTION 5.09.

   Further Assurances; etc    55

SECTION 5.10.

   Ownership of Subsidiaries; etc    56

SECTION 5.11.

   Additional Guarantors and Collateral.    56

SECTION 5.12.

   Most Favored Nation Status    57 ARTICLE VI Negative Covenants    57

SECTION 6.01.

   Indebtedness    58

SECTION 6.02.

   Liens    59

SECTION 6.03.

   Fundamental Changes; Asset Dispositions.    60

SECTION 6.04.

   Investments, Loans, Advances, Guarantees and Acquisitions    61

SECTION 6.05.

   Swap Agreements    62

SECTION 6.06.

   Restricted Payments    62

SECTION 6.07.

   Transactions with Affiliates    63

SECTION 6.08.

   Restrictive Agreements    63

SECTION 6.09.

   Subordinated Indebtedness; Certain Prepayments    63

SECTION 6.10.

   Sale and Leaseback Transactions    64

SECTION 6.11.

   Fiscal Year    64

SECTION 6.12.

   Maximum Leverage Ratio    64

SECTION 6.13.

   Minimum Fixed Charge Coverage Ratio    64 ARTICLE VII Events of Default    64
ARTICLE VIII The Administrative Agent    67 ARTICLE IX Miscellaneous    69

SECTION 9.01.

   Notices    69

 

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SECTION 9.02.

   Waivers; Amendments    70

SECTION 9.03.

   Expenses; Indemnity; Damage Waiver    72

SECTION 9.04.

   Successors and Assigns    73

SECTION 9.05.

   Survival    76

SECTION 9.06.

   Counterparts; Integration; Effectiveness    76

SECTION 9.07.

   Severability    77

SECTION 9.08.

   Right of Setoff    77

SECTION 9.09.

   Governing Law; Jurisdiction; Consent to Service of Process    77

SECTION 9.10.

   WAIVER OF JURY TRIAL    78

SECTION 9.11.

   Headings    78

SECTION 9.12.

   Confidentiality    78

SECTION 9.13.

   Interest Rate Limitation    79

SECTION 9.14.

   USA PATRIOT Act    79

SECTION 9.15.

   Conversion of Currencies    79

SECTION 9.16.

   Appointment of Borrower    80

SECTION 9.17.

   Application of Proceeds    80

SCHEDULES:

Schedule 1.01 – Pricing Schedule

Schedule 2.01 – Commitments

Schedule 2.20 – Closing Date Subsidiary Borrowers

Schedule 3.13 – Subsidiaries

Schedule 6.01 – Existing Indebtedness

Schedule 6.02 – Existing Liens

Schedule 6.04 – Existing Investments

Schedule 6.08 – Existing Restrictions

EXHIBITS:

Exhibit A – Form of Assignment and Assumption

Exhibit B – Form of Designation Letter

Exhibit C – Form of Termination Letter

Exhibit D – Mandatory Cost Rate

Exhibit E – Form of Compliance Certificate

 

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CREDIT AGREEMENT dated as of September 28, 2007, among SCANSOURCE, INC., the
Subsidiary Borrowers party hereto, the LENDERS party hereto, and JPMORGAN CHASE
BANK, N.A., as Administrative Agent, Swingline Lender and Issuing Bank.

The parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

“Acquired Entity or Business” means either (a) the assets constituting a
business, division, facility, product line or line of business of any Person not
already a Subsidiary or (b) the capital stock of any such Person, which Person
shall, as a result of an acquisition or merger, become at least a 51% owned
Subsidiary of the Borrower (or shall be merged with and into the Borrower or a
Subsidiary Guarantor, with the Borrower or such Subsidiary Guarantor being the
surviving Person).

“Adjusted LIBO Rate” means, with respect to any Eurocurrency Borrowing in
Dollars for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate. For all other Eurocurrency
Borrowings, “Adjusted LIBO Rate” means the LIBO Rate.

“Administrative Agent” means JPMorgan, in its capacity as administrative agent
for the Lenders hereunder, and, as applicable with respect to Borrowings and
Loans in Foreign Currencies, J.P. Morgan Europe Limited.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Advance” means any Loan or any Letter of Credit.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

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

 

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“Agreement Currency” shall have the meaning assigned to such term in
Section 9.15(b).

“Alternate Base Rate” means, for any day, a rate per annum equal to the greater
of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus  1/2 of 1%. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.

“Applicable Borrower” means, with respect to any Loan or other amount owing
hereunder or any matter pertaining to such Loan or other amount, whichever of
the Borrowers is the primary obligor on such Loan or other amount.

“Applicable Creditor” shall have the meaning assigned to such term in
Section 9.15(b).

“Applicable Lending Installation” is defined in Section 2.02(e).

“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitment. If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.

“Applicable Rate” means, for any day, with respect to any Eurocurrency Loan or
ABR Loan or with respect to the commitment fees payable hereunder, the
applicable rate per annum set forth on Schedule 1.01 under the caption
“Eurocurrency Spread”, “ABR Spread” or “Commitment Fee Rate”, as the case may
be, based upon the Leverage Ratio.

“Approved Fund” has the meaning assigned to such term in Section 9.04.

“Asset Disposition” means any sale, transfer or other disposition of any asset
of the Borrower or any Subsidiary in a single transaction or in a series of
related transactions (other than (a) the sale of inventory or products in the
ordinary course or the sale of obsolete or worn out property in the ordinary
course, and (b) the sale of Permitted Investments in the ordinary course of
business).

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.

“Banking Services” means each and any of the following bank services provided to
any Credit Party by any Lender or any of its Affiliates: (a) commercial credit
cards, (b) stored value cards and (c) treasury management services (including,
without limitation, controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services).

 

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“Banking Services Obligations” of the Credit Parties means any and all
obligations of the Credit Parties, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor) in connection
with Banking Services.

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.

“Bond Financing Agreement” means that certain Financing Agreement dated as of
August 1, 2007, between the Borrower and Mississippi Business Finance
Corporation, as the same may be amended, modified, supplemented, restated or
renewed from time to time.

“Bonds” means the Mississippi Business Finance Corporation Taxable Industrial
Development Revenue Bonds, Series 2007 (ScanSource, Inc. Project), issued by the
Mississippi Business Finance Corporation in connection with the Borrower’s
distribution center located in Southaven, DeSoto County, Mississippi, the
proceeds of which Bonds were loaned to the Borrower or one of its Subsidiaries
pursuant to the Bond Financing Agreement.

“Borrower” means ScanSource, Inc., a South Carolina corporation.

“Borrowers” means the Borrower and each Subsidiary Borrower.

“Borrowing” means (a) Revolving Loans of the same Type, made, converted or
continued on the same date to the same Applicable Borrower and, in the case of
Eurocurrency Loans, as to which a single Interest Period is in effect or (b) a
Swingline Loan.

“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in
accordance with Section 2.03.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurocurrency Loan
denominated in a Foreign Currency, the term “Business Day” shall mean any day on
which banks are generally open in London for the conduct of substantially all of
their commercial lending activities and which is also a day on which the TARGET
(Trans-European Automated Real-Time Gross Settlement Express Transfer) payment
system is open for settlement of payment in Euros.

“Capital Expenditures” means for any period the sum of all capital expenditures
incurred during such period by the Borrower and its consolidated Subsidiaries,
as determined in accordance with GAAP.

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.

 

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“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) of Equity
Interests representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower;
(b) occupation of a majority of the seats (other than vacant seats) on the board
of directors of the Borrower by Persons who were neither (i) nominated by the
board of directors of the Borrower nor (ii) appointed by directors so nominated;
or (c) the acquisition of direct or indirect Control of the Borrower by any
Person or group.

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

“Charges” has the meaning set forth in Section 9.13.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline
Loans.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” means all property with respect to which any security interests
have been granted (or purported to be granted) pursuant to any Security
Document, including, without limitation, all cash delivered as collateral
pursuant to Section 2.06(j).

“Collateral Agent” means JPMorgan acting as collateral agent and security
trustee for the Secured Creditors pursuant to the Security Documents.

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Revolving Loans and to acquire participations in Letters of Credit and
Swingline Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such
commitment may be (a) reduced or increased from time to time pursuant to
Section 2.09 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount of
each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Commitment, as
applicable. The initial aggregate amount of the Lenders’ Commitments is
$250,000,000.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power or by contract. “Controlling” and
“Controlled” have meanings correlative thereto.

 

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“Credit Documents” means this Agreement and, after the execution and delivery
thereof pursuant to the terms of this Agreement, each promissory note, if any,
delivered pursuant to Section 2.10(e), the Parent Guaranty, the Subsidiary
Guaranty and each Security Document.

“Credit Parties” means each of the Borrowers and each Subsidiary Guarantor.

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

“Designation Letter” means a letter in substantially the form of Exhibit B
hereto.

“Disposed Company” means an entity or assets constituting a business, division,
facility, product line or line of business sold by the Borrower or any of its
Subsidiaries by way of sale of equity or substantially all of such assets of
such entity and otherwise permitted by this Agreement.

“Dollar Equivalent” means, on any date of determination (a) with respect to any
amount in Dollars, such amount, and (b) with respect to any amount in any
Foreign Currency, the equivalent in Dollars of such amount, determined by the
Administrative Agent pursuant to Section 1.05 using the Exchange Rate with
respect to such Foreign Currency at the time in effect under the provisions of
such Section.

“Dollars” or “$” refers to lawful money of the United States of America.

“Domestic Subsidiary” means each Subsidiary that is incorporated under the laws
of the United States, any State thereof or the District of Columbia.

“EBITDA” means, for any applicable computation period, the Borrower’s and
Subsidiaries’ Net Income on a consolidated basis, plus, to the extent included
in the determination of Net Income, (a) income and franchise taxes and other
taxes measured by income or profits in respect of the Borrower and its
Subsidiaries paid or accrued during such period, (b) Total Interest Expense for
such period, (c) amortization and depreciation deducted in determining Net
Income for such period, (d) other extraordinary non-cash charges for such
period, (e) non-recurring losses for such period, and (f) non-cash charges in
respect of stock options and goodwill amortization for such period, and minus,
to the extent included in the determination of Net Income, (a) extraordinary
non-cash gains for such period and (b) non-recurring gains for such period.
Solely with respect to the calculation of the Leverage Ratio, for any
computation period during which (i) an Acquired Company or Business is acquired
or (ii) a Disposed Company is sold, EBITDA shall be calculated on a pro forma
basis as if such Acquired Entity or Business or Disposed Company, as the case
may be, had been acquired (and any related Indebtedness incurred) or sold (and
any related Indebtedness repaid), as the case may be, on the first day of such
computation period.

 

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“EDGAR” means the Electronic Data Gathering, Analysis and Retrieval system
established and operated by the SEC, or any successor system.

“Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“EMU Legislation” means the legislative measures of the European Union for the
introduction of, changeover to or operation of the euro in one or more member
states of the European Union.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30 day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by

 

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the Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

“Euro” or “€” means the single currency unit of the Participating Member States.

“Eurocurrency”, when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

“Exchange Rate” means on any day, for purposes of determining the Dollar
Equivalent of any currency other than Dollars, the rate at which such currency
may be exchanged into Dollars at the time of determination on such day on the
Reuters Currency pages, if available, for such currency. In the event that such
rate does not appear on any Reuters Currency pages, the Exchange Rate shall be
determined by reference to such other publicly available service for displaying
exchange rates as may be agreed upon by the Administrative Agent and the
Borrowers, or, in the absence of such an agreement, such Exchange Rate shall
instead be the arithmetic average of the spot rates of exchange of the
Administrative Agent in the market where its foreign currency exchange
operations in respect of such currency are then being conducted, at or about
such time as the Administrative Agent shall elect after determining that such
rates shall be the basis for determining the Exchange Rate, on such date for the
purchase of Dollars for delivery two Business Days later; provided that if at
the time of any such determination, for any reason, no such spot rate is being
quoted, the Administrative Agent may use any reasonable method it deems
appropriate to determine such rate, and such determination shall be conclusive
absent manifest error.

“Exchange Rate Date” means, if on such date any outstanding Loan or Letter of
Credit is (or any Loan or Letter of Credit that has been requested at such time
would be) denominated in a currency other than Dollars, each of:

(a) the last Business Day of each calendar month,

(b) if an Event of Default has occurred and is continuing, any Business Day
designated as an Exchange Rate Date by the Administrative Agent in its sole
discretion, and

(c) each date (with such date to be reasonably determined by the Administrative
Agent) that is on or about the date of (i) a Borrowing Request or an Interest
Election Request with respect to any Revolving Borrowing or (ii) each request
for the issuance, amendment, renewal or extension of any Letter of Credit or
Swingline Loan.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrowers hereunder, (a) income or franchise
taxes imposed on (or measured

 

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by) its net income by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which any of the
Borrowers is organized or in which its principal office is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.19(b)), any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office) or is attributable
to such Foreign Lender’s failure to comply with Section 2.17(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrowers with respect to such withholding tax
pursuant to Section 2.17(a).

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.

“Fixed Charge Coverage Ratio” means, as of the end of any fiscal quarter of the
Borrower, the ratio of (a) the sum of (i) EBITDA for the period of four
consecutive fiscal quarters most recently ended on or prior to such date and
(ii) all obligations of the Borrower or any of its consolidated Subsidiaries as
lessee under operating leases and rental agreements for such period to (b) Fixed
Charges for such period.

“Fixed Charges” means, for any period, the sum of (i) Total Interest Expense for
such period, (ii) all payments of principal in respect of Indebtedness
(excluding voluntary principal payments made with respect to any Indebtedness)
of the Borrower or any of its consolidated Subsidiaries for such period,
(iii) all payment obligations of the Borrower or any of its consolidated
Subsidiaries for such period under all operating leases and rental agreements,
(iv) the aggregate cash taxes on income (and franchise taxes, if applicable)
paid by the Borrower and its consolidated Subsidiaries during such period,
(v) without duplication, all Restricted Payments paid or declared (but not yet
paid) by the Borrower and its consolidated Subsidiaries during such period
(excluding any such Restricted Payments made to the Borrower or a consolidated
Subsidiary) and (vi) all Capital Expenditures during such period.

“Foreign Currency” means (a) with respect to any Revolving Loan, Euros,
Sterling, Canadian dollars, Swedish krona, Swiss francs, Japanese yen,
Australian dollars and any other currency acceptable to the Administrative Agent
and each of the Lenders that is freely available, freely transferable and freely
convertible into Dollars and in which dealings in deposits are carried on in the
London interbank market, (b) with respect to any Letter of Credit, any

 

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currency acceptable to the Administrative Agent that is freely available, freely
transferable and freely convertible into Dollars, and agreed to by the Issuing
Bank issuing such Letter of Credit, and (c) with respect to any Swingline
Foreign Currency Loan, any currency acceptable to the Administrative Agent that
is freely available, freely transferable and freely convertible into Dollars,
and agreed to by the Swingline Lender.

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is organized. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

“Foreign Pension Plan” means any plan, fund (including, without limitation, any
superannuation fund) or other similar program established or maintained outside
the United States by the Borrower or any one or more of its Subsidiaries
primarily for the benefit of employees of the Borrower or such Subsidiaries
residing outside the United States, which plan, fund or other similar program
provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination or severance
of employment, and which plan is not subject to ERISA or the Code.

“Foreign Subsidiary” means any Subsidiary that is incorporated or organized
under the laws of any jurisdiction other than the United States of America, any
State thereof or the District of Columbia.

“Full Credit Parties” means the Borrower and each Subsidiary Guarantor.

“GAAP” means generally accepted accounting principles in the United States of
America.

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government, including
the European Union.

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of

 

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business. The amount of any Guarantee made by any guarantor shall be deemed to
be the lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee is made and (b) the
maximum amount for which such guarantor may be liable pursuant to the terms of
the instrument embodying such Guarantee, unless (in the case of a primary
obligation that is not Indebtedness) such primary obligation and the maximum
amount for which such guarantor may be liable are not stated or determinable, in
which case the amount of such Guarantee shall be such guarantor’s maximum
reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property now or
hereafter owned by such Person, whether or not the Indebtedness secured thereby
has been assumed, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances and (k) all
Off-Balance Sheet Liabilities. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Information Memorandum” means the Confidential Information Memorandum dated
August, 2007 relating to the Borrower and the Transactions.

“Interest Election Request” means a request by the Borrower to convert or
continue a Revolving Borrowing in accordance with Section 2.08.

“Interest Payment Date” means (a) with respect to any ABR Loan (other than a
Swingline Loan), the first day of each January, April, July and October,
(b) with respect to any Eurocurrency Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurocurrency Borrowing with an Interest Period of more than

 

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three months’ duration, each day prior to the last day of such Interest Period
that occurs at intervals of three months’ duration after the first day of such
Interest Period and (c) with respect to any Swingline Loan, the day that such
Loan is required to be repaid.

“Interest Period” means (a) with respect to any Eurocurrency Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is seven (7) days or one, two,
three or six months thereafter, as the Borrower may elect, and (b) as to any
Swingline Foreign Currency Loan, the period commencing on the date of such Loan
and ending on the day that is designated in the notice delivered pursuant to
Section 2.04 with respect to such Swingline Foreign Currency Loan, which shall
not be later than thirty days thereafter; provided, that (i) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurocurrency Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.

“Issuing Bank” means JPMorgan, in its capacity as the issuer of Letters of
Credit hereunder, and its successors in such capacity as provided in
Section 2.06(i). The Issuing Bank may, in its discretion, arrange for one or
more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which
case the term “Issuing Bank” shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.

“JPMorgan” means JPMorgan Chase Bank, N.A., a national banking association, and
its successors.

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

“LC Exposure” means, at any time, the sum of (a) the Dollar Equivalent of the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(b) the Dollar Equivalent of the aggregate amount of all LC Disbursements that
have not yet been reimbursed by or on behalf of the Borrower at such time. The
LC Exposure of any Lender at any time shall be its Applicable Percentage of the
total LC Exposure at such time.

“Lenders” means the Persons listed on Schedule 2.01, any other Person that shall
have become a party hereto in accordance with Section 2.09(d) and any other
Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption. Unless the context otherwise requires, the term
“Lenders” includes the Swingline Lender.

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

 

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“Leverage Ratio” means, at any time, the ratio of Total Debt at such time to
EBITDA for the most recently completed four fiscal quarters of the Borrower,
computed on a consolidated basis for the Borrower and its Subsidiaries.

“LIBO Rate” means, with respect to any Eurocurrency Borrowing for any Interest
Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m., London time, on the Quotation Day for such Interest
Period by reference to the British Bankers’ Association Interest Settlement
Rates for deposits in the currency of such Borrowing (as reflected on the
applicable Telerate screen page), for a period equal to such Interest Period;
provided that, to the extent that an interest rate is not ascertainable pursuant
to the foregoing provisions of this definition, the “LIBO Rate” shall be the
average (rounded upward, if necessary, to the next 1/100 of 1%) determined by
the Administrative Agent of the respective interest rates per annum reported to
the Administrative Agent by JPMorgan and each other Lender selected by the
Administrative Agent (JPMorgan and each such other Lender, the “Reference
Lenders”) as the rate at which each Reference Lender offers to place deposits in
the currency of such Borrowing for such Interest Period to first-class banks in
the London interbank market at approximately 11:00 a.m., London time, on the
Quotation Day for such Interest Period.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, assignment by way of security, charge or
security interest in, on or of such asset, (b) the interest of a vendor or a
lessor under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.

“Loans” means the loans made by the Lenders to the Borrowers pursuant to this
Agreement.

“Local Time” means (a) with respect to a Loan or Borrowing denominated in
Dollars, New York City time and (b) with respect to a Loan or Borrowing
denominated in any Foreign Currency, London time.

“Mandatory Costs Rate” means the rate calculated in accordance with the formula
and in the manner set forth in Exhibit D hereto.

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations or condition, financial or otherwise, of the Borrower and the
Subsidiaries taken as a whole, (b) the ability of any Credit Party to perform
its obligations under the Credit Documents or (c) the rights of or benefits
available to the Lenders under the Credit Documents.

“Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $10,000,000. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of the Borrower or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Borrower or such Subsidiary
would be required to pay if such Swap Agreement were terminated at such time.

 

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“Material Foreign Subsidiary” means a Foreign Subsidiary the Equity Interests of
which are held directly by the Borrower or a Domestic Subsidiary and which,
together with its subsidiaries, accounts for (or in the case of a recently
formed or acquired Foreign Subsidiary would so account for on a pro forma
historical basis) at least 5% of Net Income (determined on any date as of the
last day of the fiscal quarter of the Borrower immediately preceding such date)
or has total assets of at least 5% of Total Assets (determined on any date as of
the last day of the fiscal quarter immediately preceding such date).

“Material Subsidiary” means collectively: (i) each Domestic Subsidiary which at
any date accounts for (or in the case of a recently formed or acquired Domestic
Subsidiary would so account for on a pro forma historical basis) at least:
(A) 10% of Total Assets as measured as at the end of the then most recently
ended fiscal year of the Borrower, or (B) 10% of Net Income (before taxes) for
either of the two most recently ended fiscal years of the Borrower; and
(ii) each Domestic Subsidiary that is a member of the Material Subsidiary Group.
As used herein, “Material Subsidiary Group” as at any date means one or more
Domestic Subsidiaries (determined in accordance with this definition) which
account for (or in the case of a recently formed or acquired Domestic Subsidiary
would so account for on a pro forma historical basis), when combined with the
Borrower, at least (A) 85% of Total Assets as measured as at the end of the then
most recently ended fiscal year of the Borrower and (B) 85% of Net Income
(before taxes) for either of the two most recently ended fiscal years. A
Domestic Subsidiary shall be a “Material Subsidiary” if such Domestic Subsidiary
is included in any of the following groups: (1) the Domestic Subsidiaries
(determined in accordance with the terms of the following sentence) accounting
for the Total Assets measured under part (A) of the preceding sentence, but not
the Net Income measured under part (B) of the preceding sentence; or (2) the
Domestic Subsidiaries (determined in accordance with the terms of the following
sentence) accounting for the Net Income measured under part (B) of the preceding
sentence, but not the Total Assets measured under part (A) of the preceding
sentence; or (3) the Domestic Subsidiaries (determined in accordance with the
terms of the following sentence) accounting for the Net Income measured under
part (B) of the preceding sentence and the Total Assets measured under part
(A) of the preceding sentence. The determination of the Domestic Subsidiaries
comprising the Material Subsidiary Group as of any date shall be made on the
basis of a group (selected by the Borrower) consisting of the smallest number of
Domestic Subsidiaries necessary to satisfy groups (1), (2) or (3), as the case
may be, above.

“Maturity Date” means September 28, 2012.

“Maximum Rate” has the meaning set forth in Section 9.15.

“Moody’s” means Moody’s Investors Service, Inc.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

 

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“Net Income” means, for any computation period, with respect to the Borrower on
a consolidated basis with its Subsidiaries (other than any Subsidiary which is
restricted from declaring or paying dividends or otherwise advancing funds to
its parent whether by contract or otherwise), cumulative net income earned
during such period (determined after the deduction of minority interests) as
determined in accordance with GAAP.

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all LC Exposure, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Credit Parties to the
Lenders or to any Lender, the Administrative Agent, the Collateral Agent, the
Issuing Bank or any indemnified party arising under the Credit Documents.

“Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any liability under any Sale and Leaseback Transaction other
than Capital Lease Obligations, (c) any liability under any so-called “synthetic
lease” arrangement or transaction entered into by such Person, or (d) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheets of such Person.

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.

“Parent Guaranty” means that certain guaranty dated as of the date hereof by the
Borrower in favor of the Secured Creditors, as the same may be amended,
restated, modified or supplemented from time to time.

“Participant” has the meaning set forth in Section 9.04.

“Participating Member State” means any member state of the European Communities
that adopts or has adopted the Euro as its lawful currency in accordance with
the legislation of the European Community relating to the Economic and Monetary
Union.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Permitted Acquisition” means the acquisition by the Borrower or a Wholly-Owned
Subsidiary thereof of an Acquired Entity or Business (including by way of merger
of such Acquired Entity or Business with and into the Borrower (so long as the
Borrower is the surviving corporation) or a Wholly-Owned Subsidiary thereof (so
long as the Person surviving such merger is a Wholly-Owned Subsidiary and the
Borrower has complied with Section 5.11)); provided that, in each case, (a) the
consideration paid or to be paid by the Borrower or such Wholly-Owned Subsidiary
consists solely of cash (including proceeds of Loans), the issuance or
incurrence of Indebtedness otherwise permitted by Section 6.01, the issuance of
common stock of the Borrower to the extent no Default or Event of Default exists
pursuant to clause (m) of Article VII or would result therefrom and the
assumption/acquisition of any Indebtedness

 

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(calculated at face value) which is permitted to remain outstanding in
accordance with the requirements of Section 6.01; (b) the Acquired Entity or
Business acquired pursuant to the respective Permitted Acquisition is in a
business permitted by Section 6.03(c); (c) in the case of a stock acquisition,
such acquisition shall have been approved by the board of directors of the
Acquired Entity or Business; (d) all applicable requirements of Sections 6.03
and 6.04(e) applicable to Permitted Acquisitions are satisfied; (e) in the case
of the acquisition of less than 100% of the capital stock of any Person
(including by way of merger), at the time of such acquisition such Person shall
own no capital stock of any other Person (excluding de minimis amounts) unless
such Person owns sufficient capital stock of such other Person to make such
other Person a Subsidiary of the Borrower and (f) no Default shall have occurred
and be continuing either immediately prior thereto or immediately after giving
effect thereto.

“Permitted Alternate Transaction” means any sale of Receivables for cash to a
non-Affiliate in a transaction (a) constituting a true sale (and treated as a
sale for GAAP purposes), (b) in respect of which there is no recourse to the
Borrower or any Subsidiary (including the transferor of the Receivables) or any
assets thereof with respect to the collectability of such Receivables or the
creditworthiness of the account debtors of such Receivables, and (c) which is
consummated pursuant to documentation in form and substance reasonably
satisfactory to the Administrative Agent.

“Permitted Encumbrances” means:

(a) Liens imposed by law for Taxes that are not yet due or are being contested
in compliance with Section 5.04;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law (or consensual liens replicating Liens so imposed),
arising in the ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in compliance with
Section 5.04;

(c) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security
laws or regulations;

(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;

(e) judgment liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article VII; and

(f) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of
business of the Borrower or any Subsidiary;

provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.

 

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“Permitted Investments” means:

(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;

(b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody’s;

(c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;

(d) fully collateralized repurchase agreements with a term of not more than 30
days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above; and

(e) money market funds that (i) comply with the criteria set forth in Securities
and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940,
(ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of
at least $5,000,000,000.

“Permitted Securitization” means any receivables financing program (a) providing
for the sale of Receivables to an SPC for cash in transactions purporting to be
sales (and treated as sales for GAAP purposes), which SPC shall finance the
purchase of such assets by the sale, transfer, conveyance, lien or pledge of
such assets to one or more limited purpose financing companies, special purpose
entities and/or other financial institutions, in each case pursuant to
documentation in form and substance reasonably satisfactory to the
Administrative Agent and (b) in respect of which there is no recourse to the
Borrower, any Domestic Subsidiary, any Foreign Subsidiary (other than the
transferor of the Receivables) or any assets thereof.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pledge Agreements” means, collectively, the Pledge Agreement(s) dated as of the
date hereof made by certain of the Credit Parties in favor of the Collateral
Agent for the benefit of the Secured Creditors, as the same may be amended,
restated, modified or supplemented from time to time, and each other document or
instrument pursuant to which Equity Interests are pledged to the Collateral
Agent for the benefit of the Secured Creditors pursuant hereto.

 

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“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.

“Quotation Day” means, with respect to any Eurocurrency Borrowing or Swingline
Foreign Currency Borrowing and any Interest Period, the day on which it is
market practice in the relevant interbank market for prime banks to give
quotations for deposits in the currency of such Borrowing for delivery on the
first day of such Interest Period. If such quotations would normally be given by
prime banks on more than one day, the Quotation Day will be the last of such
days.

“Receivables” means accounts receivable, payment intangibles, accounts or notes
receivable of ScanSource Europe, SPRL and related rights associated with the
sale of goods or services by ScanSource Europe, SPRL.

“Receivables Transaction Attributed Indebtedness” means the amount of
obligations outstanding under the legal documents entered into as part of any
Permitted Securitization on any date of determination that would be
characterized as principal if such Permitted Securitization were structured as a
secured lending transaction rather than as a purchase.

“Register” has the meaning set forth in Section 9.04.

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.

“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures
and unused Commitments representing more than 50% of the sum of the total
Revolving Credit Exposures and unused Commitments at such time.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests in the Borrower or any option, warrant or other right
to acquire any such Equity Interests in the Borrower.

“Revolving Credit Exposure” means, with respect to any Lender at any time, the
sum of the Dollar Equivalent of the outstanding principal amount of such
Lender’s Revolving Loans and its LC Exposure and Swingline Exposure at such
time.

“Revolving Loan” means a Loan made pursuant to Section 2.01.

 

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“S&P” means Standard & Poor’s.

“Sale and Leaseback Transaction” means any sale or other transfer of property by
any Person with the intent to lease such property as lessee.

“Secured Creditors” shall have the meaning assigned that term in the respective
Security Documents.

“Secured Obligations” means all Obligations, together with all Banking Services
Obligations and Swap Obligations owing to one or more Lenders or their
respective Affiliates.

“Security Agreement” means the Security Agreement dated as of the date hereof
made by certain of the Credit Parties in favor of the Collateral Agent for the
benefit of the Secured Creditors, as the same may be amended, restated, modified
or supplemented from time to time.

“Security Documents” means and includes the Pledge Agreements, the Security
Agreement and each other document or instrument pursuant to which security is
granted to the Collateral Agent for the benefit of the Secured Creditors
pursuant hereto.

“Solvent” means, when used with respect to a Person, that (a) the fair saleable
value of the assets of such Person is in excess of the total amount of the
present value of its liabilities (including for purposes of this definition all
liabilities (including loss reserves as determined by such Person), whether or
not reflected on a balance sheet prepared in accordance with GAAP and whether
direct or indirect, fixed or contingent, secured or unsecured, disputed or
undisputed), (b) such Person is able to pay its debts or obligations in the
ordinary course as they mature and (c) such Person does not have unreasonably
small capital to carry out its business as conducted and as proposed to be
conducted. “Solvency” shall have a correlative meaning.

“SPC” means a special purpose, bankruptcy-remote Person formed for the sole and
exclusive purpose of engaging in activities in connection with the purchase,
sale and financing of accounts receivable, payment intangibles, accounts or
notes receivable and related rights in connection with and pursuant to a
Permitted Securitization.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject, with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurocurrency Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

 

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“Sterling” or “£” means the lawful currency of the United Kingdom of Great
Britain and Northern Ireland.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Borrower.

“Subsidiary Borrower” means Netpoint International, Inc. and any Wholly-Owned
Subsidiary designated as such by the Borrower pursuant to Section 2.20.

“Subsidiary Guarantor” means each Subsidiary of the Borrower which is a party to
the Subsidiary Guaranty.

“Subsidiary Guaranty” means the Subsidiary Guaranty dated as of the date hereof
made by the Subsidiaries party thereto in favor of the Secured Creditors, as the
same may be amended, restated, modified or supplemented from time to time.

“Substantial Portion” means, with respect to the property of the Borrower and
its Subsidiaries, property which (a) represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of the twelve-month period ending with the last day of the month
preceding the month in which such determination is made, or (b) is responsible
for more than 10% of the consolidated net sales or of the consolidated net
income of the Borrower and its Subsidiaries as reflected in the financial
statements referred to in clause (a) above.

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.

“Swap Obligations” of a Person means any and all obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all Swap Agreements, and
(b) any and all cancellations, buy backs, reversals, terminations or assignments
of any Swap Agreement transaction.

 

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“Swingline Dollar Loan” means a Swingline Loan denominated in Dollars.

“Swingline Exposure” means, at any time, the Dollar Equivalent of the aggregate
principal amount of all Swingline Loans outstanding at such time. The Swingline
Exposure of any Lender at any time shall be its Applicable Percentage of the
total Swingline Exposure at such time.

“Swingline Foreign Currency Loan” means a Swingline Loan denominated in a
Foreign Currency.

“Swingline Lender” means JPMorgan, in its capacity as lender of Swingline Loans
hereunder.

“Swingline Loan” means a Loan made pursuant to Section 2.05.

“Tangible Net Worth” means an amount equal to (a) the Borrower’s total
shareholders equity (including capital stock, additional paid in capital and
retained earnings after deducting treasury stock) determined in accordance with
GAAP, minus (b) the aggregate book value of the intangible assets, including
goodwill, of the Borrower and its consolidated Subsidiaries, determined in
accordance with GAAP.

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

“Termination Letter” means a letter in substantially the form of Exhibit C
hereto.

“Total Assets” means, at any time, the total assets of the Borrower and its
consolidated Subsidiaries, determined on a consolidated basis, as set forth or
reflected on the most recent consolidated balance sheet of the Borrower and its
consolidated Subsidiaries delivered to the Administrative Agent pursuant to
Section 5.01.

“Total Debt” means all Indebtedness of the Borrower and its Subsidiaries, on a
consolidated basis, calculated in accordance with GAAP plus, without
duplication, (a) all Off-Balance Sheet Liabilities, (b) the face amount of all
outstanding letters of credit in respect of which the Borrower or any Subsidiary
has any actual or contingent reimbursement obligation and (c) the principal
amount of all Guarantees by the Borrower and its Subsidiaries of Indebtedness.

“Total Interest Expense” means, for any period, total cash interest expense
deducted in the computation of Net Income for such period (including that
attributable to Capital Lease Obligations and interest paid under synthetic
leases) of the Borrower and its Subsidiaries for such period with respect to all
outstanding Indebtedness of the Borrower and its Subsidiaries (including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers’ acceptance financing and net costs of rate hedging in
respect of interest rates to the extent such net costs are allocable to such
period in accordance with GAAP).

 

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“Transactions” means the execution, delivery and performance by the Borrowers of
this Agreement and any Designation Letters, the Credit Documents, the borrowing
of Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“Wholly-Owned Subsidiary” of a Person means (a) any subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (b) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled (other than in the case of Foreign Subsidiaries, director’s
qualifying shares and/or other nominal amounts of shares required to be held by
Persons other than the Borrower and its Subsidiaries under applicable law).

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

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurocurrency Loan”) or by Class and Type (e.g., a
“Eurocurrency Revolving Loan”). Borrowings also may be classified and referred
to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurocurrency
Borrowing”) or by Class and Type (e.g., a “Eurocurrency Revolving Borrowing”).

SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) 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,
including cash, securities, accounts and contract rights.

 

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SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
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 change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

SECTION 1.05. Foreign Currency Calculations. (a) For purposes of determining the
Dollar Equivalent of any Advance denominated in a Foreign Currency or any
related amount, the Administrative Agent shall determine the Exchange Rate as of
the applicable Exchange Rate Date with respect to each Foreign Currency in which
any requested or outstanding Advance is denominated and shall apply such
Exchange Rates to determine such amount (in each case after giving effect to any
Advance to be made or repaid on or prior to the applicable date for such
calculation).

(b) For purposes of any determination hereunder (including determinations under
Section 6.01, 6.02, 6.04 or 6.09 or under Article VII), all amounts incurred,
outstanding or proposed to be incurred or outstanding in currencies other than
Dollars shall be translated into Dollars at the currency exchange rates in
effect on the date of such determination; provided that no Default shall arise
as a result of any limitation set forth in Dollars in Section 6.01 or 6.02 being
exceeded solely as a result of changes in currency exchange rates from those
rates applicable at the time or times Indebtedness or Liens were initially
consummated in reliance on the exceptions under such Sections. For purposes of
any determination under Section 6.04 or 6.09, the amount of each investment,
asset disposition or other applicable transaction denominated in a currency
other than Dollars shall be translated into Dollars at the currency exchange
rate in effect on the date such investment, disposition or other transaction is
consummated. Such currency exchange rates shall be determined in good faith by
the Borrowers.

SECTION 1.06. Redenomination of Certain Foreign Currencies. (a) Each obligation
of any party to this Agreement to make a payment denominated in the national
currency unit of any member state of the European Union that adopts the Euro as
its lawful currency after the Effective Date shall be redenominated into Euro at
the time of such adoption (in accordance with the EMU Legislation). If, in
relation to the currency of any such member state, the basis of accrual of
interest expressed in this Agreement in respect of that currency shall be
inconsistent with any convention or practice in the London Interbank Market for
the basis of accrual of interest in respect of the Euro, such expressed basis
shall be replaced by such convention or practice with effect from the date on
which such member state adopts the Euro as its lawful currency; provided that if
any Borrowing in the currency of such member state is outstanding immediately
prior to such date, such replacement shall take effect, with respect to such
Borrowing, at the end of the then current Interest Period.

 

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(b) Without prejudice and in addition to any method of conversion or rounding
prescribed by any EMU Legislation and (i) without limiting the liability of any
Borrower for any amount due under this Agreement and (ii) without increasing any
Commitment of any Lender, all references in this Agreement to minimum amounts
(or integral multiples thereof) denominated in the national currency unit of any
member state of the European Union that adopts the Euro as its lawful currency
after the Effective Date shall, immediately upon such adoption, be replaced by
references to such minimum amounts (or integral multiples thereof) as shall be
specified herein with respect to Borrowings denominated in Euros.

(c) Each provision of this Agreement shall be subject to such reasonable changes
of construction as the Administrative Agent may from time to time specify to be
appropriate to reflect the adoption of the Euro by any member state of the
European Union and any relevant market conventions or practices relating to the
Euro or any other Foreign Currency.

ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender agrees to make Revolving Loans denominated in Dollars and Foreign
Currencies to the Borrowers from time to time during the Availability Period in
an aggregate principal amount that will not result in (a) such Lender’s
Revolving Credit Exposure exceeding such Lender’s Commitment (subject, in the
case of the Swingline Lender, to Section 2.05(a)) or (b) the sum of the total
Revolving Credit Exposures exceeding the total Commitments. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrowers
may borrow, prepay and reborrow Revolving Loans.

SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be made as
part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender’s failure to make Loans
as required.

(b) Subject to Section 2.14, each Revolving Borrowing denominated in Dollars
shall be comprised entirely of ABR Loans or Eurocurrency Loans as the Borrower
may request in accordance herewith and each Revolving Borrowing denominated in a
Foreign Currency shall be comprised entirely of Eurocurrency Loans. Each
Swingline Dollar Loan shall be an ABR Loan and each Swingline Foreign Currency
Loan shall be a Eurocurrency Loan.

(c) At the commencement of each Interest Period for any Eurocurrency Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $1,000,000 in the case of such a
Borrowing denominated in Dollars and $5,000,000 (or the approximate equivalent)
in the case of such a Borrowing denominated in a Foreign Currency. At the time
that each ABR Revolving Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple

 

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of $500,000 and not less than $500,000; provided that an ABR Revolving Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(e). Each Swingline Dollar Loan
shall be in an amount that is an integral multiple of $50,000 and not less than
$250,000 or such other amounts as agreed by the Borrower and the Swingline
Lender, and each Swingline Foreign Currency Loan shall be in an amount that is
an integral multiple of $100,000 and not less than $500,000. Borrowings of more
than one Type and Class may be outstanding at the same time; provided that there
shall not at any time be outstanding more than a total of twelve Eurocurrency
Revolving Borrowings denominated in Dollars or eight Eurocurrency Revolving
Borrowings denominated in Foreign Currencies. Notwithstanding the foregoing,
Loans which are not denominated in Dollars may be made in amounts and increments
in the applicable Foreign Currency satisfactory to the Administrative Agent and,
where applicable, the Swingline Lender.

(d) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Maturity
Date.

(e) Notwithstanding any other provision of this Agreement, each Lender at its
option may make any ABR Loan or Eurocurrency Loan by causing any domestic or
foreign office, branch or Affiliate of such Lender (an “Applicable Lending
Installation”) to make such Loan that has been designated by such Lender to the
Administrative Agent. All terms of this Agreement shall apply to any such
Applicable Lending Installation of such Lender and the Loans and any Notes
issued hereunder shall be deemed held by each Lender for the benefit of any such
Applicable Lending Installation. Each Lender may, by written notice to the
Administrative Agent and the Borrower, designate replacement or additional
Applicable Lending Installations through which Loans will be made by it and for
whose account Loan payments are to be made. Any exercise of such option shall
not affect the obligation of the Applicable Borrower to repay such Loan in
accordance with the terms of this Agreement.

SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurocurrency Borrowing, not later than 12:00
p.m., Local Time, (i) in the case of such Borrowings denominated in Euros,
Sterling or Canadian dollars, one Business Day, (ii) in the case of such
Borrowings denominated in Dollars, three Business Days and (iii) in the case of
such Borrowings denominated in any other Foreign Currency, four Business Days or
such shorter period as the Administrative Agent may agree, in each case before
the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not
later than 12:00 p.m., New York City time, one Business Day before the date of
the proposed Borrowing; provided that any such notice of an ABR Revolving
Borrowing to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.06(e) may be given not later than 12:00 p.m., New York City time, on
the date of the proposed Borrowing. Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or telecopy to
the Administrative Agent of a written Borrowing Request in a form approved by
the Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:

(i) the identity of the Applicable Borrower;

 

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(ii) the aggregate amount of the requested Borrowing;

(iii) the currency (which may be Dollars or a Foreign Currency) in which such
Borrowing is to be denominated;

(iv) the date of such Borrowing, which shall be a Business Day;

(v) in the case of a Borrowing denominated in Dollars, whether such Borrowing is
to be an ABR Borrowing or a Eurocurrency Borrowing;

(vi) in the case of a Eurocurrency Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by clause (a) of the
definition of the term “Interest Period”; and

(vii) the location and number of the Applicable Borrower’s account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.07.

If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing, unless such Revolving
Borrowing is denominated in a Foreign Currency, in which case such Revolving
Borrowing shall be a Eurocurrency Borrowing. If no Interest Period is specified
with respect to any requested Eurocurrency Revolving Borrowing, then the
Borrower shall be deemed to have selected an Interest Period of one month’s
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the
requested Borrowing. Notwithstanding the foregoing, with respect to Revolving
Borrowings in currencies which become Foreign Currencies after the date hereof
pursuant to the definition of “Foreign Currency”, related request periods and
borrowing increments shall be as agreed to by the Borrower and the
Administrative Agent.

SECTION 2.04. [Intentionally Omitted]

SECTION 2.05. Swingline Loans. (a) Subject to the terms and conditions set forth
herein, the Swingline Lender agrees to make Swingline Loans to the Borrowers
(provided that Subsidiary Borrowers which are Foreign Subsidiaries may only
borrow Swingline Foreign Currency Loans) from time to time during the
Availability Period, in an aggregate principal amount at any time outstanding
that will not result in (i) the Swingline Exposure exceeding $40,000,000,
(ii) the sum of the total Revolving Credit Exposures exceeding the total
Commitments, or (iii) the Dollar Equivalent of the aggregate amount of all
Swingline Foreign Currency Loans exceeding $20,000,000; provided that the
Swingline Lender shall not be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Swingline Loans; provided, that except as the Swingline Lender may otherwise
agree, there shall not at any time be more than a total of four Swingline
Foreign Currency Loans outstanding.

 

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(b) To request a Swingline Loan, the Borrower shall notify the Administrative
Agent of such request by telephone (confirmed by telecopy), not later than 4:00
pm, New York City time, on the day of a proposed Swingline Loan in the case of
Swingline Dollar Loans and not later than 10:00 a.m., Local Time, on the day of
any other proposed Swingline Loan. Each such notice shall be irrevocable and
shall specify (i) the requested date (which shall be a Business Day),
(ii) whether such Swingline Loan is to be denominated in Dollars or a Foreign
Currency, (iii) the amount of the requested Swingline Loan, (iv) the identity of
the Applicable Borrower and (v) in the case of a Swingline Borrowing denominated
in a Foreign Currency, the Interest Period requested to be applicable thereto,
which shall be a period contemplated by clause (b) of the definition of the term
“Interest Period.” The Administrative Agent will promptly advise the Swingline
Lender of any such notice received from the Borrower. The Swingline Lender shall
make each Swingline Loan available to the Applicable Borrower by means of a
credit to the general deposit account of the Applicable Borrower with the
Swingline Lender (or, in the case of a Swingline Loan made to finance the
reimbursement of an LC Disbursement as provided in Section 2.06(e), by
remittance to the Issuing Bank) by 5:00 p.m., Local Time, on the requested date
of such Swingline Loan. Notwithstanding the foregoing, with respect to Swingline
Loans in currencies which become Foreign Currencies after the date hereof
pursuant to the definition of “Foreign Currency”, related request periods and
borrowing increments shall be as agreed to by the Borrower, the Administrative
Agent and the Swingline Lender.

(c) The Swingline Lender may by written notice given to the Administrative Agent
not later than 10:00 a.m., New York City time, on any Business Day require the
Lenders to acquire participations on such Business Day in all or a portion of
the Swingline Loans outstanding. Such notice shall specify the aggregate amount
of Swingline Loans in which Lenders will participate, and such amount of
Swingline Loans, if denominated in Foreign Currency, shall be converted to
Dollars and shall bear interest at the Alternate Base Rate. Promptly upon
receipt of such notice, the Administrative Agent will give notice thereof to
each Lender, specifying in such notice such Lender’s Applicable Percentage of
such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally
agrees, upon receipt of notice as provided above, to pay to the Administrative
Agent, for the account of the Swingline Lender, such Lender’s Applicable
Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Lender shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.07 with
respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Administrative
Agent shall promptly pay to the Swingline Lender the amounts so received by it
from the Lenders. The Administrative Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this paragraph, and
thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from the Borrower (or other party on behalf of the
Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be promptly remitted
to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the

 

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Administrative Agent to the Lenders that shall have made their payments pursuant
to this paragraph and to the Swingline Lender, as their interests may appear;
provided that any such payment so remitted shall be repaid to the Swingline
Lender or to the Administrative Agent, as applicable, if and to the extent such
payment is required to be refunded to the Borrower for any reason. The purchase
of participations in a Swingline Loan pursuant to this paragraph shall not
relieve the Borrower of any default in the payment thereof.

SECTION 2.06. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, each of the Borrowers may request the issuance of
Letters of Credit denominated in Dollars or Foreign Currencies for its own
account (provided that Subsidiary Borrowers which are Foreign Subsidiaries may
only request Letters of Credit denominated in Foreign Currencies), in a form
reasonably acceptable to the Administrative Agent and the Issuing Bank, at any
time and from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by any Borrower to, or entered into by any Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Applicable Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary
thereof, the currency in which such Borrower proposes such Letter of Credit be
denominated and such other information as shall be necessary to prepare, amend,
renew or extend such Letter of Credit. If requested by the Issuing Bank, such
Borrower also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit such Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the LC Exposure shall not exceed
$50,000,000, (ii) the aggregate LC Exposure for Letters of Credit denominated in
Foreign Currencies shall not exceed $25,000,000 and (iii) the sum of the total
Revolving Credit Exposures shall not exceed the total Commitments.

(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close
of business on the date that is five Business Days prior to the Maturity Date.

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants
to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter

 

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of Credit. In consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the Administrative Agent,
for the account of the Issuing Bank, such Lender’s Applicable Percentage of each
LC Disbursement made by the Issuing Bank and not reimbursed by the Applicable
Borrower on the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the Applicable Borrower for any
reason. Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Applicable Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, Local Time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., Local Time, on such date, or, if such notice
has not been received by the Borrower prior to such time on such date, then not
later than 12:00 noon, Local Time, on (i) the Business Day that the Borrower
receives such notice, if such notice is received prior to 10:00 a.m., Local
Time, on the day of receipt, or (ii) the Business Day immediately following the
day that the Borrower receives such notice, if such notice is not received prior
to such time on the day of receipt; provided that the Applicable Borrower may,
subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.03 or 2.05 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, such Borrower’s obligation to make such payment shall be discharged
and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the
Applicable Borrower fails to make such payment when due, such amount, if
denominated in Foreign Currency, shall be converted to Dollars and shall bear
interest at the Alternate Base Rate and the Administrative Agent shall notify
each Lender of the applicable LC Disbursement, the payment then due from the
Applicable Borrower in respect thereof and such Lender’s Applicable Percentage
thereof. Promptly following receipt of such notice, each Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Applicable Borrower, in the same manner as provided in Section 2.07 with respect
to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to
the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the Lenders.
Promptly following receipt by the Administrative Agent of any payment from the
Applicable Borrower pursuant to this paragraph, the Administrative Agent shall
distribute such payment to the Issuing Bank or, to the extent that Lenders have
made payments pursuant to this paragraph to reimburse the Issuing Bank, then to
such Lenders and the Issuing Bank as their interests may appear. Any payment
made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for
any LC Disbursement (other than the funding of ABR Revolving Loans or a
Swingline Loan as contemplated above) shall not constitute a Loan and shall not
relieve the Applicable Borrower of its obligation to reimburse such LC
Disbursement.

(f) Obligations Absolute. The Applicable Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional

 

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and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit, or (iv) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Applicable Borrower’s obligations
hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank,
nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Applicable Borrower
to the extent of any direct damages (as opposed to consequential damages, claims
in respect of which are hereby waived by the Borrowers to the extent permitted
by applicable law) suffered by the Applicable Borrower that are caused by the
Issuing Bank’s failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of gross
negligence or willful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Applicable Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.

(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Applicable Borrower shall reimburse such LC Disbursement in full on
the date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Applicable Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Applicable Borrower fails to reimburse such LC

 

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Disbursement when due pursuant to paragraph (e) of this Section, then
Section 2.13(e) shall apply. Interest accrued pursuant to this paragraph shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to paragraph (e) of this
Section to reimburse the Issuing Bank shall be for the account of such Lender to
the extent of such payment.

(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any
time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.

(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing greater than 50% of
the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to any Borrower
described in clause (h) or (i) of Article VII. Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the Borrower under this Agreement. The Administrative Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole
discretion of the Administrative Agent and at the Borrower’s risk and expense,
such deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other obligations of the Borrowers under this Agreement. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived.

 

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SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, Local Time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders; provided that Swingline Loans shall be made as provided in
Section 2.05. The Administrative Agent will make such Loans available to the
Applicable Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Applicable Borrower maintained with the
Administrative Agent in New York City (or, in the case of Subsidiary Borrowers
or Loans denominated in a Foreign Currency, in such other accounts as may be
designated by the Applicable Borrower and agreed by the Administrative Agent)
and designated by the Borrower in the applicable Borrowing Request; provided
that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.06(e) shall be remitted by the Administrative Agent to
the Issuing Bank.

(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Applicable Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Applicable Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Applicable Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, (x) the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation (in the case
of a Borrowing denominated in Dollars) or (y) the rate reasonably determined by
the Administrative Agent to be the cost to it of funding such amount (in the
case of a Borrowing denominated in a Foreign Currency) or (ii) in the case of
the Applicable Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing.

SECTION 2.08. Interest Elections. (a) Each Revolving Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurocurrency Revolving Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower may elect to
convert such Borrowing to a different Type, in the case of Borrowings
denominated in Dollars, or to continue such Borrowing and, in the case of a
Eurocurrency Revolving Borrowing, may elect Interest Periods therefor, all as
provided in this Section. The Borrower may elect different options with respect
to different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section shall not apply to Swingline Foreign Currency
Borrowings or Swingline Dollar Borrowings, which may not be converted or
continued.

 

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(b) To make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting a
Revolving Borrowing of the Type and denominated in the Foreign Currency
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Interest Election Request in a form approved by the Administrative Agent
and signed by the Borrower.

(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurocurrency Borrowing; and

(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurocurrency Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurocurrency Revolving Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing (unless such Borrowing is denominated in a Foreign Currency, in
which case such Borrowing shall be continued as a Eurocurrency Borrowing with an
Interest Period of one month’s duration commencing on the last day of such
Interest Period). Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i)

 

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no outstanding Revolving Borrowing may be converted to or continued as a
Eurocurrency Borrowing, (ii) unless repaid, each Eurocurrency Revolving
Borrowing denominated in Dollars shall be converted to an ABR Borrowing at the
end of the Interest Period applicable thereto, and (iii) unless repaid, each
Eurocurrency Revolving Borrowing denominated in a Foreign Currency shall be
continued as a Eurocurrency Revolving Borrowing with an Interest Period of one
month’s duration.

SECTION 2.09. Termination, Reduction and Increase of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.

(b) The Borrower may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall be in an
amount that is an integral multiple of $5,000,000 and not less than $10,000,000
and (ii) the Borrower shall not terminate or reduce the Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.11, the sum of the Revolving Credit Exposures would exceed the total
Commitments.

(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.

(d) The Borrower may, from time to time, at its option, seek to increase the
total Commitments by up to an aggregate amount of $50,000,000 for all such
increases (resulting in maximum total Commitments of $300,000,000) upon at least
three (3) Business Days’ prior written notice to the Administrative Agent, which
notice shall specify the amount of any such increase and shall be delivered at a
time when no Default has occurred and is continuing. After delivery of such
notice, the Administrative Agent or the Borrower, in consultation with the
Administrative Agent, may offer the increase (which may be declined by any
Lender in its sole discretion) in the total Commitments on either a ratable
basis to the Lenders or on a non pro-rata basis to one or more Lenders and/or to
other Lenders or entities reasonably acceptable to the Administrative Agent and
the Borrower. No increase in the total Commitments shall become effective until
the existing or new Lenders extending such incremental Commitment amount and the
Borrower shall have delivered to the Administrative Agent a document in form
reasonably satisfactory to the Administrative Agent pursuant to which any such
existing Lender states the amount of its Commitment increase, any such new
Lender states its Commitment amount and agrees to assume and accept the
obligations and rights of a Lender hereunder and the Borrower accepts such
incremental Commitments. The Lenders (new or existing) shall accept an
assignment from the existing Lenders, and the existing Lenders shall make an
assignment to the

 

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new or existing Lender accepting a new or increased Commitment, of a direct or
participation interest in each then outstanding Loan and Letter of Credit such
that, after giving effect thereto, all Revolving Credit Exposure hereunder is
held ratably by the Lenders in proportion to their respective Commitments.
Assignments pursuant to the preceding sentence shall be made in exchange for the
principal amount assigned plus accrued and unpaid interest and commitment and
letter of credit fees. The Borrower shall make any payments under Section 2.16
resulting from such assignments. Any such increase of the total Commitments
shall be subject to receipt by the Administrative Agent from the Borrower of
such supplemental opinions, resolutions, certificates and other documents as the
Administrative Agent may reasonably request. Not more than four (4) increases
may be made pursuant to this Section 2.09(d).

SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) Each Applicable Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each of its Revolving
Loans on the Maturity Date and (ii) to the Swingline Lender the then unpaid
principal amount of each Swingline Loan on the earlier of the Maturity Date and
the first date after such Swingline Loan is made that is the 15th or last day of
a calendar month and is at least two Business Days after such Swingline Loan is
made; provided that on each date that a Revolving Borrowing is made, the
Borrower shall repay all Swingline Loans then outstanding.

(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrowers to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class and Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrowers to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraph (b) or
(c) of this Section shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrowers to repay the Loans in
accordance with the terms of this Agreement.

(e) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, the Applicable Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

 

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(f) If at any time for any reason (other than fluctuations in currency exchange
rates) the aggregate Revolving Credit Exposure of the Lenders exceeds the
aggregate Commitments of the Lenders, the Borrower shall (or shall cause one or
more Subsidiary Borrowers to) immediately prepay the Loans in the amount of such
excess. To the extent that, after the prepayment of all Loans an excess of the
Revolving Credit Exposure over the aggregate Commitments still exists, the
Borrower shall (or shall cause one or more Subsidiary Borrowers to) promptly
cash collateralize the Letters of Credit in the manner described in
Section 2.06(j) in an amount sufficient to eliminate such excess.

(g) The Administrative Agent will determine the aggregate LC Exposure and the
Dollar Equivalent of each Loan on each Exchange Rate Date. If at any time the
sum of such amounts exceeds 105% of the aggregate Commitments of the Lenders as
a result of fluctuations in currency exchange rates, the Borrower shall (or
shall cause one or more Subsidiary Borrowers to) immediately prepay the Loans in
the amount of such excess. To the extent that, after the prepayment of all Loans
an excess of the sum of such amounts over the aggregate Commitments still
exists, the Borrower shall (or shall cause one or more Subsidiary Borrowers to)
promptly cash collateralize the Letters of Credit in the manner described in
Section 2.06(j) in an amount sufficient to eliminate such excess.

SECTION 2.11. Prepayment of Loans. (a) The Borrowers shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with paragraph (b) of this Section.

(b) The Borrower shall notify the Administrative Agent (and, in the case of
prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurocurrency Revolving Borrowing, not later than 11:00 a.m., Local Time, three
Business Days before the date of prepayment, (ii) in the case of prepayment of
an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before the date of prepayment or (iii) in the case of prepayment of
a Swingline Dollar Loan, not later than 4:00 p.m., New York City time, and in
the case of prepayment of a Swingline Foreign Currency Loan, not later than 2:00
p.m., London time, in each case on the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.09, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.09. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.

SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee, which shall accrue at the
Applicable Rate on the daily amount of the difference between the Commitment of
such Lender and the

 

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Revolving Credit Exposure (excluding Swingline Exposure) of such Lender during
the period from and including the date hereof to but excluding the date on which
such Commitment terminates. Accrued commitment fees shall be payable in arrears
on the fifth Business Day after the last day of March, June, September and
December of each year and on the date on which the Commitments terminate,
commencing on the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).

(b) The Borrower agrees to pay (i) to the Administrative Agent for the account
of each Lender a participation fee with respect to its participations in Letters
of Credit, which shall accrue at the same Applicable Rate used to determine the
interest rate applicable to Eurocurrency Revolving Loans on the average daily
amount of such Lender’s LC Exposure (excluding any portion thereof attributable
to unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the
rate or rates per annum separately agreed upon between the Borrower and the
Issuing Bank on the average daily amount of the LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, as well as the Issuing Bank’s standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Commitments terminate and any such
fees accruing after the date on which the Commitments terminate shall be payable
on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

(c) The Borrower agrees to pay to the Administrative Agent, for its own account
or for the account of the Lenders, as applicable, fees payable in the amounts
and at the times separately agreed upon between the Borrower and the
Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the Issuing Bank in the case
of fees payable to it) for distribution, in the case of facility fees and
participation fees, to the Lenders. Fees paid shall not be refundable under any
circumstances.

SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing (excluding
Swingline Loans) shall bear interest at the Alternate Base Rate plus the
Applicable Rate.

 

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(b) The Loans comprising each Eurocurrency Borrowing shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.

(c) Each Swingline Dollar Loan shall bear interest at the Alternate Base Rate
plus the Applicable Rate or at such other rate as the Borrower and the Swingline
Lender may from time to time agree.

(d) Each Swingline Foreign Currency Loan shall bear interest at the Adjusted
LIBO Rate plus the Applicable Rate.

(e) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fee or other amount payable by any of the Borrowers hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

(f) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Commitments; provided
that (i) interest accrued pursuant to paragraph (d) of this Section shall be
payable on demand, (ii) in the event of any repayment or prepayment of any Loan
(other than a prepayment of an ABR Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment, (iii) in the event of any
conversion of any Eurocurrency Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion and (iv) except as it may earlier come due pursuant to
Article VII, interest on Eurocurrency Loans made to ScanSource Europe Limited
having an Interest Period ending prior to the six month anniversary of the
Effective Date shall be due and payable on such date.

(g) All interest hereunder shall be computed on the basis of a year of 360 days,
except that (i) interest on Borrowings denominated in Sterling shall be computed
on the basis of a year of 365 days, (ii) interest on Borrowings denominated in
any other Foreign Currency for which it is required by applicable law or
customary to compute interest on the basis of a year of 365 days or, if required
by applicable law or customary, 366 days in a leap year, shall be computed on
such basis, and (iii) interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurocurrency Borrowing denominated in any currency:

(a) the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate for such Interest Period; or

 

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(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurocurrency Borrowing denominated
in such currency shall be ineffective and such Borrowing shall be converted to
or continued as on the last day of the Interest Period applicable thereto (A) if
such Borrowing is denominated in Dollars, an ABR Borrowing or (B) if such
Borrowing is denominated in a Foreign Currency, as a Borrowing bearing interest
at such rate as the Administrative Agent determines adequately reflects the
costs to the Lenders of making or maintaining such Borrowing, and (ii) if any
Borrowing Request requests a Eurocurrency Borrowing in such currency, such
Borrowing shall be made as an ABR Borrowing (if such Borrowing is requested to
be made in Dollars) or shall be made as a Borrowing bearing interest at such
rate as the Administrative Agent determines adequately reflects the costs to the
Lender of making or maintaining such Borrowing.

SECTION 2.15. Increased Costs. (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or the Issuing Bank; or

(ii) impose on any Lender or the Issuing Bank or the London interbank market any
other condition affecting this Agreement or Eurocurrency Loans made by such
Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or the Issuing Bank’s capital or on the capital of
such Lender’s or the Issuing Bank’s

 

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holding company, if any, as a consequence of this Agreement or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such
Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the
Issuing Bank’s holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such
reduction suffered.

(c) A certificate of a Lender or the Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 20 days
after receipt thereof.

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Bank’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 180 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurocurrency 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 Eurocurrency Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, continue
or prepay any Eurocurrency Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under
Section 2.11(b) and is revoked in accordance therewith) or (d) the assignment of
any Eurocurrency Loan other than on the last day of the Interest Period
applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to
be equal to an amount determined by such Lender to be the excess, if any, of
(i) the amount of interest which would have accrued on the principal amount of
such Loan had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan (i.e., excluding the Applicable Margin), for the
period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period for such Loan), over
(ii) the amount of interest which would accrue on such principal amount for such
period at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from

 

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other banks in the eurocurrency market. A certificate of any Lender setting
forth any amount or amounts that such Lender is entitled to receive pursuant to
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.

SECTION 2.17. Taxes. (a) Any and all payments by or on account of any obligation
of any of the Borrowers hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if any of the
Borrowers shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Applicable Borrower
shall make such deductions and (iii) the Applicable Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.

(b) In addition, the Applicable Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

(c) The Applicable Borrower shall indemnify the Administrative Agent, each
Lender and the Issuing Bank, within 10 days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of such
Applicable Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive
absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Applicable Borrower to a Governmental Authority, the Applicable Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

(e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Applicable
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.

(f) If the Administrative Agent or a Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by

 

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one of the Borrowers or with respect to which one of the Borrowers has paid
additional amounts pursuant to this Section 2.17, it shall pay over such refund
to the Applicable Borrower (but only to the extent of indemnity payments made,
or additional amounts paid, by the Applicable Borrower under this Section 2.17
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, that the Applicable Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount
paid over to the Applicable Borrower (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) to the Administrative
Agent or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority. This Section shall
not be construed to require the Administrative Agent or any Lender to make
available its tax returns (or any other information relating to its taxes which
it deems confidential) to any of the Borrowers or any other Person.

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Each of the Borrowers shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or
otherwise) prior to 12:00 noon, Local Time (4:00 p.m., New York City time, in
the case of Swingline Dollar Loans and 2:00 p.m. London time, in the case of
Swingline Foreign Currency Loans), on the date when due, in immediately
available funds, without set off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at its applicable offices set forth in Section 9.01, except
payments to be made directly to the Issuing Bank or Swingline Lender as
expressly provided herein and except that payments pursuant to Sections 2.15,
2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder of (i) principal or interest in respect of any Loan shall be made in
the currency in which such Loan is denominated, (ii) reimbursement obligations
shall be made in the currency in which the Letter of Credit in respect of which
such reimbursement obligation exists is denominated or (iii) any other amount
due hereunder or under another Loan Document shall be made in Dollars. Any
payment required to be made by the Administrative Agent hereunder shall be
deemed to have been made by the time required if the Administrative Agent shall
at or before such time, have taken the necessary steps to make such payment in
accordance with the regulations or operating procedures of the clearing or
settlement system used by the Administrative Agent to make such payment.

(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment

 

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of principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.

(c) If any Lender shall, by exercising any right of set off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Revolving Loans or participations in LC Disbursements or Swingline Loans
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Loans and participations in LC Disbursements,
Swingline Loans and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Revolving Loans and
participations in LC Disbursements, Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans and participations in LC
Disbursements and Swingline Loans; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by any of the Borrowers pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each of the Borrowers consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against such Applicable Borrower rights of set-off and counterclaim
with respect to such participation as fully as if such Lender were a direct
creditor of the Applicable Borrower in the amount of such participation.

(d) Unless the Administrative Agent shall have received notice from the
Applicable Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Applicable Borrower will not make such payment, the
Administrative Agent may assume that the Applicable Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the Issuing Bank, as the case may be,
the amount due. In such event, if the Applicable Borrower has not in fact made
such payment, then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or Issuing Bank with interest thereon, for
each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, (i) at the greater of
the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation (in
the case of an amount denominated in Dollars) and (ii) the rate reasonably
determined by the Administrative Agent to be the cost to it of funding such
amount (in the case of an amount denominated in a Foreign Currency).

(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), then
the Administrative

 

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Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid.

SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.15, or if any of the Borrowers is required
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.

(b) If any Lender requests compensation under Section 2.15, if any of the
Borrowers is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
if any Lender defaults in its obligation to fund Loans hereunder or if any
Lender refuses to consent to the designation of a Subsidiary Borrower pursuant
to Section 2.20 when Lenders holding greater than 66-2/3% of the aggregate
Commitments have consented to such designation, then the Borrower may, at its
sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
its interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the
prior written consent of the Administrative Agent (and if a Commitment is being
assigned, the Issuing Bank), which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements and
Swingline Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.15 or payments required to be made
pursuant to Section 2.17, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.

SECTION 2.20. Subsidiary Borrowers.

(a) Designation. The Borrower may, at any time or from time to time, designate
one or more Wholly-Owned Subsidiaries of the Borrower as a “Subsidiary Borrower”
hereunder by furnishing to the Administrative Agent a Designation Letter in
duplicate, duly completed and executed by the Borrower and such Wholly-Owned
Subsidiary, together with the items described in paragraphs (b) and (c) of
Section 4.01 relating to such Subsidiary Borrower in

 

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substantially the same form and scope as those delivered with respect to any
Subsidiary Borrower designated on the date of this Agreement (or, as the
Administrative Agent may reasonably require if there were no such deliveries)
and such other documents as the Administrative Agent shall reasonably request.
Upon any such designation of a Wholly-Owned Subsidiary and, in the case of a
designated Subsidiary which is not a Domestic Subsidiary, the approval of such
designation by the Administrative Agent and each Lender, such Subsidiary shall
be a Subsidiary Borrower hereunder (with all the related rights and obligations
thereof) and shall be entitled to Revolving Loans, Letters of Credit and
Swingline Loans on and subject to the terms and conditions of, and to the extent
provided in, this Agreement. Subsidiary Borrowers designated as of the date
hereof are set forth on Schedule 2.20. The Lenders hereby consent to ScanSource
Europe, SPRL becoming a Subsidiary Borrower, subject to the Borrower’s
compliance with the other requirements of this Section 2.20.

(b) Termination of Subsidiary Borrower Status. So long as all Loans made to any
Subsidiary Borrower and any related obligations have been paid in full, the
Borrower may terminate the status of such Subsidiary Borrower as a Subsidiary
Borrower hereunder by furnishing to the Administrative Agent a Termination
Letter in duplicate, duly completed and executed by the Borrower and such
Subsidiary. Any Termination Letter furnished hereunder shall be effective upon
receipt by the Administrative Agent, which shall promptly notify the Lenders.
Notwithstanding the foregoing, the delivery of a Termination Letter with respect
to any Subsidiary Borrower shall not terminate (i) any obligation of such
Subsidiary Borrower that remains unpaid at the time of such delivery or (ii) the
obligations of the Borrower under the Parent Guaranty with respect to any such
unpaid obligations.

(c) Netpoint International, Inc. Netpoint International, Inc. hereby accepts the
designation as Subsidiary Borrower, expressly and unconditionally accepts the
obligations of a Subsidiary Borrower hereunder and agrees to be bound by and
perform and comply with the terms and provisions of the Credit Agreement
applicable to it. By executing this Agreement, Netpoint International, Inc.
agrees that it is making such representations and agreements as set forth in the
form of Designation Letter, which is incorporated by reference herein, and
agrees to be bound thereby as if it had executed a Designation Letter.

(d) ScanSource Europe Limited. ScanSource Europe Limited hereby accepts the
designation as Subsidiary Borrower, expressly and unconditionally accepts the
obligations of a Subsidiary Borrower hereunder and agrees to be bound by and
perform and comply with the terms and provisions of the Credit Agreement
applicable to it. By executing this Agreement, ScanSource Europe Limited agrees
that it is making such representations and agreements as set forth in the form
of Designation Letter, which is incorporated by reference herein, and agrees to
be bound thereby as if it had executed a Designation Letter.

SECTION 2.21. Additional Reserve Costs. (a) For so long as any Lender is
required to make special deposits with the Bank of England and/or the UK
Financial Services Authority (“FSA”) (or, in either case, any other authority
which replaces all or any of their respective functions) or comply with reserve
assets, liquidity, cash margin or other requirements of the Bank of England or
FSA, as the case may be, to maintain reserve asset ratios or to pay fees, in
each case in respect of such Lender’s Eurocurrency Loans or Swingline Foreign
Currency Loans or any other facilities from time to time provided pursuant to
this Agreement,

 

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such Lender shall be entitled to require the Applicable Borrower to pay,
contemporaneously with each payment of interest on each of such Loans,
additional interest on such Loan at a rate per annum equal to the Mandatory
Costs Rate calculated in accordance with the formula and in the manner set forth
in Exhibit D hereto.

(b) For so long as any Lender is required to comply with reserve assets,
liquidity, cash margin or other requirements of any monetary or other authority
(including any such requirement imposed by the European Central Bank or the
European System of Central Banks, but excluding requirements reflected in the
Statutory Reserves or the Mandatory Costs Rate) in respect of any of such
Lender’s Eurocurrency Loans and Swingline Foreign Currency Loans or any other
facilities from time to time provided pursuant to this Agreement, such Lender
shall be entitled to require the Applicable Borrower to pay, contemporaneously
with each payment of interest on each of such Lender’s Loans subject to such
requirements, additional interest on such Loan at a rate per annum specified by
such Lender to be the cost to such Lender of complying with such requirements in
relation to such Loan.

(c) Any additional interest owed pursuant to paragraph (a) or (b) above shall be
determined by the applicable Lender, which determination shall be conclusive
absent manifest error, and notified to the applicable Borrower (with a copy to
the Administrative Agent) at least five Business Days before each date on which
interest is payable for the applicable Loan, and such additional interest so
notified to the applicable Borrower by such Lender shall be payable to the
Administrative Agent for the account of such Lender on each date on which
interest is payable for such Loan.

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Administrative Agent and the Lenders
that:

SECTION 3.01. Organization; Powers. Each of the Borrower and its Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.

SECTION 3.02. Authorization; Enforceability. The Transactions are within the
Borrowers’ corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder or shareholder action. This Agreement
has been duly executed and delivered by the Borrower and constitutes a legal,
valid and binding obligation of the Borrowers, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.

 

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SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority as a condition to the effectiveness,
enforceability or performance thereof, except such as have been obtained or made
and are in full force and effect, (b) will not violate any applicable law or
regulation or the charter, by-laws, memorandum and articles of association or
other organizational documents of the Borrower or any of its Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the Borrower or
any of its Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by the Borrower or any of its Subsidiaries, and
(d) will not result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries except Liens created under the Credit
Documents.

SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower
has heretofore furnished to the Lenders its consolidated balance sheet and
statements of income, stockholders equity and cash flows as of and for the
fiscal years ended June 30, 2006 and June 30, 2007, reported on by Ernst &
Young, LLP, independent public accountants. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP.

(b) Since June 30, 2007, there has been no material adverse change in the
business, assets, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries, taken as a whole.

SECTION 3.05. Properties. (a) Each of the Borrower and its Subsidiaries has good
title to, or valid leasehold interests in, all its real and personal property
material to its business, except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.

(b) Each of the Borrower and its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any failure to so own or license or any such infringements that, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.

SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions,
suits or proceedings by or before any arbitrator or Governmental Authority
pending against or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (ii) that involve this Agreement or the
Transactions.

(b) Neither the Borrower nor any of its Subsidiaries (i) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (ii) has become
subject to any Environmental

 

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Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability, except where such failure, liability or claims could not reasonably
be expected to result in a Material Adverse Effect.

SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower and its
Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.

SECTION 3.08. Investment Company Status. Neither the Borrower nor any of its
Subsidiaries is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.

SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $5,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $5,000,000 the fair
market value of the assets of all such underfunded Plans.

SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither the Information Memorandum nor any of the other
reports, financial statements, certificates or other information furnished by or
on behalf of the Borrower to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished), taken as a whole,
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.

 

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SECTION 3.12. Security Documents. The security interests created in favor of the
Collateral Agent, as pledgee, for the benefit of the Secured Creditors, under
each Security Document constitute perfected security interests in the Collateral
described in such Security Document under the governing law of such Security
Document, subject to no security interests of any other Person, except as
permitted by such Security Document. No filings or recordings are required in
order to perfect (or maintain the perfection or priority of) the security
interests created in the Collateral under any Security Document other than
filings or recordings that have been made, except where the Administrative Agent
has determined that the time or expense of such perfection is not justified by
the value of such Collateral.

SECTION 3.13. Subsidiaries. As of the Effective Date, the Borrower has no
Subsidiaries other than those Subsidiaries listed on Schedule 3.13. Schedule
3.13 correctly sets forth, as of the Effective Date, (i) the percentage
ownership (direct or indirect) of the Borrower in each class of capital stock or
other equity of its Subsidiaries and also identifies the direct owner thereof,
and (ii) the jurisdiction of organization of each such Subsidiary. Schedule 3.13
correctly identifies those Subsidiaries which constitute Material Subsidiaries
and which constitute Material Foreign Subsidiaries as of the Effective Date.

SECTION 3.14. Regulation U. Margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) constitutes less than 25% of
the value of those assets of the Borrower and its Subsidiaries which are subject
to any limitation on sale, pledge, or other restriction hereunder. Neither the
making of any Loan or issuance of any Letters of Credit hereunder nor the use of
the proceeds thereof will violate or be inconsistent with the provisions of
Regulation T, Regulation U or Regulation X of the Board of Governors of the
Federal Reserve System.

SECTION 3.15. Solvency. On the Effective Date, after giving effect to the
consummation of the transactions contemplated hereby and by the Credit Documents
and the payment of all fees, costs and expenses payable by the Borrower with
respect to the transactions contemplated hereby and by the Credit Documents,
each of the Borrower and each of its Material Subsidiaries and Material Foreign
Subsidiaries is Solvent.

SECTION 3.16. Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (a) any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect or (b) any
agreement governing Material Indebtedness.

SECTION 3.17. Foreign Pension Plan. Each Foreign Pension Plan has been
maintained in substantial compliance with its terms and in substantial
compliance with the requirements of any and all applicable laws, statutes,
rules, regulations and orders and has been maintained, where required, in good
standing with applicable regulatory authorities. All contributions required to
be made with respect to a Foreign Pension Plan have been timely made. Neither
the Borrower nor any of its Subsidiaries has incurred any material obligation in
connection with the termination of or withdrawal from any Foreign Pension Plan.
The present

 

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value of the accrued benefit liabilities (whether or not vested) under each
Foreign Pension Plan, determined as of the end of the Borrower’s most recently
ended fiscal year on the basis of actuarial assumptions, each of which is
reasonable, did not exceed the current value of the assets of such Foreign
Pension Plan allocable to such benefit liabilities.

SECTION 3.18. Labor Relations. Neither the Borrower nor any of its Subsidiaries
is engaged in any unfair labor practice that could reasonable be expected to
have a Material Adverse Effect. There is (a) no significant unfair labor
practice complaint pending against the Borrower or any of its Subsidiaries or,
to the best knowledge of the Borrower, threatened against any of them before the
National Labor Relations Board or any similar Governmental Authority in any
jurisdiction, and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them, (b) no significant strike, labor
dispute, slowdown or stoppage is pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries and (c) to the best knowledge of the
Borrower, no question concerning union representation exists with respect to the
employees of the Borrower or any of its subsidiaries, except (with respect to
any matter specified in clause (a), (b) or (c) above, either individually or in
the aggregate) such as could not reasonably be expected to have a Material
Adverse Effect.

ARTICLE IV

Conditions

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

(a) The Administrative Agent (or its counsel) shall have received from each
party to a Credit Document either (i) a counterpart of such Credit Document
signed on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include electronic transmission of a signed
signature page) that such party has signed a counterpart of such Credit
Document.

(b) The Administrative Agent shall have received favorable written opinion(s)
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of counsel for the Borrower covering such matters relating to the
Borrowers, this Agreement or the Transactions as the Lenders shall reasonably
request. The Borrower hereby requests such counsel to deliver such opinion(s).

(c) The Administrative Agent shall have received such documents and certificates
as the Administrative Agent or its counsel may reasonably request relating to
the organization, existence and good standing of the Borrowers, the
authorization of the Transactions and any other legal matters relating to the
Borrowers, this Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.

 

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(d) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.

(e) The Administrative Agent shall have received all fees and other amounts due
and payable to it or for the account of the Lenders on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or payment of all out of
pocket expenses required to be reimbursed or paid by the Borrower hereunder.

(f) If applicable, the Administrative Agent shall have received a Designation
Letter for any Subsidiary Borrower being designated as such as of the Effective
Date and not party to this Agreement.

(g) The Administrative Agent shall have received (i) satisfactory audited
consolidated financial statements of the Borrower for the two most recent fiscal
years ended prior to the Effective Date as to which such financial statements
are available, and (ii) satisfactory unaudited interim consolidated financial
statements of the Borrower for each quarterly period subsequent to the date of
the latest financial statements delivered pursuant to clause (i) of this
paragraph as to which such financial statements are available, and
(iii) projections of the Borrower and its consolidated Subsidiaries for fiscal
years 2007 to 2012 in form and substance satisfactory to the Administrative
Agent.

(h) The commitments under the Borrower’s Amended and Restated Credit Agreement
dated as of July 16, 2004 (as amended) with Branch Banking and Trust Company of
South Carolina, as administrative agent, and the financial institutions party
thereto shall have been terminated, all loans thereunder shall have been repaid
in full, together with interest thereon, all letters of credit, if any, issued
thereunder shall have been terminated or supplemented by a Letter of Credit and
all other amounts owing pursuant to such agreement and all agreements related
thereto shall have been repaid in full, all such agreements and Liens securing
the same shall have been terminated or released on terms and conditions
satisfactory to the Administrative Agent and be of no further force or effect,
and the Administrative Agent shall have received a payoff letter satisfactory to
the Administrative Agent from Branch Banking and Trust Company of South Carolina
to such effect.

(i) The Administrative Agent shall have received such duly executed UCC-3
termination statements and all other releases and similar documents as the
Administrative Agent may request with respect to any security interests securing
indebtedness being repaid in full on the Effective Date.

(j) The Administrative Agent shall have received insurance certificates naming
the Collateral Agent, on behalf of the Secured Creditors, as lender’s loss payee
for any casualty policies and additional insured for any general liability
policies, in form and substance acceptable to the Administrative Agent.

(k) The Administrative Agent shall have received such duly completed UCC
financing statements as the Administrative Agent shall have requested to perfect
its security

 

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interest in the Collateral and such copies of searches of financing statements
filed under the UCC, together with tax lien and judgment searches with respect
to the assets of the Credit Parties, in both cases in such jurisdictions as the
Administrative Agent may request.

(l) The Administrative Agent shall have received (or arrangements satisfactory
to the Administrative Agent shall have been made with respect to the delivery
of) a landlord waiver with respect to each parcel of real property leased by any
Credit Party as the Administrative Agent may request, each in form and substance
acceptable to the Administrative Agent.

(m) The Administrative Agent shall have received (or arrangements satisfactory
to the Administrative Agent shall have been made with respect to the delivery
of) bailee letters with respect to Collateral held by third parties as the
Administrative Agent shall request and in form and substance acceptable to the
Administrative Agent.

(n) The Administrative Agent shall have received (or arrangements satisfactory
to the Administrative Agent shall have been made with respect to the delivery
of) all stock (or unit) certificates evidencing all certificated Equity
Interests to be pledged pursuant to the Pledge Agreements, accompanied by stock
(or unit) powers executed in blank, and all notes to be pledged pursuant to the
Pledge Agreements (including notes evidencing indebtedness required to be so
evidenced pursuant to Section 6.04), accompanied by note powers executed in
blank.

(o) The Administrative Agent shall have received copies of all Governmental
Authority and third party approvals necessary or, in the discretion of the
Administrative Agent, advisable in connection with the Transactions and all
other documents reasonably requested by the Administrative Agent.

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 5:00 p.m., New York City time, on October 31, 2007 (and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:

(a) The representations and warranties of the Credit Parties set forth in the
Credit Documents shall be true and correct on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true on and as of such earlier
date.

 

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(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.

ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:

SECTION 5.01. Financial Statements; Ratings Change and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:

(a) within 90 days after the end of each fiscal year of the Borrower (or 105
days if an extension has been obtained for the filing of an equivalent periodic
report under Rule 12b-25 of the General Rules and Regulations under the
Securities Exchange Act of 1934), its audited consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by independent public
accountants of recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;

(b) within 45 days after the end of each of the first three fiscal quarters of
each fiscal year of the Borrower (or 60 days if an extension has been obtained
for the filing of an equivalent periodic report under Rule 12b-25 of the General
Rules and Regulations under the Securities Exchange Act of 1934), its
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;

 

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(c) concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate in the form of Exhibit E hereto of a Financial Officer
of the Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.12 and 6.13,
(iii) notifying the Administrative Agent of any Commercial Tort Claims,
Copyrights, Patents or Trademarks (each term as defined in the Security
Agreement) of a Credit Party not previously disclosed to the Administrative
Agent and which, in the case of Copyrights, Patents or Trademarks, have been
registered with any Governmental Authority, and (iv) stating whether any change
in GAAP or in the application thereof has occurred since the date of the audited
financial statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate;

(d) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by the Borrower or
any Subsidiary with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, as the case may be; and

(e) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request.

Documents required to be delivered pursuant to Sections 5.01(a), (b) or (d) (to
the extent any such documents are included in materials otherwise filed with the
Securities Exchange Commission) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet or such documents become available on EDGAR; provided
that (i) the Borrower shall deliver paper or electronic copies of such documents
to the Administrative Agent or any Lender that requests the Borrower to deliver
copies of such documents until a written request to cease delivering such copies
is given by the Administrative Agent or such Lender and (ii) the Borrower shall
notify (which may be by facsimile or electronic mail) the Administrative Agent
and each Lender of the posting of any documents described in Section 5.01(d).
The Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and shall have no
responsibility to monitor compliance by the Borrower with any such request for
delivery, and each Lender shall be solely responsible for requesting delivery to
it or maintaining its copies of such documents.

SECTION 5.02. Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:

(a) the occurrence of any Default;

 

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(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting the Borrower or
any Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect;

(c) the occurrence of any ERISA Event (or comparable event with respect to a
Foreign Pension Plan) that, alone or together with any other ERISA Events (or
comparable events with respect to a Foreign Pension Plan) that have occurred,
could reasonably be expected to result in liability of the Borrower and its
Subsidiaries in an aggregate amount exceeding $5,000,000; and

(d) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises required to carry on its
business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03.

SECTION 5.04. Payment of Obligations. The Borrower will, and will cause each of
its Subsidiaries to, pay its obligations, including Tax liabilities, that, if
not paid, could result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will, and will
cause each of its Subsidiaries to, (a) keep and maintain all property material
to the conduct of its business in good working order and condition, ordinary
wear and tear excepted, and (b) maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.

SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities. The Borrower will, and will cause
each of its Subsidiaries to, permit any representatives designated by the
Administrative Agent, the Collateral Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested (and, in the case of any Lender, at such Lender’s
expense).

 

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SECTION 5.07. Compliance with Laws. The Borrower will, and will cause each of
its Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of the Loans
will be used only for general corporate purposes, including, but not limited to,
acquisitions permitted hereby, refinancing of indebtedness and working capital.
No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations T, U and X.

SECTION 5.09. Further Assurances; etc. (a) The Borrower will, and will cause
each of its Subsidiaries to, at the expense of the Borrower, make, execute,
endorse, acknowledge, file and/or deliver to the Collateral Agent from time to
time such schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports,
and other assurances or instruments and take such further steps relating to the
Collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require to assure the creation and continuation of perfected security
interests in the Collateral and as are generally consistent with the terms of
this Agreement and the Security Documents. Furthermore, the Borrower will, and
will cause its Subsidiaries to, deliver to the Collateral Agent such opinions of
counsel and other related documents as may be reasonably requested by the
Administrative Agent to assure compliance with this Section 5.09.

(b) The Borrower agrees that each action required by clause (a) of this
Section 5.09 shall be completed as soon as reasonably practical, but in no event
later than 30 days (or such greater number of days as the Administrative Agent
may agree) after such action is requested to be taken by the Collateral Agent,
the Administrative Agent or the Required Lenders.

(c) If, following a change in the relevant sections of the Code or the
regulations, rules, rulings, notices or other official pronouncements issued or
promulgated thereunder, the Borrower does not within 30 days after a request
from the Administrative Agent or the Required Lenders (or such greater number of
days as the Administrative Agent may agree) deliver evidence, in form and
substance reasonably satisfactory to the Administrative Agent (which evidence
may be in the form of an opinion of counsel), with respect to any Foreign
Subsidiary of the Borrower which has not already had all of its stock pledged
pursuant to the Pledge Agreements that (i) a pledge of 66-2/3% or more of the
total combined voting power of all classes of capital stock of such Foreign
Subsidiary entitled to vote and (ii) the entering into by such Foreign
Subsidiary of a guaranty in substantially the form of the Subsidiary Guaranty,
in any such case could reasonably be expected to cause (I) any undistributed
earnings of such Foreign Subsidiary or its parent as determined for Federal
income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary’s direct or indirect United States parent for Federal income tax
purposes or (II) other Federal income tax consequences to the Credit Parties
having an adverse financial consequence to any Credit Party in any material
respect, then in the case of a failure to deliver the evidence described in
clause (i) above, that portion of such Foreign

 

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Subsidiary’s outstanding capital stock not theretofore pledged pursuant to the
Pledge Agreements shall be promptly pledged to the Collateral Agent for the
benefit of the Secured Creditors pursuant to the Pledge Agreements (or another
pledge agreement in substantially similar form, if needed), and in the case of a
failure to deliver the evidence described in clause (ii) above such Foreign
Subsidiary shall promptly execute and deliver the Subsidiary Guaranty (or
another guaranty in substantially similar form, if needed), guaranteeing the
obligations of the Borrower under the Credit Documents and under any Swap
Agreement entered into with a Secured Creditor, in each case to the extent that
the entering into of a Pledge Agreement or Subsidiary Guaranty is permitted by
the laws of the respective foreign jurisdiction and with all documents delivered
pursuant to this Section 5.09(c) to be in form and substance reasonably
satisfactory to the Administrative Agent.

SECTION 5.10. Ownership of Subsidiaries; etc. The Borrower will directly or
indirectly own (a) in the case of any Person which becomes a Subsidiary after
the date hereof, not less than the percentage of the Equity Interests of such
Person directly or indirectly owned by the Borrower at the time such Person
becomes a Subsidiary and (b) in each other case, 100% (or 92% in the case of
Netpoint International, Inc. prior to the time it becomes a Wholly-Owned
Subsidiary and 100% thereafter) of the Equity Interests of each of its
Subsidiaries except, in the case of Foreign Subsidiaries, director’s qualifying
shares and/or other nominal amounts of shares required to be held by Persons
other than the Borrower and its Subsidiaries under applicable law; provided that
the foregoing shall not prohibit any sale or other disposition of all of the
Equity Interests in any Subsidiary held by the Borrower and its Subsidiaries
made in accordance with Section 6.03.

SECTION 5.11. Additional Guarantors and Collateral.

(a) Effective upon any Domestic Subsidiary which is not, as of the date hereof,
a Material Subsidiary becoming a Material Subsidiary or a Subsidiary Borrower,
the Borrower shall cause such Domestic Subsidiary to, within fifteen
(15) Business Days, or such longer period as the Administrative Agent may agree,
(i) execute and deliver to the Administrative Agent for the benefit of the
Secured Creditors a joinder to the Subsidiary Guaranty and (ii) pledge to the
Collateral Agent for the benefit of the Secured Creditors a first priority
security interest in substantially all personal property owned by such Person
pursuant to security documents substantially similar to the Security Documents.
The Borrower shall promptly notify the Administrative Agent at any time at which
any such Domestic Subsidiary becomes a Material Subsidiary.

(b) Effective upon any Foreign Subsidiary of the Borrower or any Subsidiary
Guarantor which is not, as of the date hereof, a Material Foreign Subsidiary
becoming a Material Foreign Subsidiary or a Subsidiary Borrower, the Borrower
shall, or shall cause the applicable Subsidiary Guarantor to, pledge to the
Collateral Agent for the benefit of the Secured Creditors a first priority
security interest in the Equity Interests of such Material Foreign Subsidiary
directly owned by such Person (up to 65% of the total Equity Interests of such
Foreign Subsidiary in the aggregate) pursuant to a pledge agreement in form
satisfactory to the Administrative Agent and provide such other documentation
with respect thereto, including legal opinions, as the Administrative Agent may
reasonably request. The Borrower shall promptly notify the Administrative Agent
at any time any such Foreign Subsidiary becomes a Material Foreign Subsidiary.

 

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(c) Effective upon the then-existing Subsidiary Guarantors failing to constitute
the Material Subsidiary Group, the Borrower shall, to the extent that there
exist one or more Domestic Subsidiaries which are not Subsidiary Guarantors,
comply with Section 5.11(a) with respect to one or more of such Domestic
Subsidiaries so that the Subsidiary Guarantors comprise the Material Subsidiary
Group. To the extent that after complying with the preceding sentence the
Subsidiary Guarantees do not constitute the Material Subsidiary Group, then the
Borrower shall, to the extent there exist any Foreign Subsidiaries the Equity
Interests of which are owned by the Borrower or a Domestic Subsidiary and are
not, to the extent of 65% thereof, already pledged to the Collateral Agent,
comply with Section 5.11(b) with respect to one or more of such Foreign
Subsidiaries (as if it were a Material Foreign Subsidiary) to the extent
necessary to cause compliance with the preceding sentence (for such purpose
treating such Foreign Subsidiary as if it were a Domestic Subsidiary which had
joined in the Subsidiary Guaranty and the Security Documents).

SECTION 5.12. Most Favored Nation Status. In the event that any Credit Party
shall after the date hereof enter into (or amend) any agreement, guarantee or
other instrument governing, providing for commitments to advance or guaranteeing
any Indebtedness that constitutes Material Indebtedness, which agreement,
guarantee or other instrument includes Covenants or defaults (other than
covenants or defaults specific to collateral securing such other Material
Indebtedness) in addition to those provided in this Agreement or the other
Credit Documents, or more favorable to the lender or other counterparty
thereunder than the corresponding Covenants or defaults provided in this
Agreement or the other Credit Documents, the Borrower shall promptly so notify
the Administrative Agent. If requested by the Administrative Agent and the
Required Lenders, the Borrowers shall enter into an amendment to this Agreement
providing for substantially the same such Covenants or defaults as those
provided for in such agreement, guarantee or other instrument. Such amendment
will remain in effect only so long as such other Material Indebtedness remains
outstanding. As used in this Section, the term “Covenants” shall mean covenants
of a type similar to those set forth in Articles V and VI hereof or which
customarily are described as affirmative, negative or financial covenants, but
in no event shall such term encompass (w) agreements of the Borrower in respect
of interest rate, fees, expenses, yield protection, indemnities, collateral,
loan maturities, prepayment premiums, prepayment prohibitions or “call”
protection or conditions precedent, (x) provisions whereby the Borrower waives
rights, (y) provisions of a type comparable to those contained in Article IX or
customarily included in the miscellaneous section of a credit agreement or
similar instrument, or (z) definitions to the extent such definitions relate to
any of the provisions described in the foregoing clauses (w), (x) and (y).

ARTICLE VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

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SECTION 6.01. Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:

(a) Indebtedness created hereunder;

(b) Indebtedness existing or proposed on the date hereof and set forth in
Schedule 6.01, and any extensions, renewals or replacements of any such
Indebtedness and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof;

(c) Indebtedness (i) of any Full Credit Party owing to any other Full Credit
Party, (ii) of any Full Credit Party owing to any Subsidiary which is not a Full
Credit Party, which Indebtedness is subordinated to the Obligations on terms
reasonably satisfactory to the Administrative Agent, (iii) of a Subsidiary which
is not a Credit Party to another Subsidiary which is not a Credit Party and
(iv) of a foreign Subsidiary Borrower owing to any Subsidiary which is not a
Credit Party, which Indebtedness is subordinated to the Obligations on terms
reasonably satisfactory to the Administrative Agent; provided that ScanSource
Europe, SPRL shall be permitted to incur Indebtedness owed to ScanSource Europe
Limited, which Indebtedness must be repaid in full on or prior to the twentieth
Business Day after the Effective Date (or such later date to which the
Administrative Agent may agree) if ScanSource Europe, SPRL has not become a
Subsidiary Borrower hereunder by such date;

(d) Guarantees (i) by any Full Credit Party of Indebtedness of any other Full
Credit Party, (ii) by any Subsidiary which is not a Credit Party of Indebtedness
of the Borrower or any other Subsidiary and (iii) by any foreign Subsidiary
Borrower of any Full Credit Party;

(e) Indebtedness of the Borrower or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof; provided that (i) such Indebtedness is incurred prior to or within 180
days after such acquisition or the completion of such construction or
improvement and (ii) the aggregate principal amount of Indebtedness permitted by
this clause (e) shall not exceed $25,000,000 at any time outstanding;

(f) Indebtedness of any Person that becomes a Subsidiary after the date hereof;
provided that (i) such Indebtedness exists at the time such Person becomes a
Subsidiary and is not created in contemplation of or in connection with such
Person becoming a Subsidiary and (ii) the aggregate principal amount of
Indebtedness permitted by this clause (f) shall not exceed $10,000,000 at any
time outstanding;

 

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(g) Indebtedness of the Borrower or any Subsidiary as an account party in
respect of trade letters of credit;

(h) Indebtedness, including that of SPCs, incurred in connection with Permitted
Securitizations; provided that the aggregate outstanding amount of such
Receivables Transaction Attributed Indebtedness, together with the aggregate
outstanding amount of Indebtedness incurred pursuant to Section 6.01(i), shall
at no time exceed $100,000,000;

(i) Indebtedness of ScanSource Europe, SPRL as to which the applicable lender
shall have recourse only to its Receivables (and not to the Borrower, any
Domestic Subsidiary or any other Foreign Subsidiary or the assets thereof);
provided that the aggregate outstanding amount of such Indebtedness, together
with the aggregate outstanding amount of Receivables Transaction Attributed
Indebtedness incurred pursuant to Section 6.01(h), shall at no time exceed the
greater of €75,000,000 and $100,000,000;

(j) Indebtedness arising under the Bond Financing Agreement not exceeding
$20,000,000 in the aggregate at any time outstanding;

(k) Indebtedness incurred and owing to Avaya, Inc. and IBM Credit Corporation
for the purpose of financing all or any part of the cost of acquiring inventory
from such Person;

(l) other Indebtedness in an aggregate principal amount not exceeding at any
time outstanding the greater of $50,000,000 or an amount equal to 15% of
Tangible Net Worth as of the most recent fiscal year end for which financial
statements have been delivered pursuant to Section 5.01(a); provided that the
aggregate principal amount of Indebtedness of the Borrower’s Subsidiaries
permitted by this clause (l) shall not exceed $15,000,000 at any time
outstanding; and provided further that the aggregate principal amount of secured
Indebtedness permitted by this clause (l) shall not exceed $15,000,000 at any
time outstanding.

SECTION 6.02. Liens. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:

(a) Permitted Encumbrances;

(b) any Lien on any property or asset of the Borrower or any Subsidiary existing
or proposed on the date hereof and set forth in Schedule 6.02; provided that
(i) such Lien shall not apply to any other property or asset of the Borrower or
any Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;

 

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(c) any Lien existing on any property or asset prior to the acquisition thereof
by the Borrower or any Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be, and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;

(d) Liens on fixed or capital assets acquired, constructed or improved by the
Borrower or any Subsidiary; provided that (i) such security interests secure
Indebtedness permitted by clause (e) of Section 6.01, (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or within
180 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
the Borrower or any Subsidiary;

(e) Liens created pursuant to the Security Documents;

(f) Liens upon assets of an SPC granted in connection with a Permitted
Securitization and customary backup Liens granted by ScanSource Europe, SPRL in
its Receivables transferred to an SPC in accordance with a Permitted
Securitization;

(g) Liens on Receivables securing Indebtedness permitted by Section 6.01(i);

(h) Liens on inventory acquired from Avaya, Inc. and IBM Credit Corporation
securing Indebtedness permitted by Section 6.01(k);

(i) other Liens securing Indebtedness at no time exceeding $15,000,000 in the
aggregate.

SECTION 6.03. Fundamental Changes; Asset Dispositions.

(a) The Borrower will not, and will not permit any Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Subsidiary may merge into any Borrower in a
transaction in which such Borrower is the surviving corporation, (ii) any Person
(other than a Borrower) may merge into any Subsidiary in a transaction in which
the surviving entity is a Subsidiary (and, if either such Subsidiary is a
Subsidiary Guarantor, then the surviving entity shall also be a Subsidiary
Guarantor) and (iii) any Subsidiary (other than a Subsidiary Borrower) may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless also

 

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permitted by Section 6.04. Notwithstanding the foregoing, no merger or
consolidation involving a Subsidiary which is a Subsidiary Guarantor or which
has pledged its assets as Collateral shall be permitted unless the surviving
entity is also a Subsidiary Guarantor and/or pledges its assets as Collateral,
as applicable.

(b) The Borrower will not, nor will it permit any Subsidiary to, make any Asset
Disposition except for (i) Asset Dispositions among the Borrowers and one or
more Domestic Subsidiaries or Subsidiary Guarantors or among any Domestic
Subsidiaries or Subsidiary Guarantors, (ii) Asset Dispositions by Foreign
Subsidiaries that are not Subsidiary Borrowers or Subsidiary Guarantors to the
Borrower or any Subsidiary, (iii) Asset Dispositions expressly permitted by
Sections 6.04, 6.06 or 6.07, (iv) transfers of Receivables pursuant to, and in
accordance with the terms of, a Permitted Securitization or a Permitted
Alternate Transaction; provided that, with respect to a Permitted
Securitization, the related Receivables Transaction Attributed Indebtedness
shall be permitted by Section 6.01(h), (v) the sale and leaseback of real
property permitted under Section 6.10 and (vi) other Asset Dispositions of
property that, together with all other property of the Borrower and its
Subsidiaries previously leased, sold or disposed of in Asset Dispositions made
pursuant to this Section 6.03(b)(vi) during the twelve-month period ending with
the month in which any such lease, sale or other disposition occurs, do not
constitute a Substantial Portion of the property of the Borrower and its
Subsidiaries.

(c) The Borrower will not, and will not permit any of its Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower or any of its Subsidiaries on the date of execution of
this Agreement and businesses reasonably related thereto.

SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
Wholly-Owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) substantially all of
the assets of any other Person or any business unit of any other Person, except:

(a) Permitted Investments;

(b) investments (including investments in Subsidiaries) existing on the date
hereof and set forth on Schedule 6.04;

(c) loans or advances giving rise to Indebtedness permitted to be incurred under
Section 6.01(c) and other investments which, if made in the form of a loan or
advance, would give rise to Indebtedness permitted to be incurred under
Section 6.01(c);

(d) Guarantees constituting Indebtedness permitted by Section 6.01;

(e) subject to the provisions of this Section 6.04(e) and the requirements
contained in the definition of Permitted Acquisition, the Borrower and its
Wholly-Owned

 

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Subsidiaries may from time to time effect Permitted Acquisitions, so long as:
(i) no Default shall have occurred and be continuing at the time of the
consummation of the proposed Permitted Acquisition or immediately after giving
effect thereto; (ii) if the proposed Permitted Acquisition is for aggregate
consideration of $25,000,000 or more, the Borrower shall have given to the
Administrative Agent written notice of such proposed Permitted Acquisition on
the earlier of (x) the date on which the Permitted Acquisition is publicly
announced and (y) ten (10) Business Days prior to consummation of such Permitted
Acquisition (or such shorter period of time as may be reasonably acceptable to
the Administrative Agent), which notice shall be executed by its chief financial
officer or treasurer and shall describe in reasonable detail the principal terms
and conditions of such Permitted Acquisition; (iii) at the time of any such
Permitted Acquisition involving the creation or acquisition of a Subsidiary, or
the acquisition of capital stock or other Equity Interest of any Person, the
Borrower and its Subsidiaries shall have complied with Section 5.11; and
(iv) the aggregate consideration for any single Permitted Acquisition or series
of related Permitted Acquisitions shall not exceed $50,000,000 (v) immediately
after giving effect to such proposed Permitted Acquisition and any Indebtedness
incurred in connection therewith, the Leverage Ratio shall be less than or equal
to 3.25 to 1.00.;

(f) routine advances to officers, directors and employees for travel,
entertainment, relocation or other reimbursable expenses incurred in the
ordinary course of business and to the extent permitted by applicable law;

(g) investments received in connection with the bankruptcy or reorganization of
any Person and in settlement of obligations of, or disputes with, any Person
arising in the ordinary course of business and upon foreclosure with respect to
any secured investment or other transfer of title with respect to any secured
investment;

(h) promissory notes and other non-cash consideration received in connection
with Asset Dispositions permitted by Section 6.03;

(i) investments in the ordinary course of business consisting of
(i) endorsements for collection or deposit or (ii) customary trade arrangements
with customers;

(j) investments under Swap Agreements permitted by Section 6.05; and

(k) other investments in the aggregate at any time not exceeding $15,000,000.

SECTION 6.05. Swap Agreements. The Borrower will not, and will not permit any of
its Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements
entered into to hedge or mitigate risks to which the Borrower or any Subsidiary
has actual exposure (other than those in respect of Equity Interests of the
Borrower or any of its Subsidiaries), and (b) Swap Agreements entered into in
order to effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary.

SECTION 6.06. Restricted Payments. The Borrower will not, and will not permit
any of its Subsidiaries to, declare, pay or make, or agree to declare, pay or
make, directly or indirectly, any Restricted Payment, except (a) the Borrower
may declare and pay dividends with respect to its Equity Interests payable
solely in additional shares of its common stock, (b)

 

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Subsidiaries may declare and pay dividends ratably with respect to their Equity
Interests, (c) the Borrower may make Restricted Payments pursuant to and in
accordance with stock option plans or other benefit plans for management or
employees of the Borrower and its Subsidiaries and (d) so long as no Default
shall have occurred and be continuing either immediately prior to or immediately
after giving effect thereto, the Borrower may make additional Restricted
Payments in an aggregate amount in any fiscal year not in excess of an amount
equal to 5% of the Borrower’s Tangible Net Worth as of the end of the
immediately preceding fiscal year.

SECTION 6.07. Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) at prices and on terms and conditions not less favorable
to the Borrower or such Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties and pursuant to the reasonable requirements
of the Borrower’s or its Subsidiaries’ business, (b) transactions between or
among the Borrower, its Wholly-Owned Subsidiaries and the Subsidiary Guarantors
(or, with respect to transfer pricing arrangements consistent with past
practice, transactions between or among the Borrower and its Subsidiaries) not
involving any other Affiliate and (c) any Restricted Payment permitted by
Section 6.06.

SECTION 6.08. Restrictive Agreements. The Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of the Borrower or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or
any other Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.08 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided that such restrictions and conditions
apply only to the Subsidiary that is to be sold and such sale is permitted
hereunder, (iv) the foregoing shall not apply to restrictions on any SPC created
in connection with any Permitted Securitization, (v) the foregoing shall not
apply to restrictions with respect to the disposition or distribution of assets
in joint venture agreements or other agreements with respect to Asset
Dispositions permitted by Section 6.03, in each case entered into in the
ordinary course of business, (vi) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (vii) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.

SECTION 6.09. Subordinated Indebtedness; Certain Prepayments. The Borrower will
not, and will not permit any Subsidiary to, make any amendment or modification
to any indenture, note or other agreement evidencing or governing any
Indebtedness which has been subordinated in right of payment to the Obligations
or directly or indirectly voluntarily

 

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prepay, defease or in substance defease, purchase, redeem, retire or otherwise
acquire, any such subordinated Indebtedness. Without limiting the preceding
sentence, so long as an Event of Default has occurred and is continuing, the
Borrower will not, and will not permit any Subsidiary to, directly or indirectly
voluntarily prepay, defease or in substance defease, purchase, redeem, retire or
otherwise acquire, any single Indebtedness that constitutes a Material
Indebtedness or collective Indebtedness that constitutes Material Indebtedness
prior to the date when due (other than its obligations hereunder).

SECTION 6.10. Sale and Leaseback Transactions. The Borrower will not, nor will
it permit any Subsidiary to, enter into or suffer to exist any Sale and
Leaseback Transaction other than the sale and leaseback of real property so long
as, giving effect thereto, the Borrower is in pro forma compliance with Sections
6.12 and 6.13 and no Default exists or would result therefrom.

SECTION 6.11. Fiscal Year. The Borrower shall not, nor shall it permit any
Subsidiary to, change its fiscal year to end on any date other than June 30 of
each year.

SECTION 6.12. Maximum Leverage Ratio. The Borrower will cause the Leverage Ratio
to be no greater than 3.50 to 1.00 at all times.

SECTION 6.13. Minimum Fixed Charge Coverage Ratio. The Borrower will cause the
Fixed Charge Coverage Ratio as of the end of each fiscal quarter of the Borrower
to be no less than 1.50 to 1.00.

ARTICLE VII

Events of Default

If any of the following events (“Events of Default”) shall occur:

(a) any of the Borrowers shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement or any cash
collateral amount due pursuant to Section 2.06(j) when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;

(b) any of the Borrowers shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of five days;

(c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any Subsidiary in or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder, shall prove to have been incorrect in any material respect when made
or deemed made;

 

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(d) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02, 5.03 (with respect to the Borrower’s
existence) or 5.08 or in Article VI;

(e) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clause (a),
(b) or (d) of this Article), and such failure shall continue unremedied for a
period of 30 days after the earlier of (i) the first day on which any executive
officer of a Credit Party has knowledge of such failure or (ii) the date written
notice thereof has been given to the Borrower by the Administrative Agent (which
notice will be given at the request of any Lender);

(f) the Borrower or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable, and such
failure continues beyond any applicable grace or cure period;

(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that (any applicable grace or
cure period having expired) enables or permits the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization, voluntary arrangement,
scheme of arrangement or other relief in respect of the Borrower, any Credit
Party, any Material Subsidiary or any Material Foreign Subsidiary or its debts,
or of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator, administrative receiver, administrator, compulsory manager or
similar official for the Borrower, any Credit Party, any Material Subsidiary or
any Material Foreign Subsidiary or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered;

(i) the Borrower, any Credit Party, any Material Subsidiary or any Material
Foreign Subsidiary shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization, voluntary arrangement, scheme of
arrangement or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator, administrative receiver, administrator, compulsory
manager or similar official for the Borrower, any Credit Party, any Material
Subsidiary or any

 

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Material Foreign Subsidiary or for a substantial part of its assets, (iv) file
an answer admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment, composition, compromise or
arrangement for the benefit of creditors or (vi) take any action for the purpose
of effecting any of the foregoing;

(j) the Borrower, any Credit Party, any Material Subsidiary or any Material
Foreign Subsidiary shall become unable, admit in writing its inability or fail
generally to pay its debts as they become due;

(k) one or more judgments for the payment of money in an aggregate amount in
excess of $10,000,000 shall be rendered against the Borrower, any Subsidiary or
any combination thereof and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively stayed, or
any action shall be legally taken by a judgment creditor to attach or levy upon
any assets of the Borrower or any Subsidiary to enforce any such judgment;

(l) an ERISA Event (or comparable event with respect to a Foreign Pension Plan)
shall have occurred that, in the opinion of the Required Lenders, when taken
together with all other ERISA Events (or comparable events with respect to a
Foreign Pension Plan) that have occurred, could reasonably be expected to result
in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding (i) $2,500,000 in any year or (ii) $5,000,000 for all periods;

(m) a Change in Control shall occur;

(n) except as otherwise provided in Section 6.03(a), the Parent Guaranty, the
Subsidiary Guaranty or any provisions thereof shall cease to be in full force or
effect as to the Borrower or any Subsidiary Guarantor, or the Borrower, any
Subsidiary Guarantor or any Person acting for or on behalf of the Borrower or
any Subsidiary Guarantor shall deny or disaffirm the Borrower’s or such
Subsidiary Guarantor’s obligations under the Parent Guaranty or the Subsidiary
Guaranty, as applicable; or

(o) any Security Document shall cease to be in full force and effect, or shall
cease to give the Collateral Agent for the benefit of the Secured Creditors the
Liens, rights, powers and privileges purported to be created thereby, or any
Credit Party shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any
such Security Document and such default shall continue beyond the period of
grace, if any, specifically applicable thereto pursuant to the terms of such
Security Document;

then, and in every such event (other than an event with respect to any of the
Borrowers described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and

 

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payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers; and in case of any event with
respect to any of the Borrowers described in clause (h) or (i) of this Article,
the Commitments shall automatically terminate and the principal of the Loans
then outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers.

ARTICLE VIII

The Administrative Agent

Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.

The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.

The Lenders identified on the front page of this Agreement as Syndication Agent
or Co-Documentation Agents shall not have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein. Without limiting
the generality of the foregoing, (a) the Administrative Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby
that the Administrative Agent is required to exercise in writing as directed by
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02), and
(c) except as expressly set forth herein, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or willful misconduct. The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement, (ii) the

 

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contents of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

Subject to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent’s
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.

Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as

 

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it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Administrative Agent or any other Lender and based
on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.

The Administrative Agent shall be permitted from time to time to designate one
of its Affiliates to perform the duties to be performed by the Administrative
Agent hereunder with respect to Loans and Borrowings denominated in Foreign
Currencies or to foreign Subsidiary Borrowers. The provisions of this Article
VIII shall apply to any such Affiliate mutatis mutandis.

Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Collateral Agent as its agent and authorizes the Collateral Agent to take such
actions on its behalf and to exercise such powers as are delegated to the
Collateral Agent by the terms hereof or of the other Credit Documents, together
with such actions and powers as are reasonably incidental thereto, including, as
the Collateral Agent may deem appropriate, entering into intercreditor
agreements with Persons financing the acquisition of inventory or equipment by
the Borrower or its Subsidiaries in transactions otherwise permitted hereby. All
provisions of this Article VIII relating to the Administrative Agent shall be
equally applicable to the Collateral Agent mutatis mutandis.

Without limiting the foregoing, if any Collateral is sold in a transaction
permitted hereunder (other than to the Borrower or to a Subsidiary thereof which
is not an SPC), such Collateral shall be sold free and clear of the Liens
created by the Security Documents and the Administrative Agent and the
Collateral Agent shall be authorized to take any actions deemed appropriate in
order to effect the foregoing.

ARTICLE IX

Miscellaneous

SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:

(i) if to the Borrower or any Subsidiary Borrower, to it at 6 Logue Court,
Greenville, South Carolina 29615, Attention of Linda Davis, Treasurer (Telecopy
No. (864) 286-4938);

(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., 10 S.
Dearborn Street, Floor 7, Chicago, IL 60603-2003, Attention of Sharon Porch
(Telecopy No. (312) 732-4855; provided, however, that all notices with respect
to Eurocurrency

 

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Revolving Borrowings in Foreign Currencies shall be sent to J.P. Morgan Europe
Limited, 125 London Wall, Floor 9, London EC2Y 5AJ, United Kingdom, Attention of
Ching Loh (Telecopy No. (44) 207 7772360);

(iii) if to the Issuing Bank, to JPMorgan Chase Bank, N.A., 10 S. Dearborn
Street, Floor 7, Chicago, IL 60603-2003, Attention of Sharon Porch (Telecopy No.
(312) 732-4855;

(iv) if to the Swingline Lender, to JPMorgan Chase Bank, N.A., 10 S. Dearborn
Street, Floor 7, Chicago, IL 60603-2003, Attention of Sharon Porch (Telecopy No.
(312) 732-4855; provided, however, that all notices with respect to Swingline
Foreign Currency Loans shall be sent to J.P. Morgan Europe Limited, 125 London
Wall, Floor 9, London EC2Y 5AJ, United Kingdom, Attention of Ching Loh (Telecopy
No. (44) 207 7772360); and

(v) if to any other Lender, to it at its address (or telecopy number) set forth
in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

(c) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative
Agent, the Issuing Bank or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Bank and the Lenders hereunder are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by the
Borrowers therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time.

 

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(b) Neither this Agreement, any other Credit Document nor any provision hereof
or thereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required Lenders or
by the Borrower and the Administrative Agent with the consent of the Required
Lenders (and, in each case, amendments or modifications entered into by the
Borrower shall be effective without the separate approval of any other Credit
Party); provided that a waiver by the Lenders only of their rights shall not
require the consent of the Borrower and further provided that no such agreement
shall:

(i) increase the Commitment of any Lender without the written consent of such
Lender,

(ii) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder, without the
written consent of each Lender affected thereby,

(iii) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby,

(iv) change Section 2.18(b) or (c), or any other provision of this Agreement
that provides for the pro rata treatment of the Lenders, in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Lender,

(v) change any of the provisions of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, or the provisions of Section 9.17,
without the written consent of each Lender,

(vi) release all or substantially all of the Collateral or, except in connection
with a transaction permitted by Section 6.03, release any Subsidiary Guarantor
(which at the time of such release is a Material Subsidiary) from its
obligations under the Subsidiary Guaranty, without the written consent of each
Lender;

provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent, the Collateral Agent, the
Issuing Bank or the Swingline Lender hereunder without the prior written consent
of the Administrative Agent, the Collateral Agent, the Issuing Bank or the
Swingline Lender, as the case may be.

Notwithstanding the foregoing, upon the execution and delivery of all
documentation required by Section 2.09(d) to be delivered in connection with an
increase to the aggregate Commitments, the Administrative Agent, the Borrower
and the new or existing Lenders whose Commitments have been affected may and
shall enter into an amendment hereof (which shall be binding on all parties
hereto and the new Lenders) solely for the purpose of reflecting any new Lenders
and their new Commitments and any increase in the Commitment of any existing
Lender.

 

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SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay
(i) all reasonable out of pocket expenses incurred by the Administrative Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and administration of
this Agreement and the other Credit Documents or any amendments, modifications
or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender,
including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement or any
other Credit Document, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

(b) The Borrower shall indemnify the Administrative Agent, the Collateral Agent,
the Issuing Bank and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Credit Document or any agreement or instrument contemplated
hereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the Transactions or any other
transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by the Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower or
any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.

(c) To the extent that the Borrower fails to pay any amount required to be paid
by it to the Administrative Agent, the Collateral Agent, the Issuing Bank or the
Swingline Lender under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Administrative Agent, the Collateral Agent, the
Issuing Bank or the Swingline Lender, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable

 

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unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, the Collateral Agent, the Issuing Bank or the
Swingline Lender in its capacity as such.

(d) To the extent permitted by applicable law, the Borrowers shall not assert,
and hereby waive, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.

(e) All amounts due under this Section shall be payable not later than ten
Business Days after written demand therefor.

SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that (i) the
Borrowers may not assign or otherwise transfer any of their respective rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrowers without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to it) with the prior written consent (such
consent not to be unreasonably withheld) of:

(A) the Borrower; provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an
Event of Default has occurred and is continuing, any other assignee;

(B) the Administrative Agent; provided that no consent of the Administrative
Agent shall be required for an assignment of any Commitment to an assignee that
is a Lender immediately prior to giving effect to such assignment; and

(C) the Issuing Bank.

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

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender’s
Commitment and Loans, the amount of the Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;

 

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(B) 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;

(C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more Credit Contacts to whom all syndicate-level information
(which may contain material non-public information about the Borrower and its
affiliates, the Credit Parties and their related parties or their respective
securities) will be made available and who may receive such information in
accordance with the assignee’s compliance procedures and applicable laws,
including Federal and state securities laws.

For the purposes of this Section 9.04(b), the term “Approved Fund” has the
following meaning:

“Approved 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 of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v)
of this Section, from and after the effective date specified in each Assignment
and Assumption the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.04
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

 

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(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrowers, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrowers, the Administrative Agent, the Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.04(e) or (h), 2.05(c),
2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), the Administrative Agent shall have
no obligation to accept such Assignment and Assumption and record the
information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

(c) (i) Any Lender may, without the consent of the Borrowers, the Administrative
Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain
unchanged, (B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (C) the Borrowers, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrowers agree that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(c) as though it were a Lender.

 

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(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.15 or 2.17 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as
though it were a Lender.

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrowers herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement 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 the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may
have had notice or knowledge of any 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
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17,
9.03 and 9.15 and Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement or any provision
hereof.

SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Credit Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.

 

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SECTION 9.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of any of the Borrowers
against any of and all the obligations of such Person now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

(b) Each of the Borrowers hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. 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 shall
affect any right that the Administrative Agent, the Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
against the Borrowers or their respective properties in the courts of any
jurisdiction.

(c) Each of the Borrowers hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law. Each foreign Subsidiary Borrower appoints the Borrower
as its agent for purposes of receipt of service of process in connection with
the Credit Documents.

 

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SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Collateral
Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, the Issuing
Bank or any Lender on a non-confidential basis from a source other than the
Borrower. For the purposes of this Section, “Information” means all information
received from the Borrower relating to the Borrower or its business, other than
any such information that is available to the Administrative Agent, the Issuing
Bank or any Lender on a non-confidential basis prior to disclosure by the
Borrower. Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THIS SECTION 9.12
FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR

 

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RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE
SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY
CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS AFFILIATES,
THE CREDIT PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.
ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT
THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO
MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN
ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

SECTION 9.14. USA PATRIOT Act. Each Lender that is subject to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”) hereby notifies the Borrowers that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies such Person, which information includes the names and addresses
of the Borrowers and other information that will allow such Lender to identify
the Borrowers in accordance with the Act.

SECTION 9.15. Conversion of Currencies. (a) If, for the purpose of obtaining
judgment in any court, it is necessary to convert a sum owing hereunder in one
currency into another currency, each party hereto agrees, to the fullest extent
that it may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures in the relevant jurisdiction
the first currency could be purchased with such other currency on the Business
Day immediately preceding the day on which final judgment is given.

 

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(b) The obligations of each Borrower in respect of any sum due to any party
hereto or any holder of the obligations owing hereunder (the “Applicable
Creditor”) shall, notwithstanding any judgment in a currency (the “Judgment
Currency”) other than the currency in which such sum is stated to be due
hereunder (the “Agreement Currency”), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, the Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrower contained
in this Section 9.15 shall survive the termination of this Agreement and the
payment of all other amounts owing hereunder.

SECTION 9.16. Appointment of Borrower. Each Subsidiary Borrower hereby
authorizes and empowers the Borrower to act as its representative and
attorney-in-fact for the purposes of signing documents and giving and receiving
notices (including borrowing requests and interest elections hereunder) and
other communications in connection with this Agreement and the transactions
contemplated hereby and for the purposes of modifying or amending any provision
of this Agreement and further agrees that the Administrative Agent and each
Lender may conclusively rely on the foregoing authorization.

SECTION 9.17. Application of Proceeds. After the exercise of remedies provided
for in Article VII (or after the Loans have automatically become immediately due
and payable), any proceeds of Collateral or other amounts received by the
Administrative Agent or Collateral Agent in respect of the Obligations pursuant
to the Credit Documents shall be applied, in each case ratably within the
applicable priority level, first, to pay any fees, indemnities, or expense
reimbursements then due to the Administrative Agent, the Collateral Agent or the
Issuing Bank from any Credit Party (other than in connection with a Swap
Agreement), second, to pay any fees, indemnities or expense reimbursements then
due to the Lenders from any Credit Party (other than in connection with a Swap
Agreement), third, to pay interest then due and payable on the Loans, fourth, to
pay principal on the Loans and unreimbursed LC Disbursements, fifth, to pay any
obligations owing to a Secured Creditor with respect to Swap Agreements, sixth,
to the payment of any other Obligation, and seventh, the balance, if any, after
all of the Obligations have been indefeasibly paid in full, to the Borrower or
as otherwise required by law.

[signature pages follow]

 

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

 

SCANSOURCE, INC. By:  

/s/ Richard P. Cleys

Name:   Richard P. Cleys Title:   Chief Financial Officer NETPOINT
INTERNATIONAL, INC. By:  

/s/ Linda B. Davis

Name:   Linda B. Davis Title:   Treasurer SCANSOURCE EUROPE LIMITED By:  

/s/ Richard P. Cleys

Name:   Richard P. Cleys Title:   Director JPMORGAN CHASE BANK, N.A.,
individually and as Administrative Agent, Swingline Lender and Issuing Bank By:
 

/s/ Steve Prichett

Name:   Steve Prichett Title:   Senior Vice President WACHOVIA BANK, NATIONAL
ASSOCIATION By:  

/s/ Thomas F. Snider

Name:   Thomas F. Snider Title:   SVP

 

Signature Page to ScanSource Credit Agreement

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REGIONS BANK By:  

/s/ Kenneth M. Zeimetz

Name:   Kenneth M. Zeimetz Title:   Senior Vice President Wells Fargo Bank,
National Association By:  

/s/ Alex Idichandy

Name:   Alex Idichandy Title:   Senior Vice President RBS Citizens, N.A. By:  

/s/ Daniel Bernard

Name:   Daniel Bernard Title:   Senior Vice President HSBC BANK USA, National
Association By:  

/s/ Jeffrey M. Henry

Name:   Jeffrey M. Henry Title:   Vice President ROYAL BANK OF CANADA By:  

/s/ Dustin Craven

Name:   Dustin Craven Title:   Attorney-in-Fact

 

Signature Page to ScanSource Credit Agreement

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ING LUXEMBOURG SA By:  

/s/ Yves Verhulst

Name:   Yves Verhulst Title:   Manager Wholesale Banking Clients Corporate &
Institutional Banking ING LUXEMBOURG SA By:  

/s/ Damien Degros

Name:   Damien Degros Title:   Head of Corporate & Institutional Banking

 

Signature Page to ScanSource Credit Agreement

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Schedule 1.01

PRICING SCHEDULE

 

APPLICABLE RATE

   LEVEL I
STATUS     LEVEL II
STATUS     LEVEL III
STATUS     LEVEL IV
STATUS     LEVEL V
STATUS  

Eurocurrency Spread

   0.50 %   0.625 %   0.75 %   1.00 %   1.25 %

ABR Spread

   0 %   0 %   0 %   0 %   0.25 %

Commitment Fee Rate

   0.10 %   0.125 %   0.15 %   0.20 %   0.275 %

For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:

“Financials” means the annual or quarterly financial statements of the Borrower
delivered pursuant to Section 5.01 of this Agreement.

“Level I Status” exists at any date if, as of the last day of the fiscal quarter
of the Borrower referred to in the most recent Financials, the Leverage Ratio is
less than 1.00 to 1.00.

“Level II Status” exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status and (ii) the Leverage Ratio is
less than 1.50 to 1.00.

“Level III Status” exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status or Level II Status and (ii) the
Leverage Ratio is less than 2.00 to 1.00.

“Level IV Status” exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status, Level II Status or Level III
Status and (ii) the Leverage Ratio is less than 2.50 to 1.00.

“Level V Status” exists at any date if the Borrower has not qualified for Level
I Status, Level II Status, Level III Status or Level IV Status.

“Status” means Level I Status, Level II Status, Level III Status, Level IV
Status, or Level V Status.

The Applicable Rate shall be determined in accordance with the foregoing table
based on the Borrower’s Status as reflected in the then most recent Financials.
Adjustments, if any, to the Applicable Rate shall be effective five Business
Days after the Administrative Agent has received the applicable Financials. If
the Borrower fails to deliver the Financials to the Administrative Agent at the
time required pursuant to the Credit Agreement, then the Applicable

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Rate shall be the highest Applicable Rate set forth in the foregoing table until
five Business Days after such Financials are so delivered. Until adjusted after
the Effective Date, Level II Status shall be deemed to exist.

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Schedule 2.01

Commitments

 

JPMorgan Chase Bank, N. A.

   $ 50,000,000

Wachovia Bank, N.A.

   $ 45,000,000

Regions Bank

   $ 35,000,000

Wells Fargo Bank, N.A.

   $ 35,000,000

RBS Citizens, N.A.

   $ 25,000,000

HSBC Bank USA, N.A.

   $ 25,000,000

Royal Bank of Canada

   $ 25,000,000

ING

   $ 10,000,000       

TOTAL

   $ 250,000,000       

 

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Schedule 2.20

Closing Date Subsidiary Borrowers

Netpoint International, Inc.

ScanSource Europe Limited