EXHIBIT 10.113

 

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REVOLVING CREDIT AGREEMENT

DATED AS OF DECEMBER 29, 2006

COMERICA BANK

AS ADMINISTRATIVE AGENT

 

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TABLE OF CONTENTS

 

              Page 1.   DEFINITIONS    1   1.1    Certain Defined Terms    1 2.
  REVOLVING CREDIT    19   2.1    Commitment    19   2.2    Accrual of Interest
and Maturity; Evidence of Indebtedness    19   2.3    Requests for and
Refundings and Conversions of Advances    20   2.4    Disbursement of Advances
   22   2.5    [Intentionally Omitted]    24   2.6    Interest Payments; Default
Interest    24   2.7    Optional Prepayments    25   2.8    Prime-based Advance
in Absence of Election or Upon Default    25   2.9    Revolving Credit
Commitment Fee    25   2.10    Mandatory Repayment of Revolving Credit Advances
   26   2.11    Optional Reduction or Termination of Revolving Credit Aggregate
Commitment    27   2.12    Use of Proceeds of Advances    28 3.   LETTERS OF
CREDIT    28   3.1    Letters of Credit    28   3.2    Conditions to Issuance   
28   3.3    Notice    29   3.4    Letter of Credit Fees; Increased Costs    30  
3.5    Other Fees    31   3.6    Drawings and Demands for Payment Under Letters
of Credit    31   3.7    Obligations Irrevocable    33   3.8    Risk Under
Letters of Credit    34   3.9    Indemnification    35   3.10    Right of
Reimbursement    36 4.   [Intentionally Omitted]    37 5.   CONDITIONS    37  
5.1    Execution of Notes and this Agreement    37   5.2    Corporate Authority
   37   5.3    Notes, Agreement and other Loan Documents    38   5.4   
[Intentionally Omitted]    38   5.5    Insurance    38   5.6    Compliance with
Certain Documents and Agreements    38   5.7    Opinions of Counsel    38   5.8
   Payment of Fees    39   5.9    Non-GAAP Balance Sheet and Financial
Statements    39   5.10    Appraisals; Audits; Due Diligence    39

 

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TABLE OF CONTENTS

(continued)

 

              Page   5.11    [Intentionally Omitted]    39   5.12    Material
Contracts    39   5.13    Governmental and Other Approvals    39   5.14   
Closing Certificate    39   5.15    PowerDsine    39   5.16    Continuing
Conditions    39 6.   REPRESENTATIONS AND WARRANTIES    40   6.1    Corporate
Authority    40   6.2    Due Authorization    40   6.3    Good Title; Leases;
Assets; No Liens    40   6.4    Taxes    41   6.5    No Defaults    41   6.6   
Enforceability of Agreement and Loan Documents    41   6.7    Compliance with
Laws    41   6.8    Non-contravention    42   6.9    Litigation    42   6.10   
Consents, Approvals and Filings, Etc    42   6.11    Agreements Affecting
Financial Condition    42   6.12    No Investment Company or Margin Stock    42
  6.13    ERISA    43   6.14    Conditions Affecting Business or Properties   
43   6.15    Environmental and Safety Matters    43   6.16    Subsidiaries    44
  6.17    [Intentionally Omitted]    44   6.18    Material Contracts    44  
6.19    Franchises, Patents, Copyrights, Tradenames, etc    44   6.20   
[Intentionally Omitted]    44   6.21    Accuracy of Information    44   6.22   
Solvency    45   6.23    Employee Matters    45   6.24    No Misrepresentation
   45 7.   AFFIRMATIVE COVENANTS    45   7.1    Financial Statements    45   7.2
   Certificates; Other Information    46   7.3    Payment of Obligations    46  
7.4    Conduct of Business and Maintenance of Existence; Compliance with Laws   
47   7.5    Maintenance of Property; Insurance    47   7.6    Inspection of
Property; Books and Records, Discussions    48   7.7    Notices    48   7.8   
Hazardous Material Laws    49

 

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TABLE OF CONTENTS

(continued)

 

              Page   7.9    Financial Covenants    50   7.10    Governmental and
Other Approvals    50   7.11    Compliance with ERISA; ERISA Notices    50  
7.12    [Intentionally Omitted]    51   7.13    Accounts    51   7.14    Use of
Proceeds    51   7.15    PowerDsine    51   7.16    Further Assurances    51 8.
  NEGATIVE COVENANTS    51   8.1    Limitation on Debt    51   8.2    Limitation
on Liens    53   8.3    Acquisitions    53   8.4    Limitation on Mergers,
Dissolution or Sale of Assets    53   8.5    Restricted Payments    54   8.6   
Limitation on Capital Expenditures    55   8.7    Limitation on Investments,
Loans and Advances    55   8.8    Transactions with Affiliates    56   8.9   
Sale-Leaseback Transactions    56   8.10    Limitations on Other Restrictions   
56   8.11    Prepayment of Debt    56   8.12    Amendment of Subordinated Debt
Documents    56   8.13    Modification of Certain Agreements    56   8.14   
Management Fees    56   8.15    Fiscal Year    57 9.   DEFAULTS    57   9.1   
Events of Default    57   9.2    Exercise of Remedies    59   9.3    Rights
Cumulative    60   9.4    Waiver by Borrowers of Certain Laws    60   9.5   
Waiver of Defaults    60   9.6    Set Off    60 10.   PAYMENTS, RECOVERIES AND
COLLECTIONS    61   10.1    Payment Procedure    61   10.2    [Intentionally
Omitted]    62   10.3    Pro-rata Recovery    62 11.   CHANGES IN LAW OR
CIRCUMSTANCES; INCREASED COSTS    63   11.1    Reimbursement of Prepayment Costs
   63   11.2    Eurodollar Lending Office    63   11.3    Circumstances
Affecting Eurodollar-based Rate Availability    63

 

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TABLE OF CONTENTS

(continued)

 

              Page   11.4    Laws Affecting Eurodollar-based Advance
Availability    64   11.5    Increased Cost of Eurodollar-based Advances    64  
11.6    Capital Adequacy and Other Increased Costs    65   11.7    Right of
Lenders to Fund through Branches and Affiliates    66   11.8    Margin
Adjustment    66 12.   AGENT    67   12.1    Appointment of Agent    67   12.2
   Deposit Account with Agent or any Lender    67   12.3    Scope of Agent’s
Duties    67   12.4    Successor Agent    68   12.5    Credit Decisions    68  
12.6    Authority of Agent to Enforce This Agreement    69   12.7   
Indemnification of Agent    69   12.8    Knowledge of Default    69   12.9   
Agent’s Authorization; Action by Lenders    70   12.10    Enforcement Actions by
the Agent    70   12.11    [Intentionally Omitted]    70   12.12    Agents in
their Individual Capacities    70   12.13    Agent’s Fees    70   12.14   
Documentation Agent or other Titles    71 13.   MISCELLANEOUS    71   13.1   
Accounting Principles    71   13.2    Choice of Law and Venue; Jury Trial Waiver
   71   13.3    Reference Provision    71   13.4    Interest    74   13.5   
Closing Costs and Other Costs; Indemnification    74   13.6    Notices    76  
13.7    Further Action    77   13.8    Successors and Assigns; Participations;
Assignments    77   13.9    Counterparts    80   13.10    Amendment and Waiver
   80   13.11    Confidentiality    81   13.12    Substitution of Lenders    82
  13.13    Withholding Taxes    82   13.14    Taxes and Fees    83   13.15   
[Intentionally Omitted]    83   13.16    Patriot Act Notice    83   13.17   
Complete Agreement; Conflicts    84   13.18    Severability    84   13.19   
Table of Contents and Headings; Section References    84   13.20    Construction
of Certain Provisions    84

 

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TABLE OF CONTENTS

(continued)

 

              Page   13.21    Independence of Covenants    84   13.22    Joint
and Several Liability    84   13.23    Advertisements    87   13.24    Reliance
on and Survival of Various Provisions    87

 

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REVOLVING CREDIT AGREEMENT

This REVOLVING CREDIT AGREEMENT (“Agreement”) is made as of December 29, 2006,
by and among the financial institutions from time to time signatory hereto
(individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”), and Microsemi Corporation (“Parent”),
Microsemi Corp. – Power Products Group, Microsemi Corp. – Integrated Products,
Microsemi Corp. – Massachusetts and Microsemi Corp. – Scottsdale (each, a
“Borrower” and collectively with Parent, “Borrowers”).

RECITALS

A. Borrowers have requested that the Lenders extend to them credit and letters
of credit on the terms and conditions set forth herein.

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

NOW THEREFORE, in consideration of the covenants contained herein, Borrowers,
the Lenders, and the Agent agree as follows:

1. DEFINITIONS.

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

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

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

“Advance(s)” shall mean a borrowing requested by Parent and made by the
Revolving Credit Lenders under Section 2.1 hereof, including without limitation
any readvance, refunding or conversion of such borrowing pursuant to Section 2.3
hereof, and any advance deemed to have been made in respect of a Letter of
Credit under Section 3.6(a) hereof, and shall include, as applicable, a
Eurodollar-based Advance and a Prime-based Advance.

“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person. A Person shall be deemed to control another Person for the purposes
of this definition if such Person possesses, directly or indirectly, the power
(i) to vote 10% or more of the Equity Interests having ordinary voting power for
the election of directors or managers of such other Person or (ii) to direct or
cause the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.

 

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

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

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

“Applicable Interest Rate” shall mean the Eurodollar-based Rate or the
Prime-based Rate.

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

“Applicable Measuring Period” shall mean the period of four consecutive fiscal
quarters ending on the applicable date of determination.

“Asset Sale” shall mean the sale, transfer or other disposition by any Borrower
of any asset (other than the sale or transfer of less than one hundred percent
(100%) of the stock or other ownership interests of any Subsidiary) to any
Person (other than to a Borrower or a Subsidiary of such Borrower).

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

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

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

“Borrower” and “Borrowers” shall have the meanings set forth in the preamble to
this Agreement.

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

 

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

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

“Comerica Bank” shall mean Comerica Bank, a Michigan banking corporation, and
its successors or assigns.

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

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

“Consolidated Funded Debt” shall mean at any date the aggregate amount of all
Funded Debt of the Borrowers at such date, determined on a Consolidated basis.

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

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

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

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

 

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“Distribution” is defined in Section 8.5 hereof.

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

“EBITDA” means, as of any date of determination, net income, plus net interest
expense, taxes, depreciation and amortization, non-cash charges and
extraordinary expenses, less non-cash income, and extraordinary income, all
determined in accordance with GAAP and measured on a rolling four (4) quarter
basis.

“Effective Date” shall mean the date on which all the conditions precedent set
forth in Sections 5.1 through 5.16 have been satisfied.

“Eligible Assignee” shall mean (a) a Lender; (b) an Affiliate of a Lender;
(c) any Person (other than a natural person) that is or will be engaged in the
business of making, purchasing, holding or otherwise investing in commercial
loans or similar extensions of credit in the ordinary course of its business,
provided that such Person is administered or managed by a Lender, an Affiliate
of a Lender or an entity or Affiliate of an entity that administers or manages a
Lender; or (d) any other Person (other than a natural person) approved by the
(i) Agent (and in the case of an assignment of a commitment under the Revolving
Credit, the Issuing Lender), and (ii) unless an Event of Default has occurred
and is continuing, the Parent (each such approval not to be unreasonably
withheld or delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrowers, or any of the Borrowers’ Affiliates
or Subsidiaries; and provided further that notwithstanding clause (d)(ii) of
this definition, no assignment shall be made to an entity which is a competitor
of Parent without the consent of Parent, which consent may be withheld in its
sole discretion.

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

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

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

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

 

  (i) the per annum interest rate at which deposits in the relevant eurocurrency
are offered to Agent’s Eurodollar Lending Office by

 

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other prime banks in the eurocurrency market in an amount comparable to the
relevant Eurodollar-based Advance and for a period equal to the relevant
Eurodollar-Interest Period at approximately 11:00 A.M. California time two
(2) Business Days prior to the first day of such Eurodollar-Interest Period,
divided by

 

  (ii) a percentage equal to 100% minus the maximum rate on such date at which
Agent is required to maintain reserves on ‘Eurocurrency Liabilities’ as defined
in and pursuant to Regulation D of the Board of Governors of the Federal Reserve
System or, if such regulation or definition is modified, and as long as Agent is
required to maintain reserves against a category of liabilities which includes
eurocurrency deposits or includes a category of assets which includes
eurocurrency loans, the rate at which such reserves are required to be
maintained on such category, such sum to be rounded upward, if necessary, to the
nearest whole multiple of 1/100th of 1%.

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

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

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

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

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

 

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“Fiscal Year” shall mean the twelve-month period ending on the each of
September 30, 2007, September 28, 2008 and September 27, 2009.

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

“GAAP” shall mean, as of any applicable date of determination, generally
accepted accounting principles in the United States of America, as applicable on
such date, consistently applied, as in effect on the Effective Date.

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

“Guarantee Obligation” shall mean as to any Person (the “guaranteeing person”)
any obligation of the guaranteeing Person in respect of any obligation of
another Person (the “primary obligor”) (including, without limitation, any bank
under any letter of credit), the creation of which was induced by a
reimbursement agreement, guaranty agreement, keepwell agreement, purchase
agreement, counterindemnity or similar obligation issued by the guaranteeing
person, in either case guaranteeing or in effect guaranteeing any Debt, leases,
dividends or other obligations (the “primary obligations”) of the primary
obligor in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary

 

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

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

“Hazardous Material Law(s)” shall mean all laws, codes, ordinances, rules,
regulations and other governmental restrictions and requirements issued by any
federal, state, local or other governmental or quasi-governmental authority or
body (or any agency, instrumentality or political subdivision thereof)
pertaining to any substance or material which is regulated for reasons of
health, safety or the environment and which are presently known or alleged to be
currently present on or about or used in any facilities owned, leased or
operated by a Borrower, or any portion thereof including, without limitation,
those relating to soil, surface, subsurface ground water conditions and the
condition of the indoor and outdoor ambient air; any so-called “superfund” or
“superlien” law; and any other United States federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree regulating, relating to,
or imposing liability or standards of conduct concerning, any Hazardous
Material, as now or at any time during the term of the Agreement in effect.

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

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

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

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

“Indebtedness” shall mean all indebtedness and liabilities (including without
limitation principal, interest (including without limitation interest accruing
at the then applicable rate provided in this Agreement or any other applicable
Loan Document after the Final Maturity Date

 

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

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

“Interest Period” shall mean a Eurodollar-Interest Period, commencing on the day
a Eurodollar-based Advance is made, or on the effective date of an election of
the Eurodollar-based Rate made under Section 2.3 hereof; provided, however that
(i) any Interest Period which would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day, except that as to an
Interest Period in respect of a Eurodollar-based Advance, if the next succeeding
Business Day falls in another calendar month, such Interest Period shall end on
the next preceding Business Day, (ii) when an Interest Period in respect of a
Eurodollar-based Advance begins on a day which has no numerically corresponding
day in the calendar month during which such Interest Period is to end, it shall
end on the last Business Day of such calendar month, and (iii) no Interest
Period in respect of any Advance shall extend beyond the Revolving Credit
Maturity Date.

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

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

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

 

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

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

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

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

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

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

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

“Letter of Credit Maximum Amount” shall mean Ten Million Dollars ($10,000,000).

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

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

“Letter(s) of Credit” shall mean any standby letters of credit issued by Issuing
Lender at the request of or for the account of Parent pursuant to Article 3
hereof.

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

 

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

“Majority Lenders” shall mean at any time (a) so long as the Revolving Credit
Aggregate Commitment has not been terminated, Lenders holding more than 50.0% of
the Revolving Credit Aggregate Commitment and (b) if the Revolving Credit
Aggregate Commitment has been terminated (whether by maturity, acceleration or
otherwise), Lenders holding more than 50.0% of the aggregate principal amount
then outstanding under the Revolving Credit Loans; provided that, for purposes
of determining Majority Lenders hereunder, the Letter of Credit Obligations
shall be allocated among the Revolving Credit Lenders based on their respective
Revolving Credit Percentages; provided further that so long as there are fewer
than three Lenders, considering any Lender and its Affiliates as a single
Lender, “Majority Lenders” shall mean all Lenders.

“Majority Revolving Credit Lenders” shall mean at any time (a) so long as the
Revolving Credit Aggregate Commitment has not been terminated, the Revolving
Credit Lenders holding more than 50.0% of the Revolving Credit Aggregate
Commitment and (b) if the Revolving Credit Aggregate Commitment has been
terminated (whether by maturity, acceleration or otherwise), Revolving Credit
Lenders holding more than 50.0% of the aggregate principal amount then
outstanding under the Revolving Credit; provided that, for purposes of
determining Majority Revolving Credit Lenders hereunder, the Letter of Credit
Obligations shall be allocated among the Revolving Credit Lenders based on their
respective Revolving Credit Percentages; provided further that so long as there
are fewer than three Revolving Credit Lenders, considering any Revolving Credit
Lender and its Affiliates as a single Revolving Credit Lender, “Majority
Revolving Credit Lenders” shall mean all Revolving Credit Lenders.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
condition (financial or otherwise), business, performance, operations,
properties or prospects of a Borrower, (b) the ability of Borrowers to perform
their obligations under this Agreement, the Notes (if issued) or any other Loan
Document to which they are a party, or (c) the validity or enforceability of
this Agreement, any of the Notes (if issued) or any of the other Loan Documents
or the rights or remedies of the Agent or the Lenders hereunder or thereunder.

“Material Contract” shall mean (i) each agreement or contract to which a
Borrower is a party or in respect of which a Borrower has any liability, that by
its terms (without reference to any indemnity or reimbursement provision
therein) provides for aggregate future guaranteed payments in respect of any
such individual agreement or contract of at least Five Million Dollars
($5,000,000), and (ii) any other agreement or contract the loss of which would
be reasonably likely to result in a Material Adverse Effect; provided that
Material Contracts shall not be deemed to include any Pension Plans, collective
bargaining agreements, broad-based pension or compensation plans or policies,
leases of real property or equipment, contracts to purchase or sell goods or
services in the ordinary course of Borrowers’ business, or casualty or liability
or other insurance policies maintained in the ordinary course of business.

 

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

“Non-GAAP” shall mean non-GAAP financial measures (non-GAAP gross margin,
non-GAAP operating expenses, non-GAAP operating income, non-GAAP income before
taxes, non-GAAP net income, and non-GAAP diluted earnings per share) that
exclude transitional idle capacity and inventory abandonments, manufacturing
profit in acquired inventory, in-process research and development, amortization
of intangible assets, stock option compensation, gain or loss on disposition of
assets and restructuring and other special charges.

“Non-GAAP Balance Sheet” shall mean the non-GAAP consolidated balance sheet of
Parent and its Subsidiaries which has been certified by a Responsible Officer of
Parent that it fairly presents in all material respects the Non-GAAP adjustments
reflecting the transactions (including payment of all fees and expenses in
connection therewith) contemplated by this Agreement and the other Loan
Documents.

“Non-GAAP Projected Financial Information” shall mean, as to any proposed
acquisition, a statement executed by Parent (supported by reasonable detail)
setting forth the total consideration to be paid or incurred in connection with
the proposed acquisition, and non-GAAP combined projected financial information
for Parent and the acquisition target (if applicable), consisting of projected
balance sheets as of the proposed effective date of the acquisition and as of
the end of at least the next succeeding one (1) Fiscal Year following the
acquisition and projected statements of income for that year, including
sufficient detail to permit calculation of the ratios described in Section 7.9
hereof, as projected as of the effective date of the acquisition and as of the
end of that Fiscal Year and accompanied by (i) a statement setting forth a
calculation of the ratio so described, (ii) a statement in reasonable detail
specifying all material assumptions underlying the projections and (iii) such
other information as the Agent or the Lenders shall reasonably request.

“Notes” shall mean the Revolving Credit Notes.

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

“Parent” shall have the meaning set forth in the preamble.

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

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

 

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

“Permitted Acquisition” shall mean any acquisition by Parent or designated
subsidiary, other than another Borrower, of all or substantially all of the
assets of another Person, or of a division or line of business of another
Person, or any Equity Interests of another Person which satisfies and/or is
conducted in accordance with the following requirements:

 

  (a) Such acquisition is of a business or Person engaged in a line of business
which is compatible with, or complementary to, the business of the Parent or
such Subsidiary;

 

  (b) Parent shall have delivered to Agent not less than fifteen (15) (or such
shorter period of time agreed to by the Agent) nor more than ninety (90) days
prior to the date of such acquisition, notice of such acquisition together with
Non-GAAP Projected Financial Information, copies of all material documents
relating to such acquisition (including the acquisition agreement and any
related document), and historical financial information (including income
statements, balance sheets and cash flows) covering at least three (3) complete
Fiscal Years of the acquisition target, if available, prior to the effective
date of the acquisition or the entire credit history of the acquisition target,
whichever period is shorter, in each case in form and substance reasonably
satisfactory to the Agent;

 

  (c) Both immediately before and after the consummation of such acquisition and
after giving effect to the Non-GAAP Projected Financial Information, no Default
or Event of Default shall have occurred and be continuing;

 

  (d) The board of directors (or other Person(s) exercising similar functions)
of the seller of the assets or issuer of the Equity Interests being acquired
shall not have disapproved such transaction or recommended that such transaction
be disapproved;

 

  (e) All governmental, quasi-governmental, agency, regulatory or similar
licenses, authorizations, exemptions, qualifications, consents and approvals
necessary under any laws applicable to Parent, or the acquisition target (if
applicable) for or in connection with the proposed acquisition and all necessary
non-governmental and other third-party approvals which, in each case, are
material to such acquisition shall have been obtained, and all necessary or
appropriate declarations, registrations or other filings with any court,
governmental or regulatory authority, securities exchange or any other Person,
which in each case, are material to the consummation of such acquisition or to
the acquisition target, if applicable, have been made, and evidence thereof
reasonably satisfactory in form and substance to Agent shall have been
delivered, or caused to have been delivered, by Parent to Agent;

 

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  (f) There shall be no actions, suits or proceedings pending or, to the
knowledge of Borrowers threatened against or affecting the acquisition target in
any court or before or by any governmental department, agency or
instrumentality, which could reasonably be expected to be decided adversely to
the acquisition target and which, if decided adversely, could reasonably be
expected to have a material adverse effect on the business, operations,
properties or financial condition of the acquisition target and its subsidiaries
(taken as a whole) or would materially adversely affect the ability of the
acquisition target to enter into or perform its obligations in connection with
the proposed acquisition, nor shall there be any actions, suits, or proceedings
pending, or to the knowledge of Borrowers threatened against a Borrower that is
making the acquisition which would materially adversely affect the ability of
Parent to enter into or perform its obligations in connection with the proposed
acquisition; and

 

  (g) The purchase price of such proposed new acquisition, computed on the basis
of total acquisition consideration paid or incurred, or required to be paid or
incurred, with respect thereto, including the amount of Debt (such Debt being
otherwise permitted under this Agreement) assumed or to which such assets,
businesses or business or Equity Interests, or any Person so acquired is subject
and including any portion of the purchase price allocated to any non-compete
agreements, when added to the purchase price for each other acquisition
consummated hereunder as a Permitted Acquisition during the term of this
agreement (not including acquisitions specifically consented to which fall
outside the terms of this definition, and not including the PowerDsine
Acquisition), does not exceed Twenty Five Million Dollars ($25,000,000).

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

 

  (a) Governmental Obligations;

 

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

 

  (c) Banker’s acceptances, money-market accounts, commercial accounts, auction
rate securities, demand deposit accounts, certificates of deposit, other time
deposits or depository receipts issued by or maintained with any Lender or any
Affiliate thereof, or any bank, trust company, savings

 

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and loan association, savings bank or other financial institution whose deposits
are insured by the Federal Deposit Insurance Corporation and whose reported
capital and surplus equal at least $250,000,000, provided that such minimum
capital and surplus requirement shall not apply to demand deposit accounts
maintained by Borrowers in the ordinary course of business;

 

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

 

  (e) Obligations of any corporation that maintains a subordinated debt credit
quality rating of at least A1 or A+ by Standard & Poor’s (or equivalent);

 

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

 

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

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

 

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

 

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

 

  (c) (i) Liens incurred in the ordinary course of business to secure the
performance of statutory obligations arising in connection with progress
payments or advance payments due under contracts with the United States
government or any agency thereof entered into in the ordinary course of

 

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

 

  (d) any attachment or judgment lien that remains unpaid, unvacated, unbonded
or unstayed by appeal or otherwise for a period ending on the earlier of
(i) thirty (30) consecutive days from the date of its attachment or entry (as
applicable) or (ii) the commencement of enforcement steps with respect thereto,
other than the filing of notice thereof in the public record;

 

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

 

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

 

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

Regardless of the language set forth in this definition, no Lien over any real
property interest of a Borrower granted to any Person shall be deemed a
“Permitted Lien” under the terms of this Agreement.

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

“PowerDsine” means PowerDsine, an Israeli corporation.

 

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“PowerDsine Acquisition” means the acquisition by Parent or designated
subsidiary other than another Borrower, of all of the issued and outstanding
capital stock of PowerDsine.

“Prime-based Advance” shall mean an Advance which bears interest at the
Prime-based Rate.

“Prime-based Rate” shall mean, for any day, that rate of interest which is equal
to the sum of the Applicable Margin plus the Prime Rate.

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

“Purchasing Lender” shall have the meaning set forth in Section 13.11.

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

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

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

“Request for Advance” shall mean a Request for a Revolving Credit Advance.

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

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

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

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

 

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

“Revolving Credit Aggregate Commitment” shall mean (a) Seventy Five Million
Dollars ($75,000,000), from the Effective Date through the first anniversary
thereof; (b) Sixty Million Dollars ($60,000,000) from the first Business Day
after the first anniversary of the Effective Date through the second anniversary
of the Effective Date; and (c) Fifty Million Dollars ($50,000,000) from and
after the first Business Day after the second anniversary of the Effective Date;
subject, in all cases, to reduction or termination under Section 2.10, 2.11 or
9.2 hereof.

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

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

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

“Revolving Credit Maturity Date” shall mean the earlier to occur of
(i) January 1, 2010, and (ii) the date on which the Revolving Credit Aggregate
Commitment shall terminate in accordance with the provisions of this Agreement.

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

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

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

 

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

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

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

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

“USA Patriot Act” is defined in Section 6.7.

“Weighted Percentage” shall mean with respect to any Lender, its percentage
share as set forth in Schedule 1.2, as such Schedule may be revised by the Agent
from time to time, which percentage shall be calculated as follows:

 

  (a) as to such Lender, so long as the Revolving Credit Aggregate Commitment
has not been terminated, its weighted percentage calculated by dividing (i) its
Revolving Credit Commitment Amount, by (ii) the Revolving Credit Aggregate
Commitment; and

 

  (b) as to such Lender, if the Revolving Credit Aggregate Commitment has been
terminated (whether by maturity, acceleration or otherwise), its weighted
percentage calculated by dividing (i) its applicable Revolving Credit Commitment
Amount, by (ii) the aggregate principal amount outstanding under the Revolving
Credit (including any outstanding Letter of Credit Obligations).

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

 

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2. REVOLVING CREDIT.

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

2.2 Accrual of Interest and Maturity; Evidence of Indebtedness.

 

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

 

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

 

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

 

  (d) The entries made in the Register maintained pursuant to paragraph (c) of
this Section 2.2 shall, absent manifest error, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of Borrowers therein recorded; provided, however, that the

 

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failure of any Revolving Credit Lender or the Agent to maintain the Register or
any account, as applicable, or any error therein, shall not in any manner affect
the obligation of Borrowers to repay the Revolving Credit Advances (and all
other amounts owing with respect thereto) made to Borrower by the Revolving
Credit Lenders in accordance with the terms of this Agreement.

 

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

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

 

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

 

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

 

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

 

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

 

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

 

  (c) on the proposed date of such Revolving Credit Advance, the sum of (x) the
aggregate principal amount of all Revolving Credit Advances

 

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outstanding on such date (including, without duplication) the Advances that are
deemed to be disbursed by Agent under Section 3.6(a) hereof in respect of
Borrowers’ Reimbursement Obligations hereunder, plus (y) the Letter of Credit
Obligations as of such date, in each case after giving effect to all outstanding
requests for Revolving Credit Advances and for the issuance of any Letters of
Credit, shall not exceed the Revolving Credit Aggregate Commitment;

 

  (d) in the case of a Prime-based Advance, the principal amount of the initial
funding of such Advance, as opposed to any refunding or conversion thereof, and
each additional Prime-based Advance, shall be at least Five Hundred Thousand
Dollars ($500,000) or the remainder available under the Revolving Credit
Aggregate Commitment if less than Five Hundred Thousand Dollars ($500,000);

 

  (e) in the case of a Eurodollar-based Advance, the principal amount of such
Advance, plus the amount of any other outstanding Revolving Credit Advance to be
then combined therewith having the same Eurodollar-Interest Period, if any,
shall be at least One Million Dollars ($1,000,000) (or a larger integral
multiple of One Hundred Thousand Dollars ($100,000)) or the remainder available
under the Revolving Credit Aggregate Commitment if less than One Million Dollars
($1,000,000) and at any one time there shall not be in effect more than seven
(7) different Eurodollar-Interest Periods;

 

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

 

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

 

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

 

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

 

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

2.4 Disbursement of Advances.

 

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

 

  (i) for Prime-based Advances, at the office of Agent located at 500 North
State College Boulevard, Suite 570, Orange, California 92868, not later than
1:00 p.m. (California time) on the date of such Advance; and

 

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

 

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

 

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

 

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

 

  (c) Agent shall deliver the documents and papers received by it for the
account of each Revolving Credit Lender to such Revolving Credit Lender. Unless
Agent shall have been notified by any Revolving Credit Lender at least two
(2) Business Days prior to the date of any proposed Revolving Credit Advance
that such Revolving Credit Lender does not intend to make available to Agent
such Revolving Credit Lender’s Percentage of such Advance, Agent may assume that
such Revolving Credit Lender has made such amount available to Agent on such
date, as aforesaid. Agent may, but shall not be obligated to, make available to
Parent the amount of such payment in reliance on such assumption. If such amount
is not in fact made available to Agent by such Revolving Credit Lender, as
aforesaid, Agent shall be entitled to recover such amount on demand from such
Revolving Credit Lender. If such Revolving Credit Lender does not pay such
amount forthwith upon Agent’s demand therefor and the Agent has in fact made a
corresponding amount available to Parent, the Agent shall promptly notify Parent
and Borrowers shall pay such amount to Agent, if such notice is delivered to
Parent prior to 1:00 p.m. (California time) on a Business Day, on the day such
notice is received, and otherwise on the next Business Day, and such amount paid
by Borrowers shall be applied as a prepayment of the Revolving Credit (without
any corresponding reduction in the Revolving Credit Aggregate Commitment),
reimbursing Agent for having funded said amounts on behalf of such Revolving
Credit Lender. Borrowers shall retain their claim against such Revolving Credit
Lender with respect to the amounts repaid by them to Agent and, if such
Revolving Credit Lender subsequently makes such amounts available to Agent,
Agent shall promptly make such amounts available to Parent as a Revolving Credit
Advance. Agent shall also be entitled to recover from such Revolving Credit
Lender or Borrowers, as the case may be, but without duplication, interest on
such amount in respect of each day from the date such amount was made available
by Agent to Parent, to the date such amount is recovered by Agent, at a rate per
annum equal to:

 

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

 

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

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

2.5 [Intentionally Omitted].

2.6 Interest Payments; Default Interest. (a) Interest on the unpaid balance of
all Prime-based Advances from time to time outstanding shall accrue from the
date of such Advance to the date repaid, at a per annum interest rate equal to
the Prime-based Rate, and shall be payable in immediately available funds
commencing on first day of the first full month after such Advance is made, and
on the first day of each calendar month thereafter. Whenever any payment under
this Section 2.6(a) shall become due on a day which is not a Business Day, the
date for payment thereof shall be extended to the next Business Day. Interest
accruing at the Prime-based Rate shall be computed on the basis of a 360 day
year and assessed for the actual number of days elapsed, and in such computation
effect shall be given to any change in the interest rate resulting from a change
in the Prime-based Rate on the date of such change in the Prime-based Rate.

 

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

 

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

 

  (d) In the case of any Event of Default under Section 9.1(i), immediately upon
the occurrence thereof, and in the case of any other Event of Default,
immediately upon receipt by Agent of notice from the Majority Revolving Credit
Lenders, interest shall be payable on demand on all Revolving Credit Advances
from time to time outstanding at a per annum rate equal to the Applicable
Interest Rate in respect of each such Advance plus, in

 

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the case of Eurodollar-based Advances, two percent (2%) for the remainder of the
then existing Interest Period, if any, and at all other such times, and for all
Prime-based Advances from time to time outstanding, at a per annum rate equal to
the Prime-based Rate plus two percent (2%).

2.7 Optional Prepayments.

 

  (a) (i) Borrowers may prepay the outstanding principal of any Prime-based
Advance(s) of the Revolving Credit at any time (subject to not less than three
(3) Business Day’s notice to Agent), provided that, any partial prepayment shall
be at least Five Hundred Thousand Dollars ($500,000), and (ii) subject to
Section 2.10(c) hereof, Borrowers may prepay the outstanding principal of any
Eurodollar-based Advance of the Revolving Credit at any time (subject to not
less than three (3) Business Day’s notice to Agent) provided that, provided
that, any partial prepayment shall be at least Five Hundred Thousand Dollars
($500,000).

 

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

2.8 Prime-based Advance in Absence of Election or Upon Default. If, (a) as to
any outstanding Eurodollar-based Advance of the Revolving Credit, Agent has not
received payment of all outstanding principal and accrued interest on the last
day of the Interest Period applicable thereto, or does not receive a timely
Request for Advance meeting the requirements of Section 2.3 hereof with respect
to the refunding or conversion of such Advance, or (b) subject to Section 2.6(d)
hereof, if on the last day of the applicable Interest Period a Default or an
Event of Default shall have occurred and be continuing, then, on the last day of
the applicable Interest Period the principal amount of any Eurodollar-based
Advance which has not been prepaid shall, absent a contrary election of the
Majority Revolving Credit Lenders, be converted automatically to a Prime-based
Advance and the Agent shall thereafter promptly notify Parent of said action.

2.9 Revolving Credit Commitment Fee. From the Effective Date to the Revolving
Credit Maturity Date, Borrowers shall pay to the Agent for distribution to the
Revolving Credit Lenders pro-rata in accordance with their respective
Percentages, a Revolving Credit Commitment Fee quarterly in arrears commencing
April 1, 2007 (in respect of the prior quarter or any portion thereof), and on
the first day of each calendar quarter thereafter. Whenever any payment of the
Revolving Credit Commitment Fee shall be due on a day which is not a Business
Day, the date for payment thereof shall be extended to the next Business Day.
The Revolving Credit Commitment Fee payable to each Revolving Credit Lender
shall be determined by multiplying the Applicable Fee Percentage times the
average daily amount by which such Lender’s Percentage of the Revolving Credit
Aggregate Commitment then in effect exceeds the sum of (i) such Lender’s
Revolving Credit Percentage of the aggregate principal amount of Revolving
Credit Advances outstanding from time to time during such period and (ii) such
Lender’s Percentage of the Letter of Credit Obligations outstanding from time to
time during such period, calculated on a daily basis. The Revolving Credit
Commitment Fee shall be

 

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computed on the basis of a year of three hundred sixty (360) days and assessed
for the actual number of days elapsed. Upon receipt of such payment, Agent shall
make prompt payment to each Lender of its share of the Revolving Credit
Commitment Fee based upon its respective Revolving Credit Percentage. It is
expressly understood that the Revolving Credit Commitment Fees described in this
Section are not refundable under any circumstances.

2.10 Mandatory Repayment of Revolving Credit Advances.

 

  (a) If at any time and for any reason the aggregate outstanding principal
amount of Revolving Credit Advances, plus the outstanding Letter of Credit
Obligations, shall exceed the Revolving Credit Aggregate Commitment, Borrowers
shall immediately reduce any pending request for a Revolving Credit Advance on
such day by the amount of such excess and, to the extent any excess remains
thereafter, repay any Revolving Credit Advances in an amount equal to the lesser
of the outstanding amount of such Advances and the amount of such remaining
excess, with such amounts to be applied between the Revolving Credit Advances as
determined by the Agent and then, to the extent that any excess remains after
payment in full of all Revolving Credit Advances, to provide cash collateral in
support of any Letter of Credit Obligations in an amount equal to the lesser of
105% of the amount of such Letter of Credit Obligations and the amount of such
remaining excess, with such cash collateral to be provided on the basis set
forth in Section 9.2 hereof. Each Borrower acknowledges that, in connection with
any repayment required hereunder, it shall also be responsible for the
reimbursement of any prepayment or other costs required under Section 11.1
hereof. Any payments made pursuant to this Section shall be applied first to
outstanding Prime-based Advances under the Revolving Credit and then to
Eurodollar-based Advances of the Revolving Credit.

 

  (b) Subject to Article 10 hereof, any payments made pursuant to this Section
shall be applied first to outstanding Prime-based Advances under the Revolving
Credit and then to Eurodollar-based Advances. If any amounts remain thereafter,
a portion of such prepayment equivalent to the undrawn amount of any outstanding
Letters of Credit shall be held by Lender as cash collateral for the
Reimbursement Obligations, with any additional prepayment monies being applied
to any Fees, costs or expenses due and outstanding under this Agreement, and
with the remainder of such prepayment thereafter being returned to Parent.

 

  (c) To the extent that, on the date any mandatory repayment of the Revolving
Credit Advances under this Section 2.10 or payment pursuant to the terms of any
of the Loan Documents is due, the Indebtedness under the Revolving Credit or any
other Indebtedness to be prepaid is being carried, in whole or in part, at the
Eurodollar-based Rate and no Default or Event of Default has occurred and is
continuing, Borrowers may deposit the amount of such mandatory prepayment in a
cash collateral account to be

 

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held by the Agent, for and on behalf of the Revolving Credit Lenders, on such
terms and conditions as are reasonably acceptable to Agent and upon such deposit
the obligation of Borrowers to make such mandatory prepayment shall be deemed
satisfied. Subject to the terms and conditions of said cash collateral account,
sums on deposit in said cash collateral account shall be applied (until
exhausted) to reduce the principal balance of the Revolving Credit on the last
day of each Eurodollar-Interest Period attributable to the Eurodollar-based
Advances of such Revolving Advance, thereby avoiding breakage costs under
Section 11.1 hereof; provided, however, that if a Default or Event of Default
shall have occurred at any time while sums are on deposit in the cash collateral
account, Agent may, in its sole discretion, elect to apply such sums to reduce
the principal balance of such Eurodollar-based Advances prior to the last day of
the applicable Eurodollar-Interest Period, and Borrowers will be obligated to
pay any resulting breakage costs under Section 11.1.

2.11 Optional Reduction or Termination of Revolving Credit Aggregate Commitment.
Borrowers may, upon at least five (5) Business Days’ prior written notice to the
Agent, permanently reduce the Revolving Credit Aggregate Commitment in whole at
any time, or in part from time to time, without premium or penalty, provided
that: (i) each partial reduction of the Revolving Credit Aggregate Commitment
shall be in an aggregate amount equal to Two Million Five Hundred Thousand
Dollars ($2,500,000) or a larger integral multiple of Two Million Five Hundred
Thousand Dollars ($2,500,000); (ii) each reduction shall be accompanied by the
payment of the Revolving Credit Commitment Fee, if any, accrued and unpaid to
the date of such reduction; (iii) Borrowers shall prepay in accordance with the
terms hereof the amount, if any, by which the aggregate unpaid principal amount
of Revolving Credit Advances (including, without duplication, any deemed
Advances made under Section 3.6 hereof) outstanding hereunder, plus the Letter
of Credit Obligations, exceeds the amount of the then applicable Revolving
Credit Aggregate Commitment as so reduced, together with interest thereon to the
date of prepayment; and (iv) no reduction shall reduce the Revolving Credit
Aggregate Commitment to an amount which is less than the aggregate undrawn
amount of any Letters of Credit outstanding at such time; provided, however that
if the termination or reduction of the Revolving Credit Aggregate Commitment
requires the prepayment of a Eurodollar-based Advance and such termination or
reduction is made on a day other than the last Business Day of the then current
Interest Period applicable to such Eurodollar-based Advance, then, pursuant to
Section 11.1, Borrowers shall compensate the Revolving Credit Lenders for any
losses or, so long as no Default or Event of Default has occurred and is
continuing, Borrowers may deposit the amount of such prepayment in a collateral
account as provided in Section 2.10(b). Reductions of the Revolving Credit
Aggregate Commitment and any accompanying prepayments of Advances of the
Revolving Credit shall be distributed by Agent to each Revolving Credit Lender
in accordance with such Revolving Credit Lender’s Revolving Percentage thereof,
and will not be available for reinstatement by or readvance to any Borrower. Any
reductions of the Revolving Credit Aggregate Commitment hereunder shall reduce
each Revolving Credit Lender’s portion thereof proportionately (based on the
applicable Percentages), and shall be permanent and irrevocable. Any payments
made pursuant to this Section shall be applied first to outstanding Prime-based
Advances under the Revolving Credit and then to Eurodollar-based Advances of the
Revolving Credit.

 

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2.12 Use of Proceeds of Advances. Advances of the Revolving Credit shall be used
to finance a portion of the PowerDsine Acquisition, and for working capital and
other lawful corporate purposes.

3. LETTERS OF CREDIT.

3.1 Letters of Credit. Subject to the terms and conditions of this Agreement,
Issuing Lender may through the Issuing Office, at any time and from time to time
from and after the date hereof until thirty (30) days prior to the Revolving
Credit Maturity Date, upon the written request of Parent accompanied by a duly
executed Letter of Credit Agreement and such other documentation related to the
requested Letter of Credit as the Issuing Lender may require, issue Letters of
Credit in Dollars for the account of Parent, in an aggregate amount for all
Letters of Credit issued hereunder at any one time outstanding not to exceed the
Letter of Credit Maximum Amount. Each Letter of Credit shall be in a minimum
face amount of One Hundred Thousand Dollars ($100,000) (or such lesser amount as
may be agreed to by Issuing Lender) and each Letter of Credit (including any
renewal thereof) shall expire not later than the first to occur of (i) one year
after the date of issuance thereof and (ii) ten (10) Business Days prior to the
Revolving Credit Maturity Date in effect on the date of issuance thereof. The
submission of all applications in respect of and the issuance of each Letter of
Credit hereunder shall be subject in all respects to the International Standby
Practices 98, and any successor documentation thereto and to the extent not
inconsistent therewith, the laws of the State of California. In the event of any
conflict between this Agreement and any Letter of Credit Document other than any
Letter of Credit, this Agreement shall control.

3.2 Conditions to Issuance. No Letter of Credit shall be issued at the request
and for the account of Parent unless, as of the date of issuance of such Letter
of Credit:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

Each Letter of Credit Agreement submitted to Issuing Lender pursuant hereto
shall constitute the certification by Borrowers of the matters set forth in
Sections 3.2 (a) through (c) hereof. The Agent shall be entitled to rely on such
certification without any duty of inquiry.

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

 

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3.4 Letter of Credit Fees; Increased Costs. (a) Borrowers shall pay letter of
credit fees as follows:

 

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

 

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

 

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

 

  (c) If any change in any law or regulation or in the interpretation thereof by
any court or administrative or governmental authority charged with the
administration thereof, adopted after the date hereof, shall either (i) impose,
modify or cause to be deemed applicable any reserve, special deposit, limitation
or similar requirement against letters of credit issued or participated in by,
or assets held by, or deposits in or for the account of, Issuing Lender or any
Revolving Credit Lender or (ii) impose on Issuing Lender or any Revolving Credit
Lender any other condition regarding this Agreement, the Letters of Credit or
any participations in such Letters of Credit, and the result of any event
referred to in clause (i) or (ii) above shall be to increase the cost or expense
to Issuing Lender or such Revolving Credit Lender of issuing or maintaining or
participating in any

 

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

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

3.6 Drawings and Demands for Payment Under Letters of Credit.

 

  (a) If the Issuing Lender shall honor a draft or other demand for payment
presented or made under any Letter of Credit, Borrowers agree to pay to the
Issuing Lender an amount equal to the amount paid by the Issuing Lender in
respect of such draft or other demand under such Letter of Credit and all
reasonable expenses paid or incurred by the Agent relative thereto not later
than 1:00 p.m. (California time), on (i) the Business Day that Parent receives
notice of such presentment and honor, if such notice is received prior to 11:00
a.m. (California time) or (ii) the Business Day immediately following the day
that Parent received such notice, if such notice is received after 11:00 a.m.
(California time). Unless Borrowers shall have made such payment to the Agent
for the account of the Issuing Lender on such day, the Agent shall be deemed to
have disbursed to Parent and to have elected to substitute for the reimbursement
obligation,

 

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with respect to the applicable Letter of Credit honored by the Issuing Lender, a
Prime-based Advance of the Revolving Credit (which Advance may be subsequently
converted at any time into a Eurodollar-based Advance pursuant to Section 2.3
hereof) on behalf of and for the account of the Revolving Credit Lenders in an
aggregate amount equal to the amount so paid by the Issuing Lender in respect of
such draft or other demand under such Letter of Credit. Such Prime-based Advance
shall be deemed disbursed notwithstanding any failure to satisfy any conditions
for disbursement of any Advance set forth in Section 2 hereof and, to the extent
of the Advances so disbursed, the reimbursement obligation of Borrowers under
this Section 3.6 shall be deemed satisfied.

 

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

 

  (c) Upon issuance by the Issuing Lender of each Letter of Credit hereunder,
each Revolving Credit Lender shall automatically acquire a pro rata
participation interest in such Letter of Credit and each related Letter of
Credit Payment based on its respective Revolving Credit Percentage. Each
Revolving Credit Lender, on the date a draft or demand under any Letter of
Credit is honored (or the next succeeding Business Day if the notice required to
be given by Issuing Lender to the Revolving Credit Lenders under Section 3.6(b)
hereof is not given to the Revolving Credit Lenders prior to 2:00 p.m.
(California time) on such date of draft or demand), shall make its Revolving
Credit Percentage of the amount paid by the Issuing Lender, and not reimbursed
by Borrowers on such day, in immediately available funds at the principal office
of the Agent for the account of Issuing Lender. If and to the extent such
Revolving Credit Lender shall not have made such pro rata portion available to
the Agent, such Revolving Credit Lender agrees to pay to the Agent for the
account of the Issuing Lender forthwith on demand such amount together with
interest thereon, for each day from the date such amount was paid by the Issuing
Lender until such amount is so made available to the Agent at the Federal Funds
Rate for the first three days and thereafter at a Prime-based Rate applicable
during such period to the related Advance deemed to have been disbursed under
Section 3.6(a) in respect of the reimbursement obligation

 

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of Borrowers. If such Revolving Credit Lender shall pay such amount to the Agent
for the account of Issuing Lender together with such interest, if any, such
amount so paid shall be deemed to constitute an Advance by such Revolving Credit
Lender disbursed in respect of the reimbursement obligation of Borrowers under
Section 3.6(a) hereof for purposes of this Agreement, effective as of the dates
applicable under said Section 3.6(a). The failure of any Revolving Credit Lender
to make its pro rata portion of any such amount paid by the Issuing Lender
available to the Agent for the account of Issuing Lender shall not relieve any
other Revolving Credit Lender of its obligation to make available its pro rata
portion of such amount, but no Revolving Credit Lender shall be responsible for
failure of any other Revolving Credit Lender to make such pro rata portion
available to the Agent for the account of Issuing Lender.

Notwithstanding the foregoing however no Revolving Credit Lender shall be deemed
to have acquired a participation in a Letter of Credit if the officers of the
Issuing Lender immediately responsible for matters concerning this Agreement
shall have received written notice from Agent or any Lender at least two
(2) Business Days prior to the date of the issuance of such Letter of Credit
that the issuance of Letters of Credit should be suspended based on the
occurrence and continuance of a Default or Event of Default and stating that
such notice is a “notice of default”; provided, however that the Revolving
Credit Lenders shall be deemed to have acquired such a participation upon the
date on which such Default or Event of Default has been waived by the requisite
Revolving Credit Lenders, as applicable.

 

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

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

 

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

 

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

 

  (c) The existence of any claim, setoff, defense or other right which any
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such beneficiary or
any such transferee may be acting), the Agent, the Issuing

 

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Lender or any Revolving Credit Lender or any other Person, whether in connection
with this Agreement, any of the Letter of Credit Documents, the transactions
contemplated herein or therein or any unrelated transactions;

 

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

 

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

 

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

 

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

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

3.8 Risk Under Letters of Credit.

 

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

 

  (b) Subject to other terms and conditions of this Agreement, Issuing Lender
shall issue the Letters of Credit and shall hold the documents related thereto
in its own name and shall make all collections thereunder and

 

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otherwise administer the Letters of Credit in accordance with Issuing Lender’s
regularly established practices and procedures and will have no further
obligation with respect thereto. In the administration of Letters of Credit,
Issuing Lender shall not be liable for any action taken or omitted on the advice
of counsel, accountants, appraisers or other experts selected by Issuing Lender
with due care and Issuing Lender may rely upon any notice, communication,
certificate or other statement from any Borrower, beneficiaries of Letters of
Credit, or any other Person which Issuing Lender believes to be authentic.
Issuing Lender will, upon request, furnish the Revolving Credit Lenders with
copies of Letter of Credit Documents related thereto.

 

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

 

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

3.9 Indemnification. Each Borrower hereby indemnifies and agrees to hold
harmless the Revolving Credit Lenders, the Issuing Lender and the Agent and
their respective Affiliates, and the respective officers, directors, employees
and agents of such Persons (each an “L/C Indemnified Person”), from and against
any and all claims, damages, losses, liabilities, costs or expenses of any kind
or nature whatsoever which the Revolving Credit Lenders, the Issuing Lender or
the Agent or any such Person may incur or which may be claimed against any of
them

 

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by reason of or in connection with any Letter of Credit (collectively, the “L/C
Indemnified Amounts”), and none of the Issuing Lender, any Revolving Credit
Lender or the Agent or any of their respective officers, directors, employees or
agents shall be liable or responsible for:

 

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

 

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

 

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

 

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

 

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

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

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

3.10 Right of Reimbursement. Each Revolving Credit Lender agrees to reimburse
the Issuing Lender on demand, pro rata in accordance with its respective
Revolving Credit Percentage, for (i) the reasonable out-of-pocket costs and
expenses of the Issuing Lender to be reimbursed by Borrowers pursuant to any
Letter of Credit Agreement or any Letter of Credit, to the extent not reimbursed
by a Borrower and (ii) any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, fees, reasonable out-of-pocket
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or

 

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asserted against Issuing Lender in any way relating to or arising out of this
Agreement (including Section 3.6(c) hereof), any Letter of Credit, any
documentation or any transaction relating thereto, or any Letter of Credit
Agreement, to the extent not reimbursed by a Borrower, except to the extent that
such liabilities, losses, costs or expenses were incurred by Issuing Lender as a
result of Issuing Lender’s gross negligence or willful misconduct or by the
Issuing Lender’s wrongful dishonor of any Letter of Credit after the
presentation to it by the beneficiary thereunder of a draft or other demand for
payment and other documentation strictly complying with the terms and conditions
of such Letter of Credit.

4. [INTENTIONALLY OMITTED].

5. CONDITIONS.

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

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

5.2 Corporate Authority. Agent shall have received, with a counterpart thereof
for each Lender:

A certificate of Parent’s Secretary or Assistant Secretary dated as of the
Effective Date as to:

 

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

 

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

 

  (iii) a certificate of good standing or continued existence (or the equivalent
thereof) from the state of its incorporation or formation, and from every state
or other jurisdiction where each Borrower is qualified to do business, which
jurisdictions are listed on Schedule 5.2 attached hereto, and

 

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

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

 

  (i) a Revolving Credit Note drawn to the order of each Lender that has
requested the delivery of Notes, as applicable, executed and delivered by
Borrowers and dated the Effective Date; and

 

  (ii) a fully executed copy of this Agreement dated the Effective Date.

 

  (b) Certified copies of uniform commercial code requests for information, or a
similar search report certified by a party acceptable to the Agent, dated a date
reasonably prior to the Effective Date, listing all effective financing
statements in the jurisdiction noted on Schedule 5.3(d) which name any Borrower
(under its present name or under any previous names used within five (5) years
prior to the date hereof) as debtor, together with (x) copies of such financing
statements, and (y) authorized Uniform Commercial Code (Form UCC-3) Termination
Statements, if any, necessary to release all Liens and other rights of any
Person previously granted by any Person (other than Liens permitted by
Section 8.2 of this Agreement).

5.4 [Intentionally Omitted].

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

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

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

 

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

5.9 Non-GAAP Balance Sheet and Financial Statements. Parent shall have delivered
to the Lenders and the Agent, in form and substance satisfactory to Agent:
(a) the Non-GAAP Balance Sheet, (b) audited financial statements of Parent and
its Subsidiaries for the Fiscal Year ending October 1, 2006, and presented in
accordance with GAAP, and the quarterly financial statements prepared by Parent
for October 1, 2006 and (c) quarterly projections of Parent through
September 30, 2007, in form acceptable to Agent.

5.10 Appraisals; Audits; Due Diligence. Agent and Lenders shall have received,
in each case in form and substance satisfactory to the Agent, such audits,
appraisals and other reports or due diligence materials as Agent and the
Majority Lenders may reasonably request.

5.11 [Intentionally Omitted].

5.12 Material Contracts. Agent shall have received copies of all Material
Contracts described on Schedule 6.18 hereof.

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

5.14 Closing Certificate. The Agent shall have received, with a signed
counterpart for each Lender, a certificate of a Responsible Officer of Parent
dated the Effective Date (or, if different, the date of the initial Advance
hereunder), stating that to the best of his or her respective knowledge after
due inquiry, (a) the conditions set forth in this Section 5 have been satisfied
to the extent required to be satisfied by any Borrower; (b) the representations
and warranties made by Borrowers in this Agreement or any of the other Loan
Documents, as applicable, are true and correct in all material respects; (c) no
Default or Event of Default shall have occurred and be continuing; (d) since
October 1, 2006, nothing shall have occurred which has had, or could reasonably
be expected to have, a material adverse change on the business, results of
operations, conditions, property or prospects (financial or otherwise) of
Borrowers; and (e) there shall have been no material adverse change to the
Non-GAAP Balance Sheet.

5.15 PowerDsine. The Agent shall have received, prior to the Effective Date, a
brokerage or similar statement with respect to PowerDsine’s cash and cash
equivalents.

5.16 Continuing Conditions. The obligations of each Lender to make Advances
(including the initial Advance) under this Agreement and the obligation of the
Issuing Lender to issue any Letters of Credit shall be subject to the continuing
conditions that:

 

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

 

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

6. REPRESENTATIONS AND WARRANTIES.

Each Borrower represents and warrants to the Agent, the Lenders and the Issuing
Lender as follows:

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

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

6.3 Good Title; Leases; Assets; No Liens. (a) Borrower, to the extent
applicable, has good and valid title (or, in the case of real property, good and
marketable title) to all assets owned by it, subject only to the Liens permitted
under section 8.2 hereof, and Borrower has a valid leasehold or interest as a
lessee or a licensee in all of its leased real property;

 

  (b) Schedule 6.3(b) hereof identifies all of the real property owned or
leased, as lessee thereunder, by the Borrower on the Effective Date, including
all warehouse or bailee locations;

 

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

 

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

 

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

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

6.5 No Defaults. Borrower is not in default under or with respect to any
agreement, instrument or undertaking to which is a party or by which it or any
of its property is bound which would cause or would reasonably be expected to
cause a Material Adverse Effect.

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

6.7 Compliance with Laws. (a) Except as disclosed on Schedule 6.7, Borrower has
complied with all applicable federal, state and local laws, ordinances, codes,
rules, regulations and guidelines (including consent decrees and administrative
orders) including but not limited to Hazardous Material Laws, and is in
compliance with any Requirement of Law, except to the extent that failure to
comply therewith could not reasonably be expected to have a Material Adverse
Effect; and (b) neither the extension of credit made pursuant to this Agreement
or the use of the proceeds thereof by the Borrower will violate the Trading with
the Enemy Act, as amended, or any of the foreign assets control regulations of
the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto, or The
United and Strengthening America by providing

 

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appropriate Tools Required to Intercept and Obstruct Terrorism (“USA Patriot
Act”) Act of 2001, Public Law 10756, October 26, 2001 or Executive Order 13224
of September 23, 2001 issued by the President of the United States (66 Fed. Reg.
49049 (2001)).

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

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

6.10 Consents, Approvals and Filings, Etc. Except as set forth on Schedule 6.10
hereof, no material authorization, consent, approval, license, qualification or
formal exemption from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority or any securities exchange or
any other Person (whether or not governmental) is required in connection with
the execution, delivery and performance: (a) by Borrower of this Agreement and
any of the other Loan Documents to which Borrower is a party or (b) by the
Borrower of the grant of Liens granted, conveyed or otherwise established (or to
be granted, conveyed or otherwise established) by or under this Agreement or the
other Loan Documents, as applicable, except in each case for such matters which
have been previously obtained. All such material authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations and
registrations which have previously been obtained or made, as the case may be,
are in full force and effect and, to the best knowledge of Borrower, are not the
subject of any attack or threatened attack (in each case in any material
respect) by appeal or direct proceeding or otherwise.

6.11 Agreements Affecting Financial Condition. Borrower is not party to any
agreement or instrument or subject to any charter or other corporate restriction
which could reasonably be expected to have a Material Adverse Effect.

6.12 No Investment Company or Margin Stock. Borrower is not an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
Borrower is not engaged principally, or as one of its important activities,
directly or indirectly, in the business of extending credit for the purpose of
purchasing or carrying margin stock. None of the proceeds of any of the Advances
will be used by Borrower to purchase or carry margin stock. Terms for which
meanings are provided in Regulation U of the Board of Governors of the Federal
Reserve System or any regulations substituted therefore, as from time to time in
effect, are used in this paragraph with such meanings.

 

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6.13 ERISA. Borrower does not maintain or contribute to any Pension Plan subject
to Title IV of ERISA, except as set forth on Schedule 6.13 hereto or otherwise
disclosed to the Agent in writing. There is no accumulated funding deficiency
within the meaning of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, or any outstanding liability with respect to any Pension Plans owed to
the PBGC other than future premiums due and owing pursuant to Section 4007 of
ERISA, and no “reportable event” as defined in Section 4043(c) of ERISA has
occurred with respect to any Pension Plan other than an event for which the
notice requirement has been waived by the PBGC. None of the Borrower has engaged
in a prohibited transaction with respect to any Pension Plan, other than a
prohibited transaction for which an exemption is available and has been
obtained, which could subject such Borrower to a material tax or penalty imposed
by Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA. Each
Pension Plan is being maintained and funded in accordance with its terms and is
in material compliance with the requirements of the Internal Revenue Code and
ERISA. Borrower has not had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to have
resulted in any Withdrawal Liability and, except as notified to Agent in writing
following the Effective Date, no such Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA) or insolvent (within the meaning
of Section 4245 of ERISA).

6.14 Conditions Affecting Business or Properties. As of the Effective Date and
the date of each request for an Advance hereunder, neither the respective
businesses nor the properties of Borrower is affected by any fire, explosion,
accident, strike, lockout or other dispute, drought, storm, hail, earthquake,
embargo, Act of God, or other casualty (except to the extent such event is
covered by insurance sufficient to ensure that upon application of the proceeds
thereof, no Material Adverse Effect could reasonably be expected to occur) which
could reasonably be expected to have a Material Adverse Effect.

6.15 Environmental and Safety Matters. Except as set forth in Schedules 6.9,
6.10 and 6.15:

 

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

 

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

 

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

 

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

 

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

6.16 Subsidiaries. Except as disclosed on Schedule 6.16 hereto as of the
Effective Date, and thereafter, except as disclosed to the Agent in writing from
time to time, Borrower does not have any other Subsidiaries.

6.17 [Intentionally Omitted].

6.18 Material Contracts. Schedule 6.18 attached hereto is an accurate and
complete list of all Material Contracts in effect on or as of the Effective Date
to which Borrower is a party or is bound.

6.19 Franchises, Patents, Copyrights, Tradenames, etc. The Borrower possess all
franchises, patents, copyrights, trademarks, trade names, licenses and permits,
and rights in respect of the foregoing, adequate for the conduct of their
business substantially as now conducted without known conflict with any rights
of others. Schedule 6.18 contains a true and accurate list of all trade names
and any and all other names used by Borrower during the five-year period ending
as of the Effective Date.

6.20 [Intentionally Omitted].

6.21 Accuracy of Information. (a) The audited financial statements for the
Fiscal Year ended October 1, 2006, furnished to Agent and the Lenders prior to
the Effective Date fairly present in all material respects the financial
condition of the Borrowers and their Subsidiaries and the results of their
operations for the periods covered thereby, and have been prepared in accordance
with GAAP. The projections, the Non-GAAP Balance Sheet and the other non-GAAP
financial information delivered to the Agent prior to the Effective Date are
based upon good faith estimates and assumptions believed by management of the
Borrower to be accurate and reasonable at the time made, it being recognized by
the Lenders that such financial information as it relates to future events is
not to be viewed as fact and that actual results during the period or periods
covered by such financial information may differ from the projected results set
forth therein.

 

  (b) From October 1, 2006 through the Effective Date, there has been no
material adverse change in the business, operations, condition, property or
prospects (financial or otherwise) of the Borrower, taken as a whole.

 

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

 

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

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

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

7. AFFIRMATIVE COVENANTS.

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

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

 

  (a) as soon as available, but in any event within ninety (90) days after the
end of each Fiscal Year, a copy of the Form 10K filed by Parent with the SEC;

 

  (b) as soon as available, but in any event within fifty (50) days after the
end of the first, second and third fiscal quarter of Parent, a copy of the Form
10Q filed by Parent with the SEC; and

all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with SEC
filing requirements.

 

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

 

  (a) Concurrently with the delivery of the financial statements described in
Sections 7.1(a) and 7.1(b) of this Agreement for each fiscal year-end and fiscal
quarter-end, respectively, a Covenant Compliance Report duly executed by a
Responsible Officer of Parent;

 

  (b) [Intentionally Omitted];

 

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

 

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

 

  (e) Within ninety (90) days after the end of each Fiscal Year, projections for
Parent and its Subsidiaries for the next succeeding Fiscal Year, on a quarterly
basis and for the following Fiscal Year on an annual basis, including a balance
sheet, as at the end of each relevant period and for the period commencing at
the beginning of the Fiscal Year and ending on the last day of such relevant
period, such projections certified by a Responsible Officer of Parent as being
based on reasonable estimates and assumptions taking into account all facts and
information known (or reasonably available to Parent) by a Responsible Officer
of Parent;

 

  (f) Any additional information as required by any Loan Document, and such
additional schedules, certificates and reports, all to such extent as Agent may
reasonably request from time to time, any such schedule, certificate or report
to be certified as true and correct in all material respects by a Responsible
Officer of Parent and shall be in such form and detail as Agent may reasonably
specify; and

 

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

7.3 Payment of Obligations. Pay, discharge or otherwise satisfy, at or before
maturity or before they become delinquent, as the case may be, all of its
material obligations of whatever nature, including without limitation all
assessments, governmental charges, claims for labor, supplies, rent or other
obligations, except where the amount or validity thereof is currently being
appropriately contested in good faith and reserves in conformity with GAAP with
respect thereto have been provided on the books of the Borrower.

 

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

 

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

 

  (b) Preserve, renew and keep in full force and effect its existence and
maintain its qualifications to do business in each jurisdiction where such
qualifications are necessary for its operations, except as otherwise permitted
pursuant to Section 8.4;

 

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

 

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

 

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

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

 

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such policies shall list the Agent as an additional insured, as Agent may
reasonably request; and (e) if requested by Agent, certificates evidencing such
policies, including all endorsements thereto, to be deposited with Agent, such
certificates being in form and substance reasonably acceptable to Agent.

7.6 Inspection of Property; Books and Records, Discussions. Permit Agent and
each Lender, through their authorized attorneys, accountants and representatives
(a) at all reasonable times during normal business hours, upon the request of
Agent or such Lender, to examine Borrower’s books, accounts, records, ledgers
and assets and properties; (b) from time to time, during normal business hours,
upon the request of the Agent, to conduct full or partial collateral audits of
the Accounts and Inventory of the Borrower and appraisals of all or a portion of
the fixed assets (including real property) of the Borrower, such audits and
appraisals to be completed by an appraiser as may be selected by Agent and
consented to by Borrower (such consent not to be unreasonably withheld), with
all reasonable costs and expenses of such audits to be reimbursed by the
Borrower, provided that so long as no Event of Default or Default exists,
Borrower shall not be required to reimburse Agent for such audits or appraisals
more frequently than once each Fiscal Year; (c) during normal business hours and
at their own risk, to enter onto the real property owned or leased by Borrower
to conduct inspections, investigations or other reviews of such real property;
and (d) at reasonable times during normal business hours and at reasonable
intervals, to visit all of the Borrower’ offices, discuss Borrower’s respective
financial matters with their respective officers, as applicable, and, by this
provision, Borrower authorizes, and will cause each of their respective
Subsidiaries to authorize, its independent certified or chartered public
accountants to discuss the finances and affairs of Borrower and examine any of
Borrower’s books, reports or records held by such accountants.

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

7.8 Hazardous Material Laws.

 

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

 

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

 

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  (c) To the extent necessary to comply in all material respects with Hazardous
Material Laws, remediate or monitor contamination arising from a release or
disposal of Hazardous Material, which solely, or together with other releases or
disposals of Hazardous Materials could reasonably be expected to have a Material
Adverse Effect;

 

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

7.9 Financial Covenants.

 

  (a) Maximum Funded Debt to EBITDA. Parent, on a consolidated basis, shall at
all times maintain a ratio of Funded Debt to EBITDA, measured quarterly, not to
exceed 2.00 to 1.00.

 

  (b) Minimum EBITDA. Parent, on a consolidated basis, shall at all times
maintain an EBITDA of at least Twenty Million Dollars ($20,000,000), measured
quarterly on a rolling four (4) quarter basis.

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

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

 

  (b) Promptly notify Agent upon the occurrence of any of the following events
in writing: (i) the termination, other than a standard termination, as defined
in ERISA, of any Pension Plan subject to Subtitle C of Title IV of ERISA by
Borrower; (ii) the appointment of a trustee by a United States District Court to
administer any Pension Plan subject to Title IV of ERISA; (iii) the commencement
by the PBGC, of any proceeding to terminate any Pension Plan subject to Title IV
of ERISA; (iv) the failure of Borrower to make any payment in respect of any
Pension Plan required under Section 412 of the Internal Revenue Code or
Section 302 of ERISA; (v) the withdrawal of Borrower from any Multiemployer Plan
if Borrower

 

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reasonably believes that such withdrawal would give rise to the imposition of
Withdrawal Liability with respect thereto; or (vi) the occurrence of (x) a
“reportable event” which is required to be reported by Borrower under
Section 4043 of ERISA other than any event for which the reporting requirement
has been waived by the PBGC or (y) a “prohibited transaction” as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code other than a
transaction for which a statutory exemption is available or an administrative
exemption has been obtained.

7.12 [Intentionally Omitted].

7.13 Accounts. Parent shall maintain its primary deposit and operating accounts
with Comerica Bank.

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

7.15 PowerDsine. Parent agrees that, within ten (10) Business Days following
consummation of the PowerDsine Acquisition, PowerDsine shall be added as a
“Borrower” to this Agreement, and that the all references to “Borrowers”
throughout the Loan Documents shall include PowerDsine. Borrowers shall cause
PowerDsine to execute and deliver to Agent within a reasonable time following
Agent’s request, and at the expense of the Borrowers, such documents or
instruments as Agent may reasonably require to effectuate more fully the
purposes of this Section.

7.16 Further Assurances. (a) Take such actions as the Agent or Majority Lenders
may from time to time reasonably request; and

 

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

8. NEGATIVE COVENANTS.

Each Borrower (except as otherwise indicated) covenants and agrees that, so long
as any Lender has any commitment to extend credit hereunder, or any of the
Indebtedness remains outstanding and unpaid, it will not, and, as applicable, it
will not permit any of its Subsidiaries to:

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

 

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

 

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

 

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

 

  (d) Subordinated Debt;

 

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

 

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

 

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

 

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

 

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

 

  (a) Permitted Liens;

 

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

 

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

Regardless of the provisions of this Section 8.2, no Lien over any real estate
owned or leased by of Borrower or any Subsidiary of Borrower shall be permitted
under the terms of this Agreement.

8.3 Acquisitions. Except for Permitted Acquisitions and acquisitions permitted
under Sections 8.5 or 8.7, if any, purchase or otherwise acquire or become
obligated for the purchase of all or substantially all or any material portion
of the assets or business interests or a division or other business unit of any
Person, or any Equity Interest of any Person, or any business or going concern.

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

 

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

 

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

 

  (c) Permitted Acquisitions;

 

  (d) mergers or consolidations of any Subsidiary of Borrower with or into
Borrower or any Subsidiary so long as the Borrower or such Subsidiary shall be
the continuing or surviving entity; provided that at the time of

 

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each such merger or consolidation, both before and after giving effect thereto,
no Default or Event of Default shall have occurred and be continuing or result
from such merger or consolidation;

 

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

 

  (f) sales or transfers, including without limitation upon voluntary
liquidation from a Subsidiary to Borrower;

 

  (g) (i) Asset Sales (exclusive of asset sales permitted pursuant to all other
subsections of this Section 8.4) in which the sales price is at least equal to
the fair market value of the assets sold and the consideration received is cash
or cash equivalents or Debt of Borrower being assumed by the purchaser, provided
that the aggregate amount of such Asset Sales does not exceed Five Million
Dollars ($5,000,000) in any Fiscal Year and no Default or Event of Default has
occurred and is continuing at the time of each such sale (both before and after
giving effect to such Asset Sale); (ii) the sale by Borrower or Borrower’s
Subsidiaries’ of Borrower’s or such Subsidiaries’ real estate located in Santa
Ana, California, Broomfield, Colorado, Montgomeryville, Pennsylvania, and Ennis,
Ireland (collectively, the “Closed Facilities”); (iii) the sale or other
restructuring of the businesses conducted at the Closed Facilities, including
but not limited to the closing of such Closed Facilities, redistribution of the
work performed at such Closed Facilities, and the sale of equipment previously
located at such Closed Facilities; and (iv) other Asset Sales approved by the
Majority Lenders in their sole discretion;

 

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

 

  (i) dispositions of owned or leased vehicles in the ordinary course of
business.

8.5 Restricted Payments. Declare or make any distributions, dividend, payment or
other distribution of assets, properties, cash, rights, obligations or
securities (collectively, “Distributions”) on account of any of its Equity
Interests, as applicable, or purchase, redeem or otherwise acquire for value any
of its Equity Interests, as applicable, or any warrants, rights or options to
acquire any of its Equity Interests, now or hereafter outstanding (collectively,
“Purchases”), except that Borrower may declare and make Distributions payable in
the Equity Interests of Borrower, provided that (i) the issuance of such Equity
Interests does not otherwise violate the terms of this Agreement and no Default
or Event of Default has occurred and is continuing at the time of making such
Distribution or would result from the making of such Distribution, and (ii) the
cash value of such Distributions do not exceed Five Million Dollars ($5,000,000)
in the aggregate during the term of this agreement.

 

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8.6 Limitation on Capital Expenditures. Make or commit to make (by way of the
acquisition of securities of a Person or otherwise) any expenditure in respect
of the purchase or other acquisition of fixed or capital assets (excluding any
such asset acquired in connection with normal replacement and maintenance
programs properly charged to current operations) except for Capital
Expenditures, the aggregate amount of which in any Fiscal Year shall not exceed
Thirty Million Dollars ($30,000,000).

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

 

  (a) Permitted Investments;

 

  (b) Investments existing on the Effective Date and listed on Schedule 8.7
hereof;

 

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

 

  (d) intercompany loans or intercompany Investments made by Parent to or in
another Borrower; provided that, in the case of any intercompany loans or
intercompany Investments made by Parent in any non-Borrower Subsidiary, the
aggregate amount outstanding in respect thereof shall not exceed Five Million
Dollars ($5,000,000) cash in the aggregate at any time; and provided, further,
that in each case, no Default or Event of Default shall have occurred and be
continuing at the time of making such intercompany loan or intercompany
Investment or result from such intercompany loan or intercompany Investment
being made;

 

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

 

  (f) loans and advances to employees, officers and directors of Borrower for
moving, entertainment, travel and other similar expenses in the ordinary course
of business in the aggregate at any time outstanding;

 

  (g) Permitted Acquisitions and Investments in any Person acquired pursuant to
a Permitted Acquisition;

 

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

 

  (i) other Investments not described above provided that both at the time of
and immediately after giving effect to any such Investment (i) no Default or
Event of Default shall have occurred and be continuing or shall result

 

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from the making of such Investment and (ii) the aggregate amount of all such
other Investments shall not exceed One Million Dollars ($1,000,000) at any time
outstanding.

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

8.8 Transactions with Affiliates. Except as set forth in Schedule 8.8, enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliates of
the Borrower except: (a) transactions with Affiliates that are Subsidiaries of
Borrower; (b) transactions otherwise permitted under this Agreement (including,
without limitation, pursuant to Section 8.14 hereof); and (c) transactions in
the ordinary course of Borrower’s business and upon fair and reasonable terms no
less favorable to Borrower than it would obtain in a comparable arms length
transaction from unrelated third parties.

8.9 Sale-Leaseback Transactions. Enter into any arrangement with any Person
providing for the leasing by Borrower of real or personal property which has
been or is to be sold or transferred by Borrower to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of Borrower, as the case may be.

8.10 Limitations on Other Restrictions. Except for this Agreement or any other
Loan Document, enter into any agreement, document or instrument which would
restrict the ability of any Subsidiary of the Borrower to pay or make dividends
or distributions in cash or kind to Borrower or any Subsidiary, to make loans,
advances or other payments of whatever nature to Borrower, or to make transfers
or distributions of all or any part of its assets to Borrower.

8.11 Prepayment of Debt. Make any prepayment (whether optional or mandatory),
repurchase, redemption, defeasance or any other payment in respect of any
Subordinated Debt.

8.12 Amendment of Subordinated Debt Documents. Amend, modify or otherwise alter
(or suffer to be amended, modified or altered) the Subordinated Debt Documents
except as permitted in the applicable Subordinated Debt Documents and
Subordination Agreements, or if no such restrictions exist in the applicable
Subordinated Debt Documents or Subordination Agreements, without the prior
written consent of the Agent.

8.13 Modification of Certain Agreements. Make, permit or consent to any
amendment or other modification to the constitutional documents of Borrower or
any Material Contract except to the extent that any such amendment or
modification (i) does not violate the terms and conditions of this Agreement or
any of the other Loan Documents, (ii) does not materially adversely affect the
interest of the Lenders as creditors and/or secured parties under any Loan
Document and (iii) could not reasonably be expected to have a Material Adverse
Effect.

8.14 Management Fees. Pay or otherwise advance, directly or indirectly, any
management, consulting or other fees to an Affiliate.

 

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8.15 Fiscal Year. Permit the Fiscal Year of Borrower to end on a day other than
September 30, 2007, September 28, 2008 and September 27, 2009.

9. DEFAULTS.

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

 

  (a) non-payment when due of (i) the principal or interest on the Indebtedness
under the Revolving Credit or (ii) any Reimbursement Obligation or (iii) any
Fees;

 

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

 

  (c) default in the observance or performance of any of the conditions,
covenants or agreements of any Borrower set forth Article 7 or Article 8;

 

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

 

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

 

  (f) (i) default by any Borrower in the payment of any indebtedness for
borrowed money, whether under a direct obligation or guaranty (other than
Indebtedness hereunder) of such Borrower in excess of Two Hundred Fifty Thousand
Dollars ($250,000) (or the equivalent thereof in any currency other than
Dollars) individually or in the aggregate when due and continuance thereof
beyond any applicable period of cure and or (ii) failure to comply with the
material terms of any other obligation of any Borrower with respect to any
indebtedness for borrowed money (other than Indebtedness hereunder) in excess of
Two Hundred Fifty Thousand Dollars ($250,000) (or the equivalent thereof in any
currency other than Dollars) individually or in the aggregate, which continues
beyond any applicable period of cure and which would permit the holder or
holders thereto to accelerate such other indebtedness for borrowed money, or
require the prepayment, repurchase, redemption or defeasance of such
indebtedness;

 

  (g) the rendering of any judgment(s) (not covered by adequate insurance from a
solvent carrier which is defending such action without reservation of rights)
for the payment of money in excess of the sum of One Million

 

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Dollars ($1,000,000) (or the equivalent thereof in any currency other than
Dollars) individually or in the aggregate against any Borrower, and such
judgments shall remain unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of thirty (30) consecutive days from the date of its
entry;

 

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

 

  (i) except as expressly permitted under this Agreement, any Borrower shall be
dissolved (other than a dissolution of a Subsidiary of such Borrower which is
not a Guarantor or a Borrower) or liquidated (or any judgment, order or decree
therefor shall be entered) except as otherwise permitted herein; or if a
creditors’ committee shall have been appointed for the business of such
Borrower; or if a Borrower shall have made a general assignment for the benefit
of creditors or shall have been adjudicated bankrupt and if not an adjudication
based on a filing by a Borrower, it shall not have been dismissed within
forty-five (45) days, or shall have filed a voluntary petition in bankruptcy or
for reorganization or to effect a plan or arrangement with creditors or shall
fail to pay its debts generally as such debts become due in the ordinary course
of business (except as contested in good faith and for which adequate reserves
are made in such party’s financial statements); or shall file an answer to a
creditor’s petition or other petition filed against it, admitting the material
allegations thereof for an adjudication in bankruptcy or for reorganization; or
shall have applied for or permitted the appointment of a receiver or trustee or
custodian for any of its property or assets; or such receiver, trustee or
custodian shall have been appointed for any of its property or assets (otherwise
than upon application or consent of a Borrower) and shall not have been removed
within thirty (30) days; or if an order shall be entered approving any petition
for reorganization of a Borrower and shall not have been reversed or dismissed
within forty-five (45) days;

 

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  (j) [Intentionally Omitted];

 

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

 

  (l) any Loan Document shall at any time for any reason cease to be in full
force and effect (other than in accordance with the terms thereof or the terms
of any other Loan Document), as applicable, or the validity, binding effect or
enforceability thereof shall be contested by any party thereto (other than any
Lender, Agent or Issuing Lender), or any Person shall deny that it has any or
further liability or obligation under any Loan Document, or any such Loan
Document shall be terminated (other than in accordance with the terms thereof or
the terms of any other Loan Document), invalidated, revoked or set aside or in
any way cease to give or provide to the Lenders and the Agent the benefits
purported to be created thereby.

9.2 Exercise of Remedies. If an Event of Default has occurred and is continuing
hereunder: (a) the Agent may, and shall, upon being directed to do so by the
Majority Revolving Credit Lenders, declare the Revolving Credit Aggregate
Commitment terminated; (b) the Agent may, and shall, upon being directed to do
so by the Majority Lenders, declare the entire unpaid principal Indebtedness,
including the Notes, immediately due and payable, without presentment, notice or
demand, all of which are hereby expressly waived by Borrowers; (c) upon the
occurrence of any Event of Default specified in Section 9.1(i) and
notwithstanding the lack of any declaration by Agent under preceding clauses
(a) or (b), the entire unpaid principal Indebtedness shall become automatically
and immediately due and payable, and the Revolving Credit Aggregate Commitment
shall be automatically and immediately terminated; (d) the Agent shall, upon
being directed to do so by the Majority Revolving Credit Lenders, demand
immediate delivery of cash collateral, and each Borrower agrees to deliver such
cash collateral upon demand, in an amount equal to 105% of the maximum amount
that may be available to be drawn at any time prior to the stated expiry of all
outstanding Letters of Credit; (e) the Agent may, and shall, upon being directed
to do so by the Majority Lenders, notify Agent that interest shall be payable on
demand on all Indebtedness (other than Revolving Credit Advances with respect to
which Section 2.6 hereof shall govern) owing from time to time to the Agent or
any Lender, at a per annum rate equal to the then applicable Prime-based Rate
plus two percent (2%); and (f) the Agent may, and shall, upon being directed to
do so by the Majority Lenders or the Lenders, as applicable (subject to the
terms hereof), exercise any remedy permitted by this Agreement, the other Loan
Documents or law.

 

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

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

9.5 Waiver of Defaults. No Event of Default shall be waived by the Lenders
except in a writing signed by an officer of the Agent in accordance with
Section 13.6 hereof. No single or partial exercise of any right, power or
privilege hereunder, nor any delay in the exercise thereof, shall preclude other
or further exercise of their rights by Agent or the Lenders. No waiver of any
Event of Default shall extend to any other or further Event of Default. No
forbearance on the part of the Agent or the Lenders in enforcing any of their
rights shall constitute a waiver of any of their rights. Each Borrower expressly
agrees that this Section may not be waived or modified by the Lenders or Agent
by course of performance, estoppel or otherwise.

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

 

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10. PAYMENTS, RECOVERIES AND COLLECTIONS.

10.1 Payment Procedure.

 

  (a) All payments to be made by a Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise provided herein, all payments made by a Borrower of principal,
interest or fees hereunder shall be made without setoff or counterclaim on the
date specified for payment under this Agreement and must be received by Agent
not later than 1:00 p.m. (California time) on the date such payment is required
or intended to be made in Dollars in immediately available funds to Agent at
Agent’s office located at 500 North State College Boulevard, Suite 570, Orange,
California 92868 for the ratable benefit of the Revolving Credit Lenders in the
case of payments in respect of the Revolving Credit and any Letter of Credit
Obligations. Any payment received by the Agent after 1:00 p.m. (California time)
shall be deemed received on the next succeeding Business Day and any applicable
interest or fee shall continue to accrue. Upon receipt of each such payment, the
Agent shall make prompt payment to each applicable Lender, or, in respect of
Eurodollar-based Advances, such Lender’s Eurodollar Lending Office, in like
funds and currencies, of all amounts received by it for the account of such
Lender.

 

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

 

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

 

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  (d) All payments to be made by a Borrower under this Agreement or any of the
Notes shall be made without setoff or counterclaim, as aforesaid, and, subject
to full compliance by each Lender (and each assignee and participant pursuant to
Section 13.8) with Section 13.13, without deduction for or on account of any
present or future withholding or other taxes of any nature imposed by any
governmental authority or of any political subdivision thereof or any federation
or organization of which such governmental authority may at the time of payment
be a member (other than any taxes on the overall income, net income, net profits
or net receipts or similar taxes (or any franchise taxes imposed in lieu of such
taxes) on the Agent or any Lender (or any branch maintained by Agent or a
Lender) as a result of a present or former connection between the Agent or such
Lender and the governmental authority, political subdivision, federation or
organization imposing such taxes), unless Borrowers are compelled by law to make
payment subject to such tax. In such event, Borrowers shall:

 

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

 

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

As used herein, the terms “tax”, “taxes” and “taxation” include all taxes,
levies, imposts, duties, fees, deductions and withholdings or similar charges
together with interest (and any taxes payable upon the amounts paid or payable
pursuant to this Section 10.1) thereon. Parent shall be reimbursed by the
applicable Lender for any payment made by a Borrower under this Section 10.1 if
the applicable Lender is not in compliance with its obligations under
Section 13.13 at the time of the Borrower’s payment.

10.2 [Intentionally Omitted].

10.3 Pro-rata Recovery. If any Lender shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of setoff or otherwise) on
account of principal of, or interest on, any of the Advances made by it, or the
participations in Letter of Credit Obligations held by it in excess of its pro
rata share of payments then or thereafter obtained by all Lenders upon principal
of and interest on all such Indebtedness, such Lender shall purchase from the
other Lenders such participations in the Revolving Credit and/or the Letter of
Credit Obligation held by them as shall be necessary to cause such purchasing
Lender to share the

 

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excess payment or other recovery ratably in accordance with the applicable
Percentages of the Lenders; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
holder, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest.

11. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS.

11.1 Reimbursement of Prepayment Costs. If (i) Borrowers make any payment of
principal with respect to any Eurodollar-based Advance on any day other than the
last day of the Interest Period applicable thereto (whether voluntarily,
pursuant to any mandatory provisions hereof, by acceleration, or otherwise);
(ii) Borrowers convert or refund (or attempt to convert or refund) any such
Advance on any day other than the last day of the Interest Period applicable
thereto; (iii) Borrowers fails to borrow, refund or convert any Eurodollar-based
Advance after notice has been given by Parent to Agent in accordance with the
terms hereof requesting such Advance; or (iv) or if Borrowers fail to make any
payment of principal in respect of a Eurodollar-based Advance when due,
Borrowers shall reimburse Agent for itself and/or on behalf of any Lender, as
the case may be, within ten (10) Business Days of written demand therefor for
any resulting loss, cost or expense incurred (excluding the loss of any
Applicable Margin) by Agent and Lenders, as the case may be, as a result
thereof, including, without limitation, any such loss, cost or expense incurred
in obtaining, liquidating, employing or redeploying deposits from third parties,
whether or not Agent and Lenders, as the case may be, shall have funded or
committed to fund such Advance. Calculation of any amounts payable to any Lender
under this paragraph shall be made as though such Lender shall have actually
funded or committed to fund the relevant Advance through the purchase of an
underlying deposit in an amount equal to the amount of such Advance and having a
maturity comparable to the relevant Interest Period; provided, however, that any
Lender may fund any Eurodollar-based Advance in any manner it deems fit and the
foregoing assumptions shall be utilized only for the purpose of the calculation
of amounts payable under this paragraph. Upon the written request of Parent,
Agent and Lenders shall deliver to Parent a certificate setting forth the basis
for determining such losses, costs and expenses, which certificate shall be
conclusively presumed correct, absent manifest error.

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

11.3 Circumstances Affecting Eurodollar-based Rate Availability. If, with
respect to any Eurodollar-Interest Period, Agent or the Majority Lenders (after
consultation with Agent) shall determine in good faith that, by reason of
circumstances affecting the foreign exchange and interbank markets generally,
deposits in eurodollars in the applicable amounts are not being offered to the
Agent or such Lenders for such Eurodollar-Interest Period, then Agent shall
forthwith give notice thereof to Parent. Thereafter, until Agent notifies Parent
that such circumstances no longer exist, (i) the obligation of Lenders to make
Eurodollar-based Advances, and the right of Parent to convert an Advance to or
refund an Advance as a Eurodollar-based Advance, as the case may be, shall be
suspended, and (ii) effective upon the last day of each

 

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Eurodollar-Interest Period related to any existing Eurodollar-based Advance,
each such Eurodollar-based Advance shall automatically be converted into a
Prime-based Advance (without regard to satisfaction of any conditions to
conversion contained elsewhere herein).

11.4 Laws Affecting Eurodollar-based Advance Availability. If, after the date of
this Agreement, the adoption or introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any of the Lenders (or any of their
respective Eurodollar Lending Offices) with any request or directive (whether or
not having the force of law) of any such authority, shall make it unlawful or
impossible for any of the Lenders (or any of their respective Eurodollar Lending
Offices) to honor its obligations hereunder to make or maintain any Advance with
interest at the Eurodollar-based Rate, such Lender shall forthwith give notice
thereof to Parent and to Agent. Thereafter, (a) the obligations of the
applicable Lenders to make Eurodollar-based Advances and the right of Parent to
convert an Advance into or refund an Advance as a Eurodollar-based Advance shall
be suspended and thereafter Parent may select as Applicable Interest Rates only
those which remain available and which are permitted to be selected hereunder,
and (b) if any of the Lenders may not lawfully continue to maintain an Advance
to the end of the then current Eurodollar-Interest Period applicable thereto as
a Eurodollar-based Advance, the applicable Advance shall immediately be
converted to a Prime-based Advance and the Prime-based Rate shall be applicable
thereto for the remainder of such Eurodollar-Interest Period. For purposes of
this Section, a change in law, rule, regulation, interpretation or
administration shall include, without limitation, any change made or which
becomes effective on the basis of a law, rule, regulation, interpretation or
administration presently in force, the effective date of which change is delayed
by the terms of such law, rule, regulation, interpretation or administration.

11.5 Increased Cost of Eurodollar-based Advances. If, after the date of this
Agreement, the adoption or introduction of, or any change in, any applicable
law, rule or regulation or in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any of the
Lenders (or any of their respective Eurodollar Lending Offices) with any request
or directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:

 

  (a) shall subject any of the Lenders (or any of their respective Eurodollar
Lending Offices) to any tax, duty or other charge with respect to any Advance or
shall change the basis of taxation of payments to any of the Lenders (or any of
their respective Eurodollar Lending Offices) of the principal of or interest on
any Advance or any other amounts due under this Agreement in respect thereof
(except for changes in the rate of tax on the overall net income of any of the
Lenders or any of their respective Eurodollar Lending Offices); or

 

  (b) shall impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any of the Lenders (or

 

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any of their respective Eurodollar Lending Offices) or shall impose on any of
the Lenders (or any of their respective Eurodollar Lending Offices) or the
foreign exchange and interbank markets any other condition affecting any
Advance;

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

11.6 Capital Adequacy and Other Increased Costs.

 

  (a) If, after the date of this Agreement, the adoption or introduction of, or
any change in any applicable law, treaty, rule or regulation (whether domestic
or foreign) now or hereafter in effect and whether or not presently applicable
to any Lender or Agent, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Lender or Agent with any guideline, request or
directive of any such authority (whether or not having the force of law),
including any risk based capital guidelines, affects or would affect the amount
of capital required to be maintained by such Lender or Agent (or any corporation
controlling such Lender or Agent) and such Lender or Agent, as the case may be,
determines that the amount of such capital is increased by or based upon the
existence of such Lender’s or Agent’s obligations or Advances hereunder and such
increase has the effect of reducing the rate of return on such Lender’s or
Agent’s (or such controlling corporation’s) capital as a consequence of such
obligations or Advances hereunder to a level below that which such Lender or
Agent (or such controlling corporation) could have achieved but for such
circumstances (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Lender or Agent to be material
(collectively, “Increased Costs”), then Agent or such Lender shall notify
Parent, and thereafter Borrowers shall pay to such Lender or Agent, as the case
may be, within ten (10) Business Days of written demand

 

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therefor from such Lender or Agent, additional amounts sufficient to compensate
such Lender or Agent (or such controlling corporation) for any increase in the
amount of capital and reduced rate of return which such Lender or Agent
reasonably determines to be allocable to the existence of such Lender’s or
Agent’s obligations or Advances hereunder. A statement setting forth the amount
of such compensation, the methodology for the calculation and the calculation
thereof which shall also be prepared in good faith and in reasonable detail by
such Lender or Agent, as the case may be, shall be submitted by such Lender or
by Agent to Parent, reasonably promptly after becoming aware of any event
described in this Section 11.6(a) and shall be conclusively presumed to be
correct, absent manifest error.

 

  (b) Notwithstanding the foregoing, however, Borrowers shall not be required to
pay any increased costs under Sections 11.5, 11.6 or 3.4(c) for any period
ending prior to the date that is 180 days prior to the making of a Lender’s
initial request for such additional amounts unless the applicable change in law
or other event resulting in such increased costs is effective retroactively to a
date more than 180 days prior to the date of such request, in which case a
Lender’s request for such additional amounts relating to the period more than
180 days prior to the making of the request must be given not more than 180 days
after such Lender becomes aware of the applicable change in law or other event
resulting in such increased costs.

11.7 Right of Lenders to Fund through Branches and Affiliates. Each Lender may,
if it so elects, fulfill its commitment as to any Advance hereunder by
designating a branch or Affiliate of such Lender to make such Advance; provided
that (a) such Lender shall remain solely responsible for the performances of its
obligations hereunder and (b) no such designation shall result in any material
increased costs to Borrowers.

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

 

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

 

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  (b) From the Effective Date until the required date of delivery (or, if
earlier, delivery) of the financial statements under Section 7.1(b) hereof, and
the Covenant Compliance Report under Section 7.2(a) hereof, for the fiscal
quarter ending December 31, 2006, the Applicable Margins and Applicable Fee
Percentages shall be those set forth under the Level I column of the pricing
matrix attached to this Agreement as Schedule 1.1. Thereafter, Applicable
Margins and Applicable Fee Percentages shall be based upon the quarterly
financial statements and Covenant Compliance Reports, subject to recalculation
as provided in Section 11.8(a) above.

12. AGENT.

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

12.2 Deposit Account with Agent or any Lender. Each Borrower authorizes Agent
and each Lender, in Agent’s or such Lender’s sole discretion, upon notice to
Agent to charge its general deposit account(s), if any, maintained with the
Agent or such Lender for the amount of any principal, interest, or other amounts
or costs due under this Agreement when the same become due and payable under the
terms of this Agreement or the Notes.

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

 

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Note as the holder thereof. Agent may employ agents and may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable to the Lenders (except as to money or property received by
them or their authorized agents), for the negligence or misconduct of any such
agent selected by it with reasonable care or for any action taken or omitted to
be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.

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

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

 

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

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

12.8 Knowledge of Default. It is expressly understood and agreed that the Agent
shall be entitled to assume that no Default or Event of Default has occurred and
is continuing, unless the officers of the Agent immediately responsible for
matters concerning this Agreement shall have received a written notice from a
Lender or a Borrower specifying such Default or Event of Default and stating
that such notice is a “notice of default”. Upon receiving such a notice, the

 

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Agent shall promptly notify each Lender of such Default or Event of Default and
provide each Lender with a copy of such notice and shall endeavor to provide
such notice to the Lenders within three (3) Business Days (but without any
liability whatsoever in the event of its failure to do so). The Agent shall also
furnish the Lenders, promptly upon receipt, with copies of all other notices or
other information required to be provided by any Borrower hereunder.

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

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

12.11 [Intentionally Omitted].

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

12.13 Agent’s Fees. Until the Indebtedness has been repaid and discharged in
full and no commitment to extend any credit hereunder is outstanding, Borrowers
shall pay to the Agent,

 

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as applicable, any agency or other fee(s) set forth (or to be set forth from
time to time) herein. The agency fees referred to in this Section 12.13 shall
not be refundable under any circumstances.

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

13. MISCELLANEOUS.

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

13.2 Choice of Law and Venue; Jury Trial Waiver. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
California, without regard to principles of conflicts of law. Each of Borrowers,
the Agent and Lenders hereby submits to the exclusive jurisdiction of the state
and Federal courts located in the State of California. THE UNDERSIGNED
ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT
MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH
PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT
OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR
AGREEMENT BETWEEN THE UNDERSIGNED PARTIES

13.3 Reference Provision. In the event the Jury Trial Waiver set forth above is
not enforceable, the parties elect to proceed under this Judicial Reference
Provision.

 

  (a) Mechanics.

 

  (i) With the exception of the items specified in clause (b), below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Agreement or any other document, instrument or agreement
between the undersigned parties (collectively in this Section, the “Loan
Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code

 

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of Civil Procedure (“CCP”), or their successor sections, which shall constitute
the exclusive remedy for the resolution of any Claim, including whether the
Claim is subject to the reference proceeding. Except as otherwise provided in
the Loan Documents, venue for the reference proceeding will be in the state or
federal court in the county or district where the real property involved in the
action, if any, is located or in the state or federal court in the county or
district where venue is otherwise appropriate under applicable law (the
“Court”).

 

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

 

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

 

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

 

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

 

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

 

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

 

  (d) Repeal. If the enabling legislation which provides for appointment of a
referee is repealed (and no successor statute is enacted), any dispute

 

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between the parties that would otherwise be determined by reference procedure
will be resolved and determined by arbitration. The arbitration will be
conducted by a retired judge or justice, in accordance with the California
Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time.
The limitations with respect to discovery set forth above shall apply to any
such arbitration proceeding.

 

  (e) THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND
CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND
NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND
FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL
APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF
OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

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

13.5 Closing Costs and Other Costs; Indemnification.

 

  (a) Borrowers shall pay or reimburse (a) Agent and its Affiliates for payment
of, on demand, all reasonable costs and expenses, including, by way of
description and not limitation, reasonable in-house and outside attorney fees
and advances, appraisal and accounting fees, lien search fees, and required
travel costs, incurred by Agent and its Affiliates in connection with the
commitment, consummation and closing of the loans contemplated hereby, or in
connection with the administration or enforcement of this Agreement or the other
Loan Documents (including the obtaining of legal advice regarding the rights and
responsibilities of the parties hereto) or any refinancing or restructuring of
the loans or Advances provided under this Agreement or the other Loan Documents,
or any amendment or modification thereof requested by a Borrower, and (b) Agent
and its Affiliates and each of the Lenders, as the case may be, for all stamp
and other taxes and duties payable or determined to be payable in connection
with the execution, delivery, filing or recording of this Agreement and the
other Loan Documents and the consummation of the transactions contemplated
hereby, and any and all liabilities with respect

 

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to or resulting from any delay in paying or omitting to pay such taxes or
duties. Furthermore, all reasonable costs and expenses, including without
limitation attorney fees, incurred by Agent and its Affiliates and, after the
occurrence and during the continuance of an Event of Default, by the Lenders in
revising, preserving, protecting, exercising or enforcing any of its or any of
the Lenders’ rights against a Borrower, or otherwise incurred by Agent and its
Affiliates and the Lenders in connection with any Event of Default or the
enforcement of the loans (whether incurred through negotiations, legal
proceedings or otherwise), including by way of description and not limitation,
such charges in any court or bankruptcy proceedings or arising out of any claim
or action by any person against Agent, its Affiliates, or any Lender which would
not have been asserted were it not for Agent’s or such Affiliate’s or Lender’s
relationship with Borrowers hereunder or otherwise, shall also be paid by
Borrowers. All of said amounts required to be paid by Borrowers hereunder and
not paid forthwith upon demand, as aforesaid, shall bear interest, from the date
incurred to the date payment is received by Agent, at the Prime-based Rate, plus
two percent (2%).

 

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

 

  (c) Each Borrower agrees to defend, indemnify and hold harmless Agent and each
Lender (and their respective Affiliates), and their respective employees,
agents, officers and directors from and against any and all claims, demands,
penalties, fines, liabilities, settlements, damages, costs or expenses of
whatever kind or nature (including without limitation, reasonable attorneys and
consultants fees, investigation and laboratory fees, environmental studies
required by Agent or any Lender in connection with the violation of Hazardous
Material Laws), court costs and litigation expenses, arising out of or related
to (i) the presence, use, disposal, release or threatened release of any
Hazardous Materials on, from or affecting any premises owned or occupied by any
Borrower in violation of or the non-compliance with applicable Hazardous
Material Laws, (ii) any personal

 

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injury (including wrongful death) or property damage (real or personal) arising
out of or related to such Hazardous Materials, (iii) any lawsuit or other
proceeding brought or threatened, settlement reached or governmental order or
decree relating to such Hazardous Materials, and/or (iv) complying or coming
into compliance with all Hazardous Material Laws (including the cost of any
remediation or monitoring required in connection therewith) or any other
Requirement of Law; provided, however, that Borrowers shall have no obligations
under this Section 13.5(c) with respect to claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses to the extent arising as a
result of the gross negligence or willful misconduct of the Agent or such
Lender, as the case may be. The obligations of Borrowers under this
Section 13.5(c) shall be in addition to any and all other obligations and
liabilities Borrowers may have to Agent or any of the Lenders at common law or
pursuant to any other agreement.

13.6 Notices.

 

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

 

  (b) Notices and other communications provided to any the Agent and the Lenders
party hereto under this Agreement or any other Loan Document may be delivered or
furnished by electronic communication (including email and Internet or intranet
websites) pursuant to procedures approved

 

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

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

13.8 Successors and Assigns; Participations; Assignments.

 

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

 

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

 

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

 

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

 

  (i) each such assignment shall be made on a pro rata basis, and shall be in a
minimum amount of the lesser of (x) Five Million Dollars

 

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

 

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

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

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

 

  (e) Borrowers and the Agent acknowledge that each of the Lenders may at any
time and from time to time, subject to the terms and conditions hereof, grant
participations in such Lender’s rights and obligations hereunder (on a pro rata
basis only) and under the other Loan Documents to any Person (other than a
natural person or to a Borrower or any of a Borrower’s Affiliates or
Subsidiaries); provided that any participation permitted

 

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hereunder shall comply with all applicable laws and shall be subject to a
participation agreement that incorporates the following restrictions:

 

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

 

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

 

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

 

  (f) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including its Notes, if any)

 

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to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledge or assignee for such Lender as a party hereto.

 

  (g) The Agent shall maintain at its principal office a copy of each Assignment
Agreement delivered to it and a register (the “Register”) for the recordation of
the names and addresses of the Lenders, the Percentages of such Lenders and the
principal amount of each type of Advance owing to each such Lender from time to
time. The entries in the Register shall be conclusive evidence, absent manifest
error, and Borrowers, the Agent, and the Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advances recorded therein
for all purposes of this Agreement. The Register shall be available for
inspection by Parent or any Lender upon reasonable notice to the Agent and a
copy of such information shall be provided to any such party on their prior
written request. The Agent shall give prompt written notice to Parent of the
making of any entry in the Register or any change in such entry.

 

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

 

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

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

13.10 Amendment and Waiver. No amendment or waiver of any provision of this
Agreement or any other Loan Document, nor consent to any departure by any
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Agent and the Majority Lenders (or by the Agent at the
written request of the Majority Lenders) or, if this Agreement expressly so
requires with respect to the subject matter thereof, by all Lenders (and, with
respect to any amendments to this Agreement or the other Loan Documents, by
Borrowers or the Guarantors that are signatories thereto), and then such waiver
or consent

 

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shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by the Lender or Lenders affected thereby, do any
of the following: (a) increase any Lender’s commitments hereunder, (b) reduce
the principal of, or interest on, any outstanding Indebtedness or any Fees or
other amounts payable hereunder, (c) postpone any date fixed for any payment of
principal of, or interest on, any outstanding Indebtedness or any Fees or other
amounts payable hereunder, (d) except as expressly permitted hereunder, release
all or substantially all of the collateral, or release any material guaranty
provided by any Person in favor of Agent and the Lenders, provided however that
Agent shall be entitled, without notice to or any further action or consent of
the Lenders, to release any collateral which a Borrower is permitted to sell,
assign or otherwise transfer in compliance with this Agreement or the other Loan
Documents or release any guaranty to the extent expressly permitted in this
Agreement or any of the other Loan Documents, (e) terminate or modify any
indemnity provided to the Lenders hereunder or under the other Loan Documents,
except as shall be otherwise expressly provided in this Agreement or any other
Loan Document, or (f) change the definitions of “Revolving Credit Percentage”,
“Weighted Percentage”, “Interest Periods”, “Majority Lenders”, “Majority
Revolving Credit Lenders”, or this Section 13.10; provided, further, that
notwithstanding the foregoing, the Revolving Credit Maturity Date may be
postponed or extended only with the consent of all of the Revolving Credit
Lenders and provided further, however, that no amendment, waiver, or consent
shall, unless in a writing signed by the Agent affect the rights or duties of
the Agent under this Agreement or any other Loan Document. All references in
this Agreement to “Lenders” or “the Lenders” shall refer to all Lenders, unless
expressly stated to refer to Majority Lenders (or the like).

The Agent shall, upon the written request of Parent, execute and deliver to
Parent such documents as may be necessary to evidence the release of any Person
from its obligations under the Loan Documents (including without limitation a
guaranty) if all of the Equity Interests of such Person that were held by a
Borrower are sold or otherwise transferred to any transferee other than Parent
or a Subsidiary of a Borrower as part of or in connection with any disposition
(whether by sale, by merger or by any other form of transaction) permitted in
accordance with the terms of this Agreement; provided that (i) Agent shall not
be required to execute any such release or subordination agreement on terms
which, in the Agent’s opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty or such release shall not in any manner discharge,
affect or impair the Indebtedness.

13.11 Confidentiality. Each Lender agrees that it will not disclose without the
prior consent of Parent (other than to its employees, its Subsidiaries, another
Lender, an Affiliate of a Lender or to its auditors or counsel) any information
with respect to Borrowers which is furnished pursuant to this Agreement or any
of the other Loan Documents; provided that any Lender may disclose any such
information (a) as has become generally available to the public or has been
lawfully obtained by such Lender from any third party under no duty of
confidentiality to Borrowers, (b) as may be required or appropriate in any
report, statement or testimony submitted to, or in respect to any inquiry, by,
any municipal, state or federal regulatory body having or claiming to have
jurisdiction over such Lender, including the Board of Governors of the Federal
Reserve System of the United States, the Office of the Comptroller of the
Currency or the Federal Deposit Insurance Corporation or similar organizations
(whether in the United

 

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States or elsewhere) or their successors, (c) as may be required or appropriate
in respect to any summons or subpoena or in connection with any litigation,
(d) in order to comply with any law, order, regulation, ruling or other
requirement of law applicable to such Lender, and (e) to any prospective
assignee or participant in accordance with Section 13.8(h) hereof.

13.12 Substitution of Lenders. If (a) any Lender has failed to fund its
Revolving Credit Percentage of any Revolving Credit Advance, or to fund a
Revolving Credit Advance to repay any Reimbursement Obligations, (b) the
obligation of any Lender to make Eurodollar-based Advances has been suspended
pursuant to Section 11.3 or 11.4, (c) any Lender has demanded compensation under
Section 11.5 or 11.6 (in each case, an “Affected Lender”), then the Agent or
Parent shall have the right to make written demand on the Affected Lender (with
a copy to Parent in the case of a demand by the Agent or with a copy to the
Agent in the case of a demand by Parent) to assign and the Affected Lender shall
assign, to one or more financial institutions that comply with the provisions of
Section 13.8 hereof (the “Purchasing Lender” or “Purchasing Lenders”) to
purchase the Advances of the Revolving Credit, of such Affected Lender
(including, without limitation, its participating interests in outstanding
Letters of Credit) and assume the commitment of the Affected Lender to extend
credit under the Revolving Credit (including without limitation its obligation
to purchase participations in Letters of Credit) under this Agreement. The
Affected Lender shall be obligated to sell its Advances of the Revolving Credit,
and assign its commitment to extend credit under the Revolving Credit (including
without limitation its obligations to purchase participations in Letters of
Credit) to such Purchasing Lender or Purchasing Lenders within ten (10) days
after receiving notice from Parent requiring it to do so, at an aggregate price
equal to the outstanding principal amount thereof, plus unpaid interest accrued
thereon up to but excluding the date of the sale. In connection with any such
sale, and as a condition thereof, Borrowers shall pay to the Affected Lender all
fees accrued for its account hereunder to but excluding the date of such sale,
plus, if demanded by the Affected Lender within ten (10) Business Days after
such sale, (i) the amount of any compensation which would be due to the Affected
Lender under Section 11.1 if Borrowers had prepaid the outstanding
Eurodollar-based Advances of the Affected Lender on the date of such sale and
(ii) any additional compensation accrued for its account under Sections 3.4(d),
11.5 and 11.6 to but excluding said date. Upon such sale, the Purchasing Lender
or Purchasing Lenders shall assume the Affected Lender’s commitment, and the
Affected Lender shall be released from its obligations hereunder to a
corresponding extent. If any Purchasing Lender is not already one of the
Lenders, the Affected Lender, as assignor, such Purchasing Lender, as assignee,
Borrowers and the Agent, shall enter into an Assignment Agreement pursuant to
Section 13.8 hereof, whereupon such Purchasing Lender shall be a Lender party to
this Agreement, shall be deemed to be an assignee hereunder and shall have all
the rights and obligations of a Lender with a Revolving Credit Percentage equal
to its ratable share of the then applicable Revolving Credit Aggregate
Commitment of the Affected Lender. In connection with any assignment pursuant to
this Section 13.12, Borrowers or the Purchasing Lender shall pay to the Agent
the administrative fee for processing such assignment referred to in
Section 13.8.

13.13 Withholding Taxes. If any Lender is not a “united states person” within
the meaning of Section 7701(a)(30) of the Internal Revenue Code, such Lender
shall promptly (but in any event prior to the initial payment of interest
hereunder or prior to its accepting any assignment under Section 13.8 hereof, as
applicable) deliver to the Agent two executed copies of (i) Internal Revenue
Service Form W-8BEN or any successor form specifying the applicable tax

 

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treaty between the United States and the jurisdiction of such Lender’s domicile
which provides for the exemption from withholding on interest payments to such
Lender, (ii) Internal Revenue Service Form W-8ECI or any successor form
evidencing that the income to be received by such Lender hereunder is
effectively connected with the conduct of a trade or business in the United
States or (iii) other evidence satisfactory to the Agent that such Lender is
exempt from United States income tax withholding with respect to such income;
provided, however, that such Lender shall not be required to deliver to Agent
the aforesaid forms or other evidence with respect to Advances to Borrowers, if
such Lender has assigned its entire interest hereunder (including its Revolving
Credit Commitment Amount, any outstanding Advances hereunder and participations
in Letters of Credit issued hereunder and any Notes issued to it by Borrowers),
to an Affiliate which is incorporated under the laws of the United States or a
state thereof, and so notifies the Agent. Such Lender shall amend or supplement
any such form or evidence as required to insure that it is accurate, complete
and non-misleading at all times. Promptly upon notice from the Agent of any
determination by the Internal Revenue Service that any payments previously made
to such Lender hereunder were subject to United States income tax withholding
when made, such Lender shall pay to the Agent the excess of the aggregate amount
required to be withheld from such payments over the aggregate amount actually
withheld by the Agent. In addition, from time to time upon the reasonable
request and the sole expense of Borrowers, each Lender and the Agent shall (to
the extent it is able to do so based upon applicable facts and circumstances),
complete and provide Parent with such forms, certificates or other documents as
may be reasonably necessary to allow such Borrower, as applicable, to make any
payment under this Agreement or the other Loan Documents without any withholding
for or on the account of any tax under Section 10.1(d) hereof (or with such
withholding at a reduced rate), provided that the execution and delivery of such
forms, certificates or other documents does not adversely affect or otherwise
restrict the rights and benefits (including without limitation economic
benefits) available to such Lender or the Agent, as the case may be, under this
Agreement or any of the other Loan Documents, or under or in connection with any
transactions not related to the transactions contemplated hereby.

13.14 Taxes and Fees. Should any tax (other than as a result of a Lender’s
failure to comply with Section 13.13 or a tax based upon the net income or
capitalization of any Lender or the Agent by any jurisdiction where a Lender or
the Agent is or has been located), or recording or filing fee become payable in
respect of this Agreement or any of the other Loan Documents or any amendment,
modification or supplement hereof or thereof, Borrowers agree to pay the same,
together with any interest or penalties thereon arising from any Borrower’s
actions or omissions, and agrees to hold the Agent and the Lenders harmless with
respect thereto. Notwithstanding the foregoing, nothing contained in this
Section 13.14 shall affect or reduce the rights of any Lender or the Agent under
Section 11.5 hereof.

13.15 [Intentionally Omitted].

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

 

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13.17 Complete Agreement; Conflicts. This Agreement, the Notes (if issued), any
Requests for Revolving Credit Advance, and the Loan Documents contain the entire
agreement of the parties hereto, superseding all prior agreements, discussions
and understandings relating to the subject matter hereof, and none of the
parties shall be bound by anything not expressed in writing. In the event of any
conflict between the terms of this Agreement and the other Loan Documents, this
Agreement shall govern.

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

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

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

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

13.22 Joint and Several Liability.

 

  (a) Each of the Borrowers acknowledges and agrees that it is the intent of the
parties that each such Borrower be primarily liable for the obligations as a
joint and several obligor. It is the intention of the parties that with respect
to liability of any Borrower hereunder arising solely by reason of its being
jointly and severally liable for Advances and other extensions of credit taken
by Borrower, the obligations of such Borrower shall be absolute, unconditional
and irrevocable irrespective of:

 

  (i) any lack of validity, legality or enforceability of this Agreement or any
Note as to any Borrower, as the case may be;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

  (b) Each of the Borrowers agrees that its joint and several liability
hereunder shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (in whole or in part) of any of the Indebtedness is
rescinded or must be restored by any Lender or any holder of any Note, upon the
insolvency, bankruptcy or reorganization of any Borrower, as the case may be, as
though such payment had not been made;

 

  (c) Each of the Borrowers hereby expressly waives: (i) notice of the Lenders’
acceptance of this Agreement; (ii) notice of the existence or creation or

 

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non payment of all or any of the Indebtedness other than notices expressly
provided for in this Agreement; (iii) presentment, demand, notice of dishonor,
protest, and all other notices whatsoever other than notices expressly provided
for in this Agreement; (iv) any claim or defense based on an election of
remedies; and (v) all diligence in collection or protection of or realization
upon the Indebtedness or any part thereof, any obligation hereunder, or any
security for or guaranty of any of the foregoing.

 

  (d) No delay on any of the Lenders part in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by any of
the Lenders of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy. No action of any of the
Lenders permitted hereunder shall in any way affect or impair any such Lenders’
rights or any Borrower’s Indebtedness under this Agreement.

 

  (e) Each of the Borrowers hereby represents and warrants to each of the
Lenders that it now has and will continue to have independent means of obtaining
information concerning the Borrowers’ affairs, financial condition and business.
Lenders shall not have any duty or responsibility to provide any Borrower with
any credit or other information concerning such Borrower’s affairs, financial
condition or business which may come into the Lenders’ possession.

 

  (f) Each of the Borrowers represents and warrants (i) that the business
operations of the Borrowers are interrelated and that the business operations of
the Borrowers complement one another, and such entities have a common business
purpose, and (ii) that, to permit their uninterrupted and continuous operations,
such entities now require and will from time to time hereafter require funds and
credit accommodations for general business purposes and that (iii) the proceeds
of advances under the Revolving Credit and the other credit facilities extended
hereunder will directly or indirectly benefit the Borrowers hereunder, severally
and jointly, regardless of which Borrower receives part or all of the proceeds
of such Advances.

 

  (g) Notwithstanding anything to the contrary contained herein, it is the
intention of the Borrowers, Agent and the Lenders that the amount of the
respective Borrowers’ obligations hereunder shall be in, but not in excess of,
the maximum amount thereof not subject to avoidance or recovery by operation of
applicable law governing bankruptcy, reorganization, arrangement, adjustment of
debts, relief of debtors, dissolution, insolvency, fraudulent transfers or
conveyances or other similar laws (collectively, “Applicable Insolvency Laws”).
To that end, but only in the event and to the extent that the Borrowers’
respective obligations hereunder or any payment made pursuant thereto would, but
for the operation of the foregoing proviso, be subject to avoidance or recovery

 

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under Applicable Insolvency Laws, the amount of the Borrowers’ respective
obligations hereunder shall be limited to the largest amount which, after giving
effect thereto, would not, under Applicable Insolvency Laws, render the
Borrower’s respective obligations hereunder unenforceable or avoidable or
subject to recovery under Applicable Insolvency Laws. To the extent any payment
actually made hereunder exceeds the limitation contained in this
Section 13.22(g), then the amount of such excess shall, from and after the time
of payment by the Borrowers (or any of them), be reimbursed by the Lenders upon
demand by such Borrowers. The foregoing proviso is intended solely to preserve
the rights of the Agent and the Lenders hereunder against the Borrowers to the
maximum extent permitted by Applicable Insolvency Laws and neither any Borrower
nor any Guarantor nor any other Person shall have any right or claim under this
Section 13.22(g) that would not otherwise be available under Applicable
Insolvency Laws.

13.23 Advertisements. The Agent and the Lenders may disclose the names of
Borrowers and the existence of the Indebtedness in general advertisements and
trade publications.

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

[Signatures Follow On Succeeding Page]

 

87

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

 

COMERICA BANK,

as Administrative Agent,

  

MICROSEMI CORPRORATION,

a Delaware corporation

By:  

/s/ Jennifer S. Seto

   By:  

/s/ David R. Sonksen

Its:   Vice President    Its:   Chief Financial Officer, Secretary & Treasurer  
  

MICROSEMI CORP. – POWER

PRODUCTS GROUP, a Delaware corporation

     By:  

/s/ David R. Sonksen

     Its:   Chief Financial Officer, Secretary & Treasurer     

MICROSEMI CORP. – INTEGRATED

PRODUCTS, a Delaware corporation

     By:  

/s/ David R. Sonksen

     Its:   Chief Financial Officer, Secretary & Treasurer     

MICROSEMI CORP. - MASSACHUSETTS,

a Delaware corporation

     By:  

/s/ David R. Sonksen

     Its:   Chief Financial Officer, Secretary & Treasurer

[Signature Page to Revolving Credit Agreement]

[Signatures Continued Next Page]

 

88

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MICROSEMI CORP. - SCOTTSDALE,

an Arizona corporation

By:  

/s/ David R. Sonksen

Its:   Chief Financial Officer, Secretary & Treasurer

 

COMERICA BANK,

as a Lender and as Issuing Lender

By:  

/s/ Jennifer S. Seto

Its:   Vice President

[Signature Page to Revolving Credit Agreement]

 

89

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Schedule 1.1

Applicable Margin Grid

Revolving Credit Facility

(basis points per annum)

 

Basis for Pricing

  

Level I

  

Level II

  

Level III

  

Level IV

Funded Debt/EBITDA*    < 0.50 to 1.00   

³ 0.50 to 1.00

but < 1.00 to 1.00

  

³ 1.00 to 1.00

but < 1.50 to 1.00

  

³ 1.50 to 1.00

but £ 2.00 to 1.00

Revolving Credit Eurodollar Margin    37.5    62.5    87.5    112.5 Revolving
Credit Prime-Based Rate Margin    (100)    (100)    (100)    (100) Revolving
Credit Commitment Fee    20    20    20    20
Letter of Credit Fees (exclusive of facing fees)    35    50    75    100

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

* Definitions as set forth in the Credit Agreement.

** Level I pricing shall be in effect until the delivery of the financial
statements for the quarter ending December 31, 2006, after which time the
pricing grid shall govern.

 

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Schedule 1.2

Lender Commitment Percentages

Revolving Credit Facility

 

Facility

  

Comerica Bank

  

[Lender 2]

  

[Lender 3]

  

TOTAL

Revolving Credit

   100%          100%

 

91

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Schedules

Schedule 5.2 – Jurisdictions

Schedule 6.1 - Corporate Authority

Schedule 6.3(b) – Real Property

Schedule 6.4 – Taxes

Schedule 6.7 - Compliance with Laws

Schedule 6.9 - Litigation

Schedule 6.10 - Consents, Approvals and Filings, Etc.

Schedule 6.13 – ERISA

Schedule 6.16 - Subsidiaries

Schedule 6.18 – Material Contracts

Schedule 6.19 – Tradenames

Schedule 6.23 – Employee Matters

Schedule 8.1 – Existing Debt

Schedule 8.2 – Existing Liens

Schedule 8.7 – Existing Investments

Schedule 8.8 - Transactions with Affiliates

Schedule 13.6 – Addresses

 

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Schedule 5.2

JURISDICTIONS

 

Entity

    

Jurisdiction of

Incorporation

    

Foreign Qualifications

Microsemi Corporation      Delaware      California, Texas Microsemi Corp. –
Power Products Group      Delaware      Oregon, Colorado Microsemi Corp. –
Integrated Products      Delaware      California, Florida, Texas Microsemi
Corp. – Massachusetts      Delaware      Massachusetts, California, [Ohio]
Microsemi Corp. – Scottsdale      Arizona      None

 

93

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Schedule 6.1

CORPORATE AUTHORITY

See Schedule 5.2

 

94

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Schedule 6.3(b)

REAL PROPERTY

Microsemi Corporation

Our headquarters are located in a rented building complex in Irvine, California.
This complex contains general office and engineering space.

Microsemi Corp. – Massachusetts

We lease one facility in Lawrence, Massachusetts and another facility in Lowell,
Massachusetts.

Microsemi Corp. – Scottsdale

We lease one facility in Scottsdale, Arizona.

Microsemi Corp. – Integrated Products

We own two facilities in Garden Grove, California.

Microsemi Corp. – Power Products Group

We lease three facilities in Bend, Oregon.

 

95

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Schedule 6.4

TAXES

[NONE.]

 

96

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Schedule 6.7

COMPLIANCE WITH LAWS

[NONE.]

 

97

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Schedule 6.9

LITIGATION

The Company is involved in various pending litigation matters arising out of the
normal conduct of our business, including without limitation litigation relating
to commercial transactions and contracts, and environmental matters. In the
opinion of management, the final outcome of these matters, if it were adverse,
will not have a material adverse effect on our financial position, results of
operations or cash flows.

In Broomfield, Colorado, the owner of a property located adjacent to a
manufacturing facility owned by Microsemi Corp. – Colorado (“the Subsidiary”)
had notified the Subsidiary and other parties of a claim that contaminants
migrated to his property, thereby diminishing its value. In August 1995, the
subsidiary, together with Coors Porcelain Company, FMC Corporation and Siemens
Microelectronics, Inc. (former owners of the manufacturing facility), agreed to
settle the claim and to indemnify the owner of the adjacent property for
remediation costs. Although TCE and other contaminants previously used by former
owners at the facility are present in soil and groundwater on the subsidiary’s
property, the Company vigorously contests any assertion that the subsidiary
caused the contamination. In November 1998, the Company signed an agreement with
the three former owners of this facility whereby they have 1) reimbursed the
Company for $530,000 of past costs, 2) assumed responsibility for 90% of all
future clean-up costs, and 3) promised to indemnify and protect the Company
against any and all third-party claims relating to the contamination of the
facility. An Integrated Corrective Action Plan was submitted to the State of
Colorado. Sampling and management plans were prepared for the Colorado
Department of Public Health & Environment. State and local agencies in Colorado
are reviewing current data and considering study and cleanup options. The most
recent forecast estimated that the total project cost, up to the year 2020,
would be approximately $5,300,000; accordingly, the Company recorded a one-time
charge of $530,000 for this project in fiscal year 2003. There has not been any
significant development since September 28, 2003.

 

98

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Schedule 6.10

CONSENTS, APPROVALS AND FILINGS, ETC

[NONE.]

 

99

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

Schedule 6.13

ERISA

[NONE.]

 

100

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

Schedule 6.16

SUBSIDIARIES

 

Name

   State Inc.    Ownership %

Microsemi Corp. – Santa Ana

   Delaware    100

Microsemi Corp. – Scottsdale

   Arizona    100

Microsemi Corp. – Colorado

   Colorado    100

Microsemi Corp. – Massachusetts

   Delaware    100

Microsemi Corp. – Integrated Products

   Delaware    100

Microsemi Corp. – Power Products Group

   Delaware    100

Microsemi Corp. - RF Power Products

   Delaware    100

Microsemi Corp. – Montgomeryville

   Delaware    100

Microsemi Corp. - Advanced Technology Center

   Delaware    100

Micro WaveSys, Inc.

   California    100

Microsemi Real Estate, Inc.

   California    100

Microsemi RF Products, Inc.

   Delaware    100

Microsemi Power Module Products, SAS

   Foreign    100

Micro (Bermuda), Ltd.

   Foreign    100

Microsemi Comercial Offshore de Macau Limitada

   Foreign    100

Microsemi Corp. – International

   Foreign    100

Shangai Microsemi Semiconductor Co. Ltd.

   Foreign    60

 

101

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Schedule 6.18

MATERIAL CONTRACTS

Incorporated by reference to the exhibits filed by the Company with the SEC, as
follows:

 

Sequential

Exhibit

Number

  

Description

2.6    Agreement and Plan of Merger dated as of November 2, 2005, by and among
the Company, APT Acquisition Corp, a Delaware corporation that is a wholly owned
subsidiary of the Company and Advanced Power Technology, Inc, and Advanced Power
Technology, Inc., a Delaware corporation, including the following exhibits:   
                                         Form of Voting Agreement   
                                         Form of Non-Competition Agreement   
                                         Form of Lock-up Agreement   
                                         Form of Option Assumption Agreement   
Exhibits omitted but to be made available to the SEC at the SEC’s request:.   
                                         Form of Employment Agreement   
                                         Form of Certificate of Merger   
                                         List of Parties to Ancillary Agreements
(18) 3    Bylaws of the Company* (1) 3.1    Amended and Restated Certificate of
Incorporation of the Company effective August 9, 2001* (6) 3.2    Certificate of
Designation of Series A Junior Participating Preferred Stock (4) 3.3   
Certificate of Amendment to Certificate of Designation of Series A Junior
Participating Preferred Stock (20) 4.1    Specimen certificate for the shares of
common stock of Microsemi (20) 4.2    Rights Agreement dated December 22, 2000
between the Company and Mellon Investor Services, LLC, as Rights Agent, and the
exhibits thereto (4) 4.2.1    Amendment No. One dated December 16, 2005 to
Rights Agreement dated December 22, 2000 between the Company and Mellon Investor
Services, LLC, as Rights Agent, and the exhibits thereto (20) 4.4    Advanced
Power Technology, Inc. Stock Option Plan dated December 31, 1995, as amended by
Amendments Nos. 1 and 2. (27) 4.4.1    Amendments Nos. 3, 4 and 5 to Stock
Option Plan dated December 31, 1995, as amended. (28) 4.4.2    Form of
Non-Qualified Stock Option Letter Agreement under the Advanced Power Technology,
Inc. Stock Option Plan dated December 31, 1995. (29) 4.4.3    Form of Incentive
Stock Option Letter Agreement under the Advanced Power Technology, Inc. Stock
Option Plan dated December 31, 1995. (29)

 

102

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4.4.4    Form of Non-Qualified Option Letter Agreement for Members of the Board
of Directors under the Advanced Power Technology, Inc. Stock Option Plan dated
December 31, 1995. (29) 4.5    Advanced Power Technology, Inc. Equity Incentive
Plan dated May 3, 2005. (30) 4.5.1    Form of Incentive Stock Option Letter
Agreement under the Advanced Power Technology, Inc. Equity Incentive Plan dated
May 3, 2005. (29) 4.5.2    Form of Non-Qualified Stock Option Letter Agreement
for Members of the Board of Directors under the Advanced Power Technology, Inc.
Equity Incentive Plan dated May 3, 2005. (29) 4.6    Form of Option Assumption
Agreement, entered into between the Registrant and each of the holders of
Advanced Power Technology, Inc. options assumed by Registrant (29) 10.13    The
Company’s 1987 Stock Plan, and amendments thereto* (7) 10.13.1    Adjustment of
1987 Plan for February 2004 Stock Split* (12) 10.78    Motorola-Microsemi
PowerMite(R) Technology Agreement (20) 10.84    Supplemental Executive
Retirement Plan* (2) 10.85    Credit Agreement, dated as of April 2, 1999, among
the Company, the Lenders from time to time party thereto and Canadian Imperial
Bank of Commerce, as Agent (3) 10.85.1    First Amendment dated as of June 25,
1999 to Credit Agreement dated April 2, 1999 (8) 10.85.2    Second Amendment
dated as of February 14, 2000 to Credit Agreement dated April 2, 1999 (8)
10.85.3    Third Amendment dated as of April 2, 2001 to Credit Agreement dated
April 2, 1999 (8) 10.85.4    Fourth Amendment dated as of May 25, 2002 to Credit
Agreement dated April 2, 1999 (8) 10.85.5    Fifth Amendment dated as of
December 5, 2002 to Credit Agreement dated April 2, 1999 (11) 10.85.6    Sixth
Amendment dated December 10, 2003 to Credit Agreement dated April 2, 1999 (12)
10.85.7    Seventh Amendment dated March 31, 2004 to Credit Agreement dated
April 2, 1999 (13) 10.85.8    Eighth Amendment dated March 31, 2004 to Credit
Agreement dated April 2, 1999 (13) 10.85.9    Ninth Amendment dated March 29,
2005 to Credit Agreement dated April 2, 1999 (15)

 

103

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10.85.10    Tenth Amendment dated as of June 1, 2006 to Credit Agreement dated
as of April 2, 1999 (23) 10.85.11    Eleventh Amendment dated as of June 28,
2006 to Credit Agreement dated as of April 2, 1999. (23) 10.85.12    Twelfth
Amendment dated as of July 14, 2006 to Credit Agreement dated as of April 2,
1999. (23) 10.86    Transition and Consulting Agreement dated January 24, 2001
between Mr. Philip Frey, Jr. and the Company* (5) 10.86.1    Agreement dated
April 1, 2002, executed May 13, 2002, between Philip Frey, Jr. and the Company,
amending the Transition and Consulting Agreement dated January 24, 2001* (9)
10.87    Agreements dated January 12, 2001 between James J. Peterson and the
Company* (5) 10.88    Agreement dated January 12, 2001 between David R. Sonksen
and the Company* (5) 10.91.1    Form of Stock Option Exchange Grant and
Replacement Option Agreement*(16) 10.91    Board Member Retirement Process *
(10) 10.92    Indemnification Agreement between the Company and each of the
following persons:* (11)

 

INDEMNITEE:

   Date:

Thomas R. Anderson

   5/05/03

Martin H. Jurick

   5/05/03

Dennis R. Leibel

   5/05/03

James J. Peterson

   5/05/03

Nick E. Yocca

   5/05/03

William E. Bendush

   5/05/03

William L. Healey

   5/05/03

Harold A. Blomquist

   6/03/03

Philip Frey, Jr.

   5/05/03

Robert B. Phinizy

   5/05/03

Paul R. Bibeau

   6/03/03

Ralph Brandi

   5/05/03

James H. Gentile

   5/12/03

John M. Holtrust

   5/29/03

John J. Petersen

   5/21/03

David R. Sonksen

   5/05/03

H.K. Desai

   5/05/03

Paul F. Folino

   7/20/04

Steven G. Litchfield

   2/25/04

 

104

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10.93    Form of Executive Retention Agreement* (14)

 

Date

  

Executive

  

Potential Payout as a Multiple of Pay

10/15/04    Ralph Brandi    Two (2) 10/15/04    John Holtrust    One (1)
10/15/04    James Gentile    One (1) 10/15/04    Steven Litchfield    One (1)

 

10.94    Form of Employee Stock Option Agreement prior to August 17, 2004* (14)
10.95    Form of Employee Stock Option Agreement from and after August 17, 2004*
(14) 10.96    Form of Non-Employee Stock Option Agreement* (14) 10.97   
Description of Cash Bonus Plan* (14) 10.98    Supplemental Medical Plan (14)
10.99    Form of Employee Stock Agreement from and after September 26, 2005*
(19) 10.100    Form of Amendment of Eligible Unvested Options* (17) 10.101   
Form of Voting Agreement between the Company and each of Patrick P.H. Sireta,
Russell Crecraft, Dah Weh Tsang, Greg Haugen and Thomas Loder (20) 10.102   
Form of Lock-up Agreement between the Company and each of Patrick P.H. Sireta,
Russell Crecraft, Dah Weh Tsang, Greg Haugen and Thomas Loder (20) 10.103   
Non-Competition Agreement between the Company and Patrick P.H. Sireta (20)
10.104    Settlement Agreement dated July 8, 1998 by and between Microsemi Corp.
– Colorado, FMC Corporation, Siemens Microelectronics, Inc. and Coors Porcelain
Company (21) 10.109    Form of Notice of Stock Option Grant and Employee Stock
Option Agreement from and after February 22, 2006 (22) 10.109.1    Form of
Notice of Stock Option Grant and Employee Stock Option Agreement from and after
March 28, 2006 (24) 10.110    Form of Notice of Stock Option Grant and
Non-Employee Stock Option Agreement from and after February 22, 2006 (22) 10.111
   Directors’ Compensation Policy prior to February 22, 2006 (25) 10.111.1   
Directors’ Compensation Policy from and after February 22, 2006 (25) 10.112   
Form of Voting Agreement (26)

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

(1) Filed in Registration Statement (No. 33-3845) and incorporated herein by
this reference.

(2) Incorporated by reference to the indicated Exhibit to the Company’s
Quarterly Report on Form 10-Q as filed on February 9, 1998 with the Commission
for the fiscal quarter ended December 28, 1997.

 

105

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(3) Incorporated by reference to the indicated Exhibit to the Company’s
Quarterly Report on Form 10-Q as filed on August 16, 1999 with the Commission
for the fiscal quarter ended July 4, 1999.

(4) Incorporated by reference to the indicated Exhibit to the Company’s
Registration Statement of Form 8-A12G as filed December 29, 2000

(5) Incorporated by reference to the indicated Exhibit to the Company’s
Quarterly Report on Form 10-Q as filed on February 13, 2001 with the Commission
for the fiscal quarter ended December 31, 2000.

(6) Incorporated by reference to the indicated Exhibit to the Company’s Current
Report on Form 8-K as filed on August 29, 2001.

(7) Incorporated by reference to the indicated Exhibit to the Company’s Annual
Report on Form 10-K filed on December 24, 2001 with the Commission for the
fiscal year ended September 30, 2001.

(8) Incorporated by reference to the indicated Exhibit to the Company’s
Quarterly Report on Form 10-Q as filed on August 12, 2002 with the Commission
for the fiscal quarter ended June 30, 2002.

(9) Incorporated by reference to the indicated Exhibit to the Company’s Current
Report on Form 8-K as filed on November 4, 2002.

(10) Incorporated by reference to the indicated Exhibit to the Company’s Annual
Report on Form 10-K filed on December 19, 2002 with the Commission for the
fiscal year ended September 29, 2002.

(11) Incorporated by reference to the indicated Exhibit to the Company’s Annual
Report on Form 10-K filed on December 19, 2003 with the Commission for the
fiscal year ended September 28, 2003.

(12) Incorporated by reference to the indicated Exhibit to the Company’s
Quarterly Report on Form 10-Q as filed on February 10, 2004 with the Commission
for the fiscal quarter ended December 28, 2003.

(13) Incorporated by reference to the indicated Exhibit to the Company’s Current
Report on Form 8-K as filed on March 28, 2004.

(14) Incorporated by reference to the indicated Exhibit to the Company’s Current
Report on Form 8-K as filed on September 24, 2004

(15) Incorporated by reference to the indicated Exhibit to the Company’s
Quarterly Report on Form 10-Q as filed on August 12, 2005 with the Commission
for the fiscal quarter ended July 3, 2005.

(16) Incorporated by reference to Exhibit 99(D)(2) to the Company’s Tender Offer
Statement on Schedule TO filed on November 1, 2002.

(17) Incorporated by reference to Exhibit 99(D)(2) to the Company’s Tender Offer
Statement on Schedule TO filed on August 17, 2005.

(18) Incorporated by reference to the indicated Exhibit to the Company’s Current
Report on Form 8-K as filed on November 7, 2005.

 

106

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(19) Incorporated by reference to the indicated Exhibit to the Company’s Current
Report on Form 8-K as filed on September 28, 2005.

(20) Incorporated by reference to the indicated Exhibit to the Registrant’s
Post-Effective Amendment No. 1 to Form S-4 (Reg. No. 333-130655) as filed on
April 27, 2006

(21) Incorporated by reference to the indicated Exhibit to the Registrant’s
Pre-Effective Amendment No. 2 to Form S-4 (Reg. No. 333-130655) as filed on
March 3, 2006.

(22) Incorporated by reference to the indicated Exhibit to the Registrant’s
Current Report on Form 8-K as filed on February 28, 2006.

(23) Incorporated by reference to the indicated Exhibit to the Registrant’s
Quarterly Report on Form 10-Q as filed on August 11, 2006.

(24) Incorporated by reference to the indicated Exhibit to the Registrant’s
Current Report on Form 8-K filed on April 3, 2006.

(25) Incorporated by reference to the indicated Exhibit to the Registrant’s
Current Report on Form 8-K as filed on October 5, 2006

(26) Incorporated by reference to the indicated Exhibit to the Registrant’s
Current Report on Form 8-K as filed on October 30, 2006.

(27) Incorporated by reference to the indicated Exhibit to the Registrant’s
Annual Report on Form 10-K as filed on December 16, 2005.

(28) Previously filed by Advanced Power Technology, Inc. (File No. 1-16047) on
June 2, 2000 as Exhibit 10.1 to its Registration Statement on Form S-1
(Registration No.333-38418) and incorporated herein by reference.

(29) Previously filed by Advanced Power Technology, Inc. (File No. 1-16047) on
March 8, 2005 as Exhibit 10.21 to its Annual Report on Form 10-K and
incorporated herein by reference.

(30) Incorporated by reference to the indicated Exhibit to the Registrant’s
Post-Effective Amendment No. 2 to Form S- on Form S-8 as filed on July 10, 2006.

 

107

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Schedule 6.19

TRADENAMES

 

Name

  

Other

Microsemi Corporation    Microsemi Irvine, CA    Microsemiconductor, Inc.
Microsemi Corp. – Santa Ana    Microsemi Santa Ana Santa Ana, CA    MSC
Microtech Microsemi (H.K.) Ltd.    Microsemi Hong Kong Shatin, Hong Kong    Hong
Kong Micro (Bermuda) Ltd.    Microsemi Ireland Ennis, County Clare, Ireland   
Micro Ennis Microsemi Corp. – Scottsdale    Microsemi Scottsdale, AZ   
Microsemi Scottsdale Microsemi Corp. – Colorado    Microsemi Colorado
Broomfield, CO    Micro Quality Semiconductor, Inc.    MQSI Garland, TX
(dissolved)    Microsemi Texas    Micro Texas Microsemi Corp. – Integrated
Products    Linfinity Garden Grove, CA    Linfinity Microelectronics, Inc   
MicroWaveSys    WaveSys    MicroPower Products Microsemi Corp. – Massachusetts
   MMP Location: Lowell, MA    Micro Lowell    BKC    BKC Semiconductors   
Microsemi Watertown    Sertech    USPD Location: Lawrence, MA    Micro NES   
NES    New England Semi    Lawrence    Micro CDI    CDI    Compensated Devices

 

108

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Schedule 6.23

EMPLOYEE MATTERS

OCSC Case No. 05CC07426. Former employee filed this employment action alleging
that he was terminated in 2005 in retaliation for audit reports he had prepared
in 2003 and earlier. In July 2006, the Superior Court granted the Company’s
motion for summary judgment and entered an order dismissing his complaint
against the Company in its entirety. Former complainant has notified the
Company, through counsel, that he intends to pursue an appeal of the summary
judgment against him. The Company intends to continue vigorously pursuing its
position in any appeal in this matter.

 

109

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Schedule 8.1

EXISTING DEBT

 

Capitalized lease (facility in Santa Ana and truck in Scottsdale)

   $ 3,224,000

Supplemental Executive Retirement Program

   $ 336,000

Comerica revolving line of credit, which expires in March 2008 ($30,000,000
limit)

   $ 400,000

INTER-COMPANY INDEBTEDNESS OF PARENT AND SUBSIDIARIES (IN THOUSANDS) (AS OF
OCTOBER 1, 2006)

 

Name

   O/S Debt (KS)  

Microsemi – Santa Ana

   (19,559 )

Microsemi (H.K.) Ltd.

   (7,804 )

Micro (Bermuda) Ltd.

   (10,000 )

Microsemi – Scottsdale

   (203,906 )

Microsemi – Colorado

   18,935  

Micro Quality Semiconductor, Inc.*

   10,263  

Microsemi – Integrated Products

   59,182  

Microsemi – Massachusetts

   (22,241 )

Microsemi – Power Products Group

   (14,626 )

Shanghai Microsemi Semi Co.

   145  

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

* Dissolved

 

110

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

Schedule 8.2

EXISTING LIENS

Comerica’s security interest in substantially all of the assets of the Company
in connection with its $30,000,000 credit facility.

 

111

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

Schedule 8.7

EXISTING INVESTMENTS

Schedule 6.16 of this Agreement is incorporated herein by reference.

 

112

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Schedule 8.8

TRANSACTIONS WITH AFFILIATES

[NONE.]

 

113

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Schedule 13.6

ADDRESSES

 

Microsemi Corporation   Microsemi Corp. – Santa Ana 2381 Morse Avenue   2830 S.
Fairview St. Irvine, CA 92614   Santa Ana, CA 92704 Microsemi Corp. – Scottsdale
  Microsemi Corp.- Colorado 8700 E. Thomas Road   800 Hoyt Street Scottsdale, AZ
85251-5073   Broomfield, CO 80020 Microsemi Corp. - Massachusetts  
MicroWaveSys, Inc. 6 Lake Street   6033 W. Century Blvd. Ste. 1200 Lawrence, MA
01841   Los Angeles, CA 90045 Microsemi Corp. – Integrated Products   Microsemi
Corp. - Massachusetts 11861 Western Avenue   75 Technology Drive Garden Grove,
CA 92841   Lowell, MA 01851 Microsemi Corp. – Power Products Group   Microsemi
Corp. – RF Power Products 405 SW Columbia Street   3000 Oakmead Village Drive
Bend. OR 97702   Santa Clara, CA 95051 Microsemi Corp. – Montgomeryville  
Microsemi Corp.–Advanced Technology Ctr 140 Commerce Drive   1855 SW 57th Court
Montgomeryville, PA 18936   Boulder, CO 80301 Microsemi Power Module Products
SAS   Micro (Bermuda) Ltd. Chemin De Magret   Gort Road, Industrial Estates
33700 Merignac   Ennis, County Clare, Ireland France   Microsemi (H.K.) Ltd.  
Shanghai Microsemi Semiconductor Co. Ltd. 5F-7F, Meeco Ind. Bldg   203 Shan Nan
Road 53-55 Au Pui Wan St., Fotan   Shanghai, P.R.C. Xin Zhuang Ind.   Shatin,
N.T. Hong Kong   Micro Macao Commercial Offshore Ltd.   Microsemi Corp. -
International 18th Floor, Unit D   c/o Wilmington Trust Corporate Services Bank
of China Bldg.   4th Floor, Century Yard, Cricket Square Avenida Doutor Mario
Soares   Elgin Avenue, P.O. Box 32322 Macau   Grand Cayman KY1-1209   Cayman
Islands

 

114

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EXHIBIT A

FORM OF REQUEST FOR REVOLVING CREDIT ADVANCE

 

No.                            

  Dated:                     , 20    

 

TO: Comerica Bank (“Agent”)

 

RE: Revolving Credit Agreement dated as of December 29, 2006 (as amended,
restated or otherwise modified from time to time, the “Credit Agreement”) by and
among the financial institutions from time to time signatory thereto
(individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”) and Microsemi Corporation (“Parent”),
Microsemi Corp. – Power Products Group, Microsemi Corp. – Integrated Products,
Microsemi Corp. – Massachusetts and Microsemi Corp. – Scottsdale (each, a
“Borrower” and collectively with Parent, “Borrowers”).

Pursuant to the terms and conditions of the Credit Agreement, Parent hereby
requests an Advance from Lenders, as described herein:

 

  (A) Date of Advance:

 

  (B) ¨ (check if applicable)

This Advance is or includes a whole or partial refunding/conversion of:

Advance No(s).                                         
                                    

 

  (C) Type of Advance (check only one):

¨ Prime-based Advance

¨ Eurodollar-based Advance

 

  (D) Amount of Advance:

$                                                 

 

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

             months (insert 1, 2, 3, or 6)

 

  (F) Disbursement Instructions

¨ Comerica Bank Account No.                                 

¨ Other:                                                                      

_____________________________________    

 

115

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

Borrowers certify to the matters specified in Section 2.3(f) of the Credit
Agreement.

Capitalized terms used herein, except as defined to the contrary, have the
meanings given them in the Credit Agreement.

 

MICROSEMI CORPORATION,

for itself and on behalf of all Borrowers

By:  

 

Its:  

 

Agent Approval:                                                 

 

116

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

EXHIBIT B

FORM OF REVOLVING CREDIT NOTE

 

$                                           , 20    

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED, MICROSEMI
CORPORATION, MICROSEMI CORP. – POWER PRODUCTS GROUP, MICROSEMI CORP. –
INTEGRATED PRODUCTS, MICROSEMI CORP. – MASSACHUSETTS AND MICROSEMI CORP. –
SCOTTSDALE (each, a “Borrower” and collectively, “Borrowers”), jointly and
severally, promise to pay to the order of [insert Bank] (“Lender”) at [Orange,
California], care of Agent, in lawful money of the United States of America, so
much of the sum of [Insert Amount derived from Percentages] Dollars
($                    ), as may from time to time have been advanced by Lender
and then be outstanding hereunder pursuant to the Revolving Credit Agreement
(“Agreement”) dated as of December 29, 2006, by and among the financial
institutions from time to time signatory thereto (individually a “Lender,” and
any and all such financial institutions collectively the “Lenders”), Comerica
Bank, as Administrative Agent for the Lenders (in such capacity, the “Agent”),
and Borrowers. Each of the Revolving Credit Advances made hereunder shall bear
interest at the Applicable Interest Rate from time to time applicable thereto
under the Credit Agreement or as otherwise determined thereunder, and interest
shall be computed, assessed and payable on the unpaid principal amount of each
Revolving Credit Advance made by the Lender from the date of such Revolving
Credit Advance until paid at the rate and at the times set forth in the Credit
Agreement.

This Note is a note under which Revolving Credit Advances (including refundings
and conversions), repayments and readvances may be made from time to time, but
only in accordance with the terms and conditions of the Credit Agreement. This
Note evidences borrowings under, is subject to, is secured in accordance with,
and may be accelerated or matured under, the terms of the Credit Agreement, to
which reference is hereby made. Capitalized terms used herein, except as defined
to the contrary, shall have the meanings given them in the Credit Agreement.

This Note shall be interpreted and the rights of the parties hereunder shall be
determined under the laws of, and enforceable in, the State of California.

Each Borrower hereby waives presentment for payment, demand, protest and notice
of dishonor and nonpayment of this Note and agree that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.

*    *    *

[SIGNATURES FOLLOW ON SUCCEEDING PAGE]

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

Nothing herein shall limit any right granted Lender by any other instrument or
by law.

 

MICROSEMI CORPORATION By:  

 

Its:  

 

MICROSEMI CORP. – POWER PRODUCTS GROUP By:  

 

Its:  

 

MICROSEMI CORP. – INTEGRATED PRODUCTS By:  

 

Its:  

 

MICROSEMI CORP. – MASSACHUSETTS By:  

 

Its:  

 

MICROSEMI CORP. – SCOTTSDALE By:  

 

Its:  

 

 

2

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

EXHIBIT C

FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT

 

TO: Lenders

 

RE: Issuance of Letter of Credit pursuant to Article 3 of the Revolving Credit
Agreement dated as of December 29, 2006 (as amended, restated or otherwise
modified from time to time, the “Credit Agreement”) by and among the financial
institutions from time to time signatory thereto (individually a “Lender,” and
any and all such financial institutions collectively the “Lenders”), Comerica
Bank, as Administrative Agent for the Lenders (in such capacity, the “Agent”)
and Microsemi Corporation (“Parent”), Microsemi Corp. – Power Products Group,
Microsemi Corp. – Integrated Products, Microsemi Corp. – Massachusetts and
Microsemi Corp. – Scottsdale (each, a “Borrower” and collectively with Parent,
“Borrowers”).

On                     , 20    ,1 Agent, in accordance with Article 3 of the
Credit Agreement, issued its Letter of Credit number                     , in
favor of                             2 for the account of MICROSEMI CORPORATION.
The face amount of such Letter of Credit is
$                                        . The amount of each Lender’s
participation in such Letter of Credit is as follows:3

 

Comerica Bank

   $                             

                    [Lender]

   $                             

                    [Lender]

   $                             

                    [Lender]

   $                             

This notification is delivered this              day of                     ,
20    , pursuant to Section 3.3 of the Credit Agreement. Except as otherwise
defined, capitalized terms used herein have the meanings given them in the
Credit Agreement.

 

Signed: COMERICA BANK, as Agent By:  

 

Its:  

 

 

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

1 Date of Issuance

2 Beneficiary

3 Amounts based on Percentages

[This form of Letter of Credit Notice (including footnotes) is subject in all
respects to the terms and conditions of the Credit Agreement which shall govern
in the event of any inconsistencies or omissions.]

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

EXHIBIT D

FORM OF LENDER ASSIGNMENT AGREEMENT

Date:                        

 

To: Microsemi Corporation, on behalf of all Borrowers

and

Comerica Bank (“Agent”)

 

Re: Revolving Credit Agreement (“Agreement”) dated as of December 29, 2006 (as
amended, restated or otherwise modified from time to time, the “Credit
Agreement”) by and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”) and Microsemi Corporation (“Parent”),
Microsemi Corp. – Power Products Group, Microsemi Corp. – Integrated Products,
Microsemi Corp. – Massachusetts and Microsemi Corp. – Scottsdale (each, a
“Borrower” and collectively with Parent, “Borrowers”).

Ladies and Gentlemen:

Reference is made to Section 13.8 of the Credit Agreement. Unless otherwise
defined herein or the context otherwise requires, all initially capitalized
terms used herein without definition shall have the meanings specified in the
Credit Agreement.

This Agreement constitutes notice to each of you of the proposed assignment and
delegation by [insert assignor Lender] (the “Assignor”) to [insert proposed
assignee] (the “Assignee”), and, subject to the terms and conditions of the
Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, effective on the
“Effective Date” (as hereafter defined) that undivided interest in each of
Assignor’s rights and obligations under the Credit Agreement and the other Loan
Documents in the amounts as set forth on the attached Schedule 1, such that,
after giving effect to the foregoing assignment and assumption, and the
concurrent assignment by Assignor to Assignee on the date hereof, the Assignee’s
interest in the Revolving Credit (and participations in any outstanding Letters
of Credit) shall be as set forth in the attached Schedule 2 with respect to the
Assignee.

The Assignor hereby instructs the Agent to make all payments from and including
the Effective Date hereof in respect of the interest assigned hereby, directly
to the Assignee. The Assignor and the Assignee agree that all interest and fees
accrued up to, but not including, the Effective Date of the assignment and
delegation being made hereby are the property of the Assignor, and not the
Assignee. The Assignee agrees that, upon receipt of any such interest or fees
accrued up to the Effective Date, the Assignee will promptly remit the same to
the Assignor.

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

The Assignee hereby confirms that it has received a copy of the Credit Agreement
and the exhibits and schedules referred to therein, and all other Loan Documents
which it considers necessary, together with copies of the other documents which
were required to be delivered under the Credit Agreement as a condition to the
making of the loans thereunder. The Assignee acknowledges and agrees that it:
(a) has made and will continue to make such inquiries and has taken and will
take such care on its own behalf as would have been the case had its Percentage
been granted and its loans been made directly by such Assignee to the Borrowers
without the intervention of the Agent, the Assignor or any other Lender; and
(b) has made and will continue to make, independently and without reliance upon
the Agent, the Assignor or any other Lender, and based on such documents and
information as it has deemed appropriate, its own credit analysis and decisions
relating to the Credit Agreement. The Assignee further acknowledges and agrees
that neither the Agent, nor the Assignor has made any representations or
warranties about the creditworthiness of the Borrowers or any other party to the
Credit Agreement or any other of the Loan Documents, or with respect to the
legality, validity, sufficiency or enforceability of the Credit Agreement, or
any other of the Loan Documents. This assignment shall be made without recourse
to or warranty by the Assignor, except as set forth herein.

Assignee represents and warrants that it is a Person to which assignments are
permitted pursuant to Section 13.8 of the Credit Agreement.

Except as otherwise provided in the Credit Agreement, effective as of the
Effective Date:

 

  1. the Assignee: (i) shall be deemed automatically to have become a party to
the Credit Agreement and the other Loan Documents, to have assumed all of the
Assignor’s obligations thereunder to the extent of the Assignee’s percentage
referred to in the second paragraph of this Assignment Agreement, and to have
all the rights and obligations of a party to the Credit Agreement and the other
Loan Documents, as if it were an original signatory thereto to the extent
specified in the second paragraph hereof; and (ii) agrees to be bound by the
terms and conditions set forth in the Credit Agreement and the other Loan
Documents as if it were an original signatory thereto; and

 

  2. the Assignor’s obligations under the Credit Agreement and the other Loan
Documents shall be reduced by the Percentage referred to in the second paragraph
of this Assignment Agreement.

As used herein, the term “Effective Date” means the date on which all of the
following have occurred or have been completed, as reasonably determined by the
Agent:

 

  (A) the delivery to the Agent of an original of this Assignment Agreement
executed by the Assignor and the Assignee;

 

  (B) the payment to the Agent, of all accrued fees, expenses and other items
for which reimbursement is then owing under the Credit Agreement;

 

  (C) the payment to the Agent of the processing fee referred to in
Section 13.8(d)(1) of the Credit Agreement (unless waived by Agent); and

 

2

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

  (D) all other restrictions and items noted in Section 13.8 of the Credit
Agreement have been completed.

The Agent shall notify the Assignor and the Assignee, along with Borrowers, of
the Effective Date.

The Assignee hereby advises each of you of the following administrative details
with respect to the assigned loans:

 

  (A) Address for Notices:

Institution Name:

Address:

Attention:

Telephone:

Facsimile:

 

  (B) Payment Instructions:

 

  (C) Proposed effective date of assignment.

The Assignee has delivered to the Agent (or is delivering to the Agent
concurrently herewith) the tax forms referred to in Section 13.12 of the Credit
Agreement to the extent required thereunder, and other forms reasonably
requested by the Agent. The Assignor has delivered to the Agent (or is
delivering to Agent concurrently herewith), the original of each Note held by
the Assignor under the Credit Agreement.

The laws of the State of California shall govern the validity, interpretation
and enforcement of this Agreement.

* * *

Signatures Follow on Succeeding Pages

 

3

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

Please evidence your consent to and acceptance of the proposed assignment and
delegation set forth herein by signing and returning counterparts hereof to the
Assignor and the Assignee.

 

[ASSIGNOR] By:  

 

Its:  

 

[ASSIGNEE] By:  

 

Its:  

 

 

4

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

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

 

COMERICA BANK, as Agent By:  

 

Its:  

 

MICROSEMI CORPORATION,

for itself and on behalf of all Borrowers*

By:  

 

Its:  

 

[*Parent’s consent will be required except as specified in Section 13.8 of the
Credit Agreement.]

[This form of Assignment Agreement (including footnotes) is subject in all
respects to the terms and conditions of the Credit Agreement which shall govern
in the event of any inconsistencies or omissions.]

 

5

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

EXHIBIT E

FORM OF COVENANT COMPLIANCE REPORT

 

TO: Comerica Bank, as Agent

RE:     Revolving Credit Agreement dated as of December 29, 2006 (as amended,
restated or otherwise modified from time to time, the “Credit Agreement”) by and
among the financial institutions from time to time signatory thereto
(individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank, as Administrative Agent for the
Lenders (in such capacity, the “Agent”) and Microsemi Corporation (“Parent”),
Microsemi Corp. – Power Products Group, Microsemi Corp. – Integrated Products,
Microsemi Corp. – Massachusetts and Microsemi Corp. – Scottsdale (each, a
“Borrower” and collectively with Parent, “Borrowers”).

This Covenant Compliance Report (“Report”) is furnished pursuant to
Section 7.2(a) of the Credit Agreement and sets forth various information as of
                    , 20     (the “Computation Date”).

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

  

Required

   Complies

Quarterly financial statements (10Q)

   Quarterly within 50 days (of 1st, 2d and 3rd fiscal quarters)    Yes      No

Annual (CPA Audited) (10K)

   FYE within 90 days    Yes      No

Compliance Cert.

   Quarterly within 50 days (and 90 days of FYE)    Yes      No

 

Financial Covenant

  

Required

  

Actual

   Complies

Measured on a Quarterly Basis:

             

Maximum Funded Debt to EBITDA

   2.00:1.00                :1.00    Yes      No

Minimum EBITDA (rolling 4-quarters)

   $20,000,000    $                        Yes      No

Parent’s Responsible Officer hereby certifies that:

A. To the best of my knowledge, all of the information set forth in this Report
(and in any Schedule attached hereto) is true and correct in all material
respects.

B. To the best of my knowledge, the representation and warranties of Borrowers
contained in the Credit Agreement and in the Loan Documents are true and correct
in all material

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

respects with the same effect as though such representations and warranties had
been made on and at the date hereof, except to the extent that such
representations and warranties expressly relate to an earlier specific date, in
which case such representations and warranties were true and correct in all
material respects as of the date when made.

C. I have reviewed the Credit Agreement and this Report is based on an
examination sufficient to assure that this Report is accurate.

D. To the best of my knowledge, except as stated in Schedule 5 hereto (which
shall describe any existing Default or Event of Default and the notice and
period of existence thereof and any action taken with respect thereto or
contemplated to be taken by Borrowers), no Default or Event of Default has
occurred and is continuing on the date of this Report.

Capitalized terms used in this Report and in the Schedules hereto, unless
specifically defined to the contrary, have the meanings given to them in the
Credit Agreement.

IN WITNESS WHEREOF, Parent has caused this Report to be executed and delivered
by Parent’s Responsible Officer this              day of
                        ,             .

 

Microsemi Corporation, for itself and on behalf of all Borrowers By:  

 

Its:  

 

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

Corporation Resolutions and Incumbency Certification

Authority to Procure Loans

I certify that I am the duly elected and qualified Secretary of MICROSEMI
CORPORATION (the “Corporation”); that the following is a true and correct copy
of resolutions duly adopted by the Board of Directors of the Corporation in
accordance with its bylaws and applicable statutes.

Copy of Resolutions:

Be it Resolved, That:

 

1. Any one (1) of the following David R. Sonksen, John W. Hohener, Hoang M. Ngo
and Mark. W. Lin of the Corporation are authorized, for, on behalf of, and in
the name of the Corporation to:

 

  (a) Negotiate and procure loans, letters of credit and other credit or
financial accommodations from the Lenders (including but not limited to Comerica
Bank, a Michigan banking corporation, as Agent and Lender) under and as defined
in that certain Revolving Credit Agreement dated as of December 29, 2006, as may
subsequently be amended from time to time.

 

  (b) Discount with the Agent and Lenders, commercial or other business paper
belonging to the Corporation made or drawn by or upon third parties, without
limit as to amount;

 

  (c) Purchase, sell, exchange, assign, endorse for transfer and/or deliver
certificates and/or instruments representing stocks, bonds, evidences of
Indebtedness or other securities owned by the Corporation, whether or not
registered in the name of the Corporation; and

 

  (d) Execute and deliver in form and content as may be required by the Agent
and Lenders any and all notes, evidences of Indebtedness, applications for
letters of credit, guaranties, subordination agreements, loan and security
agreements, financing statements, assignments, liens, deeds of trust, mortgages,
trust receipts and other agreements, instruments or documents to carry out the
purposes of these Resolutions, any or all of which may relate to all or to
substantially all of the Corporation’s property and assets.

 

2. Said Agent and Lenders be and are authorized and directed to pay the proceeds
of any such loans or discounts as directed by the persons so authorized to sign,
whether so payable to the order of any of said persons in their individual
capacities or not, and whether such proceeds are deposited to the individual
credit of any of said persons or not;

 

3. Any and all agreements, instruments and documents previously executed and
acts and things previously done to carry out the purposes of these Resolutions
are ratified, confirmed and approved as the act or acts of the Corporation.

 

4. These Resolutions shall continue in force, and the Agent and Lenders may
consider the holders of said offices and their signatures to be and continue to
be as set forth in a certified copy of these Resolutions delivered to the Agent
or the Lenders, until notice to the contrary in writing is duly served on the
Agent (such notice to have no effect on any action previously taken by the Agent
or the Lenders in reliance on these Resolutions).

 

5. Any person, corporation or other legal entity dealing with the Agent or the
Lenders may rely upon a certificate signed by an officer of the Agent or the
Lenders to effect that these Resolutions and any agreement, instrument or
document executed pursuant to them are still in full force and effect and
binding upon the Corporation.

 

- 1 -

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

6. Agent and the Lenders may consider the holders of the offices of the
Corporation and their signatures, respectively, to be and continue to be as set
forth in the Certificate of the Secretary of the Corporation until notice to the
contrary in writing is duly served on the Agent and the Lenders.

I further certify that the above Resolutions are in full force and effect as of
the date of this Certificate; that these Resolutions and any borrowings or
financial accommodations under these Resolutions have been properly noted in the
corporate books and records, and have not been rescinded, annulled, revoked or
modified; that neither the foregoing Resolutions nor any actions to be taken
pursuant to them are or will be in contravention of any provision of the
articles of incorporation or bylaws of the Corporation or of any agreement,
indenture or other instrument to which the Corporation is a party or by which it
is bound; and that neither the articles of incorporation nor bylaws of the
Corporation nor any agreement, indenture or other instrument to which the
Corporation is a party or by which it is bound require the vote or consent of
shareholders of the Corporation to authorize any act, matter or thing described
in the foregoing Resolutions.

I further certify that the following named persons have been duly elected to the
offices set opposite their respective names, that they continue to hold these
offices at the present time, and that the signatures which appear below are the
genuine, original signatures of each respectively:

(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)

 

NAME (Type or Print)

  

TITLE

  

SIGNATURE

David R. Sonksen   

Chief Financial Officer,

Secretary & Treasurer

  

/s/ David R. Sonksen

John W. Hohener    Vice President – Finance   

/s/ John W. Hohener

Hoang M. Ngo    Corporate Controller   

/s/ Hoang M. Ngo

Mark W. Lin    Asst. Corp. Controller   

/s/ Mark W. Lin

In Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal (where available) of said Corporation to be affixed on
December 29, 2006.

 

MICROSEMI CORPORATION

/s/ David R. Sonksen

Secretary

 

- 2 -

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

Corporation Resolutions and Incumbency Certification

Authority to Procure Loans

I certify that I am the duly elected and qualified Secretary of MICROSEMI CORP.
– POWER PRODUCTS GROUP (the “Corporation”); that the following is a true and
correct copy of resolutions duly adopted by the Board of Directors of the
Corporation in accordance with its bylaws and applicable statutes.

Copy of Resolutions:

Be it Resolved, That:

 

1. David R. Sonksen of the Corporation is authorized, for, on behalf of, and in
the name of the Corporation to:

 

  (a) Negotiate and procure loans, letters of credit and other credit or
financial accommodations from the Lenders (including but not limited to Comerica
Bank, a Michigan banking corporation, as Agent and Lender) under and as defined
in that certain Revolving Credit Agreement dated as of December 29, 2006, as may
subsequently be amended from time to time.

 

  (b) Discount with the Agent and Lenders, commercial or other business paper
belonging to the Corporation made or drawn by or upon third parties, without
limit as to amount;

 

  (c) Purchase, sell, exchange, assign, endorse for transfer and/or deliver
certificates and/or instruments representing stocks, bonds, evidences of
Indebtedness or other securities owned by the Corporation, whether or not
registered in the name of the Corporation; and

 

  (d) Execute and deliver in form and content as may be required by the Agent
and Lenders any and all notes, evidences of Indebtedness, applications for
letters of credit, guaranties, subordination agreements, loan and security
agreements, financing statements, assignments, liens, deeds of trust, mortgages,
trust receipts and other agreements, instruments or documents to carry out the
purposes of these Resolutions, any or all of which may relate to all or to
substantially all of the Corporation’s property and assets.

 

2. Said Agent and Lenders be and are authorized and directed to pay the proceeds
of any such loans or discounts as directed by the persons so authorized to sign,
whether so payable to the order of any of said persons in their individual
capacities or not, and whether such proceeds are deposited to the individual
credit of any of said persons or not;

 

3. Any and all agreements, instruments and documents previously executed and
acts and things previously done to carry out the purposes of these Resolutions
are ratified, confirmed and approved as the act or acts of the Corporation.

 

4. These Resolutions shall continue in force, and the Agent and Lenders may
consider the holders of said offices and their signatures to be and continue to
be as set forth in a certified copy of these Resolutions delivered to the Agent
or the Lenders, until notice to the contrary in writing is duly served on the
Agent (such notice to have no effect on any action previously taken by the Agent
or the Lenders in reliance on these Resolutions).

 

5. Any person, corporation or other legal entity dealing with the Agent or the
Lenders may rely upon a certificate signed by an officer of the Agent or the
Lenders to effect that these Resolutions and any agreement, instrument or
document executed pursuant to them are still in full force and effect and
binding upon the Corporation.

 

6. Agent and the Lenders may consider the holders of the offices of the
Corporation and their signatures, respectively, to be and continue to be as set
forth in the Certificate of the Secretary of the Corporation until notice to the
contrary in writing is duly served on the Agent and the Lenders.

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

I further certify that the above Resolutions are in full force and effect as of
the date of this Certificate; that these Resolutions and any borrowings or
financial accommodations under these Resolutions have been properly noted in the
corporate books and records, and have not been rescinded, annulled, revoked or
modified; that neither the foregoing Resolutions nor any actions to be taken
pursuant to them are or will be in contravention of any provision of the
articles of incorporation or bylaws of the Corporation or of any agreement,
indenture or other instrument to which the Corporation is a party or by which it
is bound; and that neither the articles of incorporation nor bylaws of the
Corporation nor any agreement, indenture or other instrument to which the
Corporation is a party or by which it is bound require the vote or consent of
shareholders of the Corporation to authorize any act, matter or thing described
in the foregoing Resolutions.

I further certify that the following named persons have been duly elected to the
offices set opposite their respective names, that they continue to hold these
offices at the present time, and that the signatures which appear below are the
genuine, original signatures of each respectively:

(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)

 

NAME (Type or Print)

  

TITLE

  

SIGNATURE

David R. Sonksen    Chief Financial Officer, Secretary & Treasurer   

/s/ David R. Sonksen

In Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal (where available) of said Corporation to be affixed on
December 29, 2006.

 

MICROSEMI CORP. – POWER PRODUCTS GROUP

/s/ David R. Sonksen

Secretary

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

Corporation Resolutions and Incumbency Certification

Authority to Procure Loans

I certify that I am the duly elected and qualified Secretary of MICROSEMI CORP.
– INTEGRATED PRODUCTS (the “Corporation”); that the following is a true and
correct copy of resolutions duly adopted by the Board of Directors of the
Corporation in accordance with its bylaws and applicable statutes.

Copy of Resolutions:

Be it Resolved, That:

 

1. David R. Sonksen of the Corporation is authorized, for, on behalf of, and in
the name of the Corporation to:

 

  (a) Negotiate and procure loans, letters of credit and other credit or
financial accommodations from the Lenders (including but not limited to Comerica
Bank, a Michigan banking corporation, as Agent and Lender) under and as defined
in that certain Revolving Credit Agreement dated as of December 29, 2006, as may
subsequently be amended from time to time.

 

  (b) Discount with the Agent and Lenders, commercial or other business paper
belonging to the Corporation made or drawn by or upon third parties, without
limit as to amount;

 

  (c) Purchase, sell, exchange, assign, endorse for transfer and/or deliver
certificates and/or instruments representing stocks, bonds, evidences of
Indebtedness or other securities owned by the Corporation, whether or not
registered in the name of the Corporation; and

 

  (d) Execute and deliver in form and content as may be required by the Agent
and Lenders any and all notes, evidences of Indebtedness, applications for
letters of credit, guaranties, subordination agreements, loan and security
agreements, financing statements, assignments, liens, deeds of trust, mortgages,
trust receipts and other agreements, instruments or documents to carry out the
purposes of these Resolutions, any or all of which may relate to all or to
substantially all of the Corporation’s property and assets.

 

2. Said Agent and Lenders be and are authorized and directed to pay the proceeds
of any such loans or discounts as directed by the persons so authorized to sign,
whether so payable to the order of any of said persons in their individual
capacities or not, and whether such proceeds are deposited to the individual
credit of any of said persons or not;

 

3. Any and all agreements, instruments and documents previously executed and
acts and things previously done to carry out the purposes of these Resolutions
are ratified, confirmed and approved as the act or acts of the Corporation.

 

4. These Resolutions shall continue in force, and the Agent and Lenders may
consider the holders of said offices and their signatures to be and continue to
be as set forth in a certified copy of these Resolutions delivered to the Agent
or the Lenders, until notice to the contrary in writing is duly served on the
Agent (such notice to have no effect on any action previously taken by the Agent
or the Lenders in reliance on these Resolutions).

 

5. Any person, corporation or other legal entity dealing with the Agent or the
Lenders may rely upon a certificate signed by an officer of the Agent or the
Lenders to effect that these Resolutions and any agreement, instrument or
document executed pursuant to them are still in full force and effect and
binding upon the Corporation.

 

6. Agent and the Lenders may consider the holders of the offices of the
Corporation and their signatures, respectively, to be and continue to be as set
forth in the Certificate of the Secretary of the Corporation until notice to the
contrary in writing is duly served on the Agent and the Lenders.

 

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

I further certify that the above Resolutions are in full force and effect as of
the date of this Certificate; that these Resolutions and any borrowings or
financial accommodations under these Resolutions have been properly noted in the
corporate books and records, and have not been rescinded, annulled, revoked or
modified; that neither the foregoing Resolutions nor any actions to be taken
pursuant to them are or will be in contravention of any provision of the
articles of incorporation or bylaws of the Corporation or of any agreement,
indenture or other instrument to which the Corporation is a party or by which it
is bound; and that neither the articles of incorporation nor bylaws of the
Corporation nor any agreement, indenture or other instrument to which the
Corporation is a party or by which it is bound require the vote or consent of
shareholders of the Corporation to authorize any act, matter or thing described
in the foregoing Resolutions.

I further certify that the following named persons have been duly elected to the
offices set opposite their respective names, that they continue to hold these
offices at the present time, and that the signatures which appear below are the
genuine, original signatures of each respectively:

(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)

 

NAME (Type or Print)

  

TITLE

  

SIGNATURE

David R. Sonksen    Chief Financial Officer, Secretary & Treasurer   

/s/ David R. Sonksen

In Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal (where available) of said Corporation to be affixed on
December 29, 2006.

 

MICROSEMI CORP. – INTEGRATED PRODUCTS

/s/ David R. Sonksen

Secretary

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

Corporation Resolutions and Incumbency Certification

Authority to Procure Loans

I certify that I am the duly elected and qualified Secretary of MICROSEMI CORP.
– MASSACHUSETTS (the “Corporation”); that the following is a true and correct
copy of resolutions duly adopted by the Board of Directors of the Corporation in
accordance with its bylaws and applicable statutes.

Copy of Resolutions:

Be it Resolved, That:

 

1. David R. Sonksen of the Corporation are/is authorized, for, on behalf of, and
in the name of the Corporation to:

 

  (a) Negotiate and procure loans, letters of credit and other credit or
financial accommodations from the Lenders (including but not limited to Comerica
Bank, a Michigan banking corporation, as Agent and Lender) under and as defined
in that certain Revolving Credit Agreement dated as of December 29, 2006, as may
subsequently be amended from time to time.

 

  (b) Discount with the Agent and Lenders, commercial or other business paper
belonging to the Corporation made or drawn by or upon third parties, without
limit as to amount;

 

  (c) Purchase, sell, exchange, assign, endorse for transfer and/or deliver
certificates and/or instruments representing stocks, bonds, evidences of
Indebtedness or other securities owned by the Corporation, whether or not
registered in the name of the Corporation; and

 

  (d) Execute and deliver in form and content as may be required by the Agent
and Lenders any and all notes, evidences of Indebtedness, applications for
letters of credit, guaranties, subordination agreements, loan and security
agreements, financing statements, assignments, liens, deeds of trust, mortgages,
trust receipts and other agreements, instruments or documents to carry out the
purposes of these Resolutions, any or all of which may relate to all or to
substantially all of the Corporation’s property and assets.

 

2. Said Agent and Lenders be and are authorized and directed to pay the proceeds
of any such loans or discounts as directed by the persons so authorized to sign,
whether so payable to the order of any of said persons in their individual
capacities or not, and whether such proceeds are deposited to the individual
credit of any of said persons or not;

 

3. Any and all agreements, instruments and documents previously executed and
acts and things previously done to carry out the purposes of these Resolutions
are ratified, confirmed and approved as the act or acts of the Corporation.

 

4. These Resolutions shall continue in force, and the Agent and Lenders may
consider the holders of said offices and their signatures to be and continue to
be as set forth in a certified copy of these Resolutions delivered to the Agent
or the Lenders, until notice to the contrary in writing is duly served on the
Agent (such notice to have no effect on any action previously taken by the Agent
or the Lenders in reliance on these Resolutions).

 

5. Any person, corporation or other legal entity dealing with the Agent or the
Lenders may rely upon a certificate signed by an officer of the Agent or the
Lenders to effect that these Resolutions and any agreement, instrument or
document executed pursuant to them are still in full force and effect and
binding upon the Corporation.

 

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

6. Agent and the Lenders may consider the holders of the offices of the
Corporation and their signatures, respectively, to be and continue to be as set
forth in the Certificate of the Secretary of the Corporation until notice to the
contrary in writing is duly served on the Agent and the Lenders.

I further certify that the above Resolutions are in full force and effect as of
the date of this Certificate; that these Resolutions and any borrowings or
financial accommodations under these Resolutions have been properly noted in the
corporate books and records, and have not been rescinded, annulled, revoked or
modified; that neither the foregoing Resolutions nor any actions to be taken
pursuant to them are or will be in contravention of any provision of the
articles of incorporation or bylaws of the Corporation or of any agreement,
indenture or other instrument to which the Corporation is a party or by which it
is bound; and that neither the articles of incorporation nor bylaws of the
Corporation nor any agreement, indenture or other instrument to which the
Corporation is a party or by which it is bound require the vote or consent of
shareholders of the Corporation to authorize any act, matter or thing described
in the foregoing Resolutions.

I further certify that the following named persons have been duly elected to the
offices set opposite their respective names, that they continue to hold these
offices at the present time, and that the signatures which appear below are the
genuine, original signatures of each respectively:

(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)

 

NAME (Type or Print)

  

TITLE

  

SIGNATURE

David R. Sonksen

   Chief Financial Officer, Secretary & Treasurer   

/s/ David R. Sonksen

In Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal (where available) of said Corporation to be affixed on
December 29, 2006.

 

MICROSEMI CORP. – MASSACHUSETTS

/s/ David R. Sonksen

Secretary

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

Corporation Resolutions and Incumbency Certification

Authority to Procure Loans

I certify that I am the duly elected and qualified Secretary of MICROSEMI CORP.
– SCOTTSDALE (the “Corporation”); that the following is a true and correct copy
of resolutions duly adopted by the Board of Directors of the Corporation in
accordance with its bylaws and applicable statutes.

Copy of Resolutions:

Be it Resolved, That:

 

1. David R. Sonksen of the Corporation is authorized, for, on behalf of, and in
the name of the Corporation to:

 

  (a) Negotiate and procure loans, letters of credit and other credit or
financial accommodations from the Lenders (including but not limited to Comerica
Bank, a Michigan banking corporation, as Agent and Lender) under and as defined
in that certain Revolving Credit Agreement dated as of December 29, 2006, as may
subsequently be amended from time to time.

 

  (b) Discount with the Agent and Lenders, commercial or other business paper
belonging to the Corporation made or drawn by or upon third parties, without
limit as to amount;

 

  (c) Purchase, sell, exchange, assign, endorse for transfer and/or deliver
certificates and/or instruments representing stocks, bonds, evidences of
Indebtedness or other securities owned by the Corporation, whether or not
registered in the name of the Corporation; and

 

  (d) Execute and deliver in form and content as may be required by the Agent
and Lenders any and all notes, evidences of Indebtedness, applications for
letters of credit, guaranties, subordination agreements, loan and security
agreements, financing statements, assignments, liens, deeds of trust, mortgages,
trust receipts and other agreements, instruments or documents to carry out the
purposes of these Resolutions, any or all of which may relate to all or to
substantially all of the Corporation’s property and assets.

 

2. Said Agent and Lenders be and are authorized and directed to pay the proceeds
of any such loans or discounts as directed by the persons so authorized to sign,
whether so payable to the order of any of said persons in their individual
capacities or not, and whether such proceeds are deposited to the individual
credit of any of said persons or not;

 

3. Any and all agreements, instruments and documents previously executed and
acts and things previously done to carry out the purposes of these Resolutions
are ratified, confirmed and approved as the act or acts of the Corporation.

 

4. These Resolutions shall continue in force, and the Agent and Lenders may
consider the holders of said offices and their signatures to be and continue to
be as set forth in a certified copy of these Resolutions delivered to the Agent
or the Lenders, until notice to the contrary in writing is duly served on the
Agent (such notice to have no effect on any action previously taken by the Agent
or the Lenders in reliance on these Resolutions).

 

5. Any person, corporation or other legal entity dealing with the Agent or the
Lenders may rely upon a certificate signed by an officer of the Agent or the
Lenders to effect that these Resolutions and any agreement, instrument or
document executed pursuant to them are still in full force and effect and
binding upon the Corporation.

 

6. Agent and the Lenders may consider the holders of the offices of the
Corporation and their signatures, respectively, to be and continue to be as set
forth in the Certificate of the Secretary of the Corporation until notice to the
contrary in writing is duly served on the Agent and the Lenders.

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

I further certify that the above Resolutions are in full force and effect as of
the date of this Certificate; that these Resolutions and any borrowings or
financial accommodations under these Resolutions have been properly noted in the
corporate books and records, and have not been rescinded, annulled, revoked or
modified; that neither the foregoing Resolutions nor any actions to be taken
pursuant to them are or will be in contravention of any provision of the
articles of incorporation or bylaws of the Corporation or of any agreement,
indenture or other instrument to which the Corporation is a party or by which it
is bound; and that neither the articles of incorporation nor bylaws of the
Corporation nor any agreement, indenture or other instrument to which the
Corporation is a party or by which it is bound require the vote or consent of
shareholders of the Corporation to authorize any act, matter or thing described
in the foregoing Resolutions.

I further certify that the following named persons have been duly elected to the
offices set opposite their respective names, that they continue to hold these
offices at the present time, and that the signatures which appear below are the
genuine, original signatures of each respectively:

(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)

 

NAME (Type or Print)

  

TITLE

  

SIGNATURE

David R. Sonksen

   Chief Financial Officer, Secretary & Treasurer   

/s/ David R. Sonksen

In Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal (where available) of said Corporation to be affixed on
December 29, 2006.

 

MICROSEMI CORP. – SCOTTSDALE

/s/ David R. Sonksen

Secretary

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

ATTN:

MICROSEMI CORPORATION

MICROSEMI CORP. – POWER PRODUCTS GROUP

MICROSEMI CORP. – INTEGRATED PRODUCTS

MICROSEMI CORP. – MASSACHUSETTS

AND MICROSEMI CORP. – SCOTTSDALE

USA PATRIOT ACT

NOTICE

OF

CUSTOMER IDENTIFICATION

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account.

WHAT THIS MEANS FOR YOU: when you open an account, we will ask your name,
address, date of birth, and other information that will allow us to identify
you. We may also ask to see your driver’s license or other identifying
documents.

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

COMERICA BANK

Member FDIC

ITEMIZATION OF AMOUNT FINANCED

DISBURSEMENT INSTRUCTIONS

(Revolver)

 

Name(s): MICROSEMI CORPORATION, on behalf of all Borrowers    Date: December 29,
2006 $75,000,000    credited to deposit account No.                      when
Advances are requested by Microsemi Corporation Amounts paid to others on your
behalf:    $    to Comerica Bank for Loan Fee $    to Comerica Bank for Document
Fee $    to Comerica Bank for accounts receivable audit (estimate) $    to Bank
counsel fees and expenses $    to                                  $    to
                                 $    TOTAL (AMOUNT FINANCED)

Upon consummation of this transaction, this document will also serve as the
authorization for Comerica Bank to disburse the loan proceeds as stated above.

 

MICROSEMI CORPORATION,

for itself and on behalf of all Borrowers

    

MICROSEMI CORPORATION,

for itself and on behalf of all Borrowers

 

    

 

Signature      Signature

 

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

COMERICA BANK

Member FDIC

AUTOMATIC DEBIT AUTHORIZATION

To: Comerica Bank

Re: Loan #                     

You are hereby authorized and instructed to charge account
No.                      in the name of

MICROSEMI CORPORATION

for principal interest and other payments due on above referenced loan as set
forth below and credit the loan referenced above.

x      Debit each interest payment as it becomes due according to the terms of
the Loan and Security Agreement and any renewals or amendments thereof.

x      Debit each principal payment as it becomes due according to the terms of
the Loan and Security Agreement and any renewals or amendments thereof.

x      Debit each payment for Bank Expenses as it becomes due according to the
terms of the Loan and Security Agreement and any renewals or amendments thereof.

This Authorization is to remain in full force and effect until revoked in
writing.

 

Borrower Signature

    

Date

 

    

December 29, 2006                                     

 

    

December 29, 2006