Exhibit 10.1

 

 

 

CREDIT AGREEMENT

 

by and among

 

EMRISE CORPORATION

 

and

 

EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

 

as Borrowers,

 

THE LENDERS THAT ARE SIGNATORIES HERETO

 

as the Lenders,

 

and

 

GVEC RESOURCE IV INC.

 

as the Arranger and Agent

 

Dated as of November 30, 2007

 

 

 

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1.

DEFINITIONS AND CONSTRUCTION

1

 

 

 

 

1.1

Definitions

1

 

1.2

Accounting Terms

1

 

1.3

Code

1

 

1.4

Construction

1

 

1.5

Schedules and Exhibits

2

 

1.6

Currency Conversion

2

 

 

 

 

2.

LOAN AND TERMS OF PAYMENT

2

 

 

 

 

2.1

Making of Loans

2

 

2.2

Term Loans

3

 

2.3

Borrowing Procedures

4

 

2.4

Payments

7

 

2.5

Overadvances

10

 

2.6

Interest: Rates, Payments, and Calculations

10

 

2.7

Cash Management

11

 

2.8

Crediting Payments

12

 

2.9

Designated Account

12

 

2.10

[Intentionally Omitted]

12

 

2.11

Fees

12

 

2.12

[Intentionally Omitted]

13

 

2.13

Joint and Several Liability of Borrowers

13

 

2.14

Registered Notes

15

 

 

 

 

3.

CONDITIONS; TERM OF AGREEMENT

16

 

 

 

 

3.1

Conditions Precedent to the Initial Extension of Credit

16

 

3.2

Conditions Precedent to all Extensions of Credit; Special Conditions Precedent
to Term Loan B

16

 

3.3

Term

18

 

3.4

Effect of Termination

19

 

3.5

Early Termination by Borrowers

19

 

3.6

Conditions Subsequent to Extensions of Credit

19

 

 

 

 

4.

REPRESENTATIONS AND WARRANTIES

21

 

 

 

 

4.1

No Encumbrances

21

 

4.2

Accounts

21

 

4.3

Inventory

21

 

4.4

Equipment

21

 

4.5

Location of Inventory and Equipment

21

 

4.6

Inventory Records

21

 

4.7

State of Incorporation; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims

22

 

4.8

Due Organization and Qualification; Subsidiaries

22

 

4.9

Due Authorization; No Conflict

23

 

4.10

Litigation

23

 

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4.11

No Material Adverse Change

23

 

4.12

Fraudulent Transfer

24

 

4.13

Employee Benefits

24

 

4.14

Environmental Condition

24

 

4.15

Intellectual Property

25

 

4.16

Leases

26

 

4.17

Deposit Accounts and Securities Accounts

26

 

4.18

Complete Disclosure

27

 

4.19

Indebtedness

27

 

4.20

Regulation U

27

 

4.21

Taxes

27

 

4.22

Compliance with Law, Etc

27

 

4.23

Adverse Agreements, Etc

28

 

4.24

Permits, Etc

28

 

4.25

Insurance

28

 

4.26

Employee and Labor Matters

28

 

4.27

Material Contracts

29

 

4.28

Capacity

29

 

4.29

Investment Company Acts

29

 

4.30

The IFN Credit Facility

29

 

4.31

The Lloyds Credit Facility

29

 

4.32

The Wells Fargo Credit Facility

29

 

 

 

 

5.

AFFIRMATIVE COVENANTS

29

 

 

 

 

5.1

Accounting System

30

 

5.2

Collateral Reporting

30

 

5.3

Financial Statements, Reports, Certificates

30

 

5.4

Appraisal

30

 

5.5

Inspection

30

 

5.6

Maintenance of Properties

30

 

5.7

Taxes

30

 

5.8

Insurance

31

 

5.9

Location of Inventory and Equipment

31

 

5.10

Compliance with Laws

31

 

5.11

Leases

32

 

5.12

Existence

32

 

5.13

Environmental

32

 

5.14

Disclosure Updates

32

 

5.15

Control Agreements

32

 

5.16

Assignment of Proceeds

32

 

5.17

Employee Benefits

33

 

5.18

Formation of Subsidiaries

33

 

5.19

Adequate Reserves

34

 

5.20

Designated Payments

34

 

 

 

 

6.

NEGATIVE COVENANTS

34

 

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6.1

Indebtedness

34

 

6.2

Liens

35

 

6.3

Restrictions on Fundamental Changes

35

 

6.4

Disposal of Assets

35

 

6.5

Change Name

35

 

6.6

Nature of Business

35

 

6.7

Prepayments and Amendments

36

 

6.8

Change of Control

36

 

6.9

Consignments

36

 

6.10

Distributions

36

 

6.11

Accounting Methods

36

 

6.12

Investments

36

 

6.13

Transactions with Affiliates

37

 

6.14

Use of Proceeds

37

 

6.15

Inventory and Equipment with Bailees

37

 

6.16

Financial Covenants

37

 

6.17

No Transactions Prohibited Under ERISA; Unfunded Liability

40

 

6.18

Salaries

41

 

6.19

Obtaining of Permits, Etc

41

 

6.20

UK Subsidiaries

41

 

6.21

Changes to Accounts

41

 

 

 

 

7.

EVENTS OF DEFAULT

41

 

 

 

 

8.

THE LENDER GROUP’S RIGHTS AND REMEDIES

43

 

8.1

Rights and Remedies

43

 

8.2

Remedies Cumulative

44

 

 

 

 

9.

TAXES AND EXPENSES

44

 

 

 

 

10.

WAIVERS; INDEMNIFICATION; RELEASE

45

 

 

 

 

 

10.1

Demand; Protest; etc

45

 

10.2

The Lender Group’s Liability for Collateral

45

 

10.3

Costs and Expenses

45

 

10.4

Indemnification

45

 

 

 

 

11.

NOTICES

46

 

 

 

 

12.

CHOICE OF LAW AND VENUE; JUDICIAL REFERENCE; WAIVER OF JURY TRIAL; SERVICE OF
PROCESS

47

 

 

 

 

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

49

 

 

 

 

 

13.1

Assignments and Participations

49

 

13.2

Successors

53

 

 

 

 

14.

AMENDMENTS; WAIVERS

53

 

iii

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14.1

Amendments and Waivers

53

 

14.2

No Waivers; Cumulative Remedies

54

 

 

 

 

15.

AGENT; THE LENDER GROUP

54

 

 

 

 

 

15.1

Appointment and Authorization of Agent

54

 

15.2

Delegation of Duties

55

 

15.3

Liability of Agent

55

 

15.4

Reliance by Agent

55

 

15.5

Notice of Default or Event of Default

56

 

15.6

Credit Decision

56

 

15.7

Costs and Expenses; Indemnification

57

 

15.8

Agent in Individual Capacity

57

 

15.9

Successor Agent

58

 

15.10

Lender in Individual Capacity

58

 

15.11

Withholding Taxes

58

 

15.12

Collateral Matters

62

 

15.13

Restrictions on Actions by Lenders; Sharing of Payments

62

 

15.14

Agency for Perfection

63

 

15.15

Payments by Agent to the Lenders

63

 

15.16

Concerning the Collateral and Related Loan Documents

63

 

15.17

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

63

 

15.18

Several Obligations; No Liability

64

 

15.19

No Consequential Damages

65

 

 

 

 

16.

GENERAL PROVISIONS

65

 

 

 

 

 

16.1

Effectiveness

65

 

16.2

Section Headings

65

 

16.3

Interpretation

65

 

16.4

Severability of Provisions

65

 

16.5

Counterparts; Electronic Execution

65

 

16.6

Revival and Reinstatement of Obligations

66

 

16.7

Confidentiality

66

 

16.8

Integration

66

 

16.9

Parent as Agent for Borrowers

67

 

16.10

Compliance With USA Patriot Act

67

 

iv

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CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of November 30,
2007, by and among the lenders identified on the signature pages hereof (such
lenders, together with their respective successors and permitted assigns, are
referred to hereinafter each individually as a “Lender” and collectively as the
“Lenders”), GVEC RESOURCE IV INC., a company organized under the laws of the
British Virgin Islands, as the arranger and administrative agent for the Lenders
(in such capacity, together with its successors and assigns in such capacity,
“Agent”), EMRISE CORPORATION, a Delaware corporation (“Parent”), and each of
Parent’s Subsidiaries identified on the signature pages hereof (such
Subsidiaries, together with Parent, are referred to hereinafter each
individually as a “Borrower,” and collectively, jointly and severally, as the
“Borrowers”).

 

INTRODUCTION

 

All defined terms not otherwise defined above or in this Introduction Statement
are as defined in Schedule 1.1 or as defined elsewhere herein.

 

The Borrowers have requested that the Lenders agree to make available a secured
credit facility of up to $23,000,000, the proceeds of which will be used to pay
certain specified obligations of the Borrowers, to fund general working capital
requirements and to make certain specified acquisitions.

 

Subject to the terms and conditions set forth herein, Agent is willing to act as
agent for the Lenders and each Lender is willing to make loans to the Borrowers
in an aggregate amount not in excess of its Commitment hereunder.

 

Accordingly, the parties hereto hereby agree as follows:

 

1.             DEFINITIONS AND CONSTRUCTION.

 

1.1           DEFINITIONS. EXCEPT AS OTHERWISE PROVIDED HEREIN, CAPITALIZED
TERMS USED IN THIS AGREEMENT SHALL HAVE THE MEANINGS SPECIFIED THEREFOR ON
SCHEDULE 1.1.

 

1.2           ACCOUNTING TERMS. ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED
HEREIN SHALL BE CONSTRUED IN ACCORDANCE WITH GAAP. WHEN USED HEREIN, THE TERM
“FINANCIAL STATEMENTS” SHALL INCLUDE THE NOTES AND SCHEDULES THERETO. WHENEVER
THE TERM “BORROWERS” OR THE TERM “PARENT” IS USED IN RESPECT OF A FINANCIAL
COVENANT OR A RELATED DEFINITION, IT SHALL BE UNDERSTOOD TO MEAN PARENT AND ITS
SUBSIDIARIES ON A CONSOLIDATED BASIS UNLESS THE CONTEXT CLEARLY REQUIRES
OTHERWISE.

 

1.3           CODE. ANY TERMS USED IN THIS AGREEMENT THAT ARE DEFINED IN THE
CODE SHALL BE CONSTRUED AND DEFINED AS SET FORTH IN THE CODE UNLESS OTHERWISE
DEFINED HEREIN, PROVIDED, HOWEVER, THAT TO THE EXTENT THAT THE CODE IS USED TO
DEFINE ANY TERM HEREIN AND SUCH TERM IS DEFINED DIFFERENTLY IN DIFFERENT
DIVISIONS OF THE CODE, THE DEFINITION OF SUCH TERM CONTAINED IN ARTICLE 9 SHALL
GOVERN.

 

1.4           CONSTRUCTION. UNLESS THE CONTEXT OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT CLEARLY REQUIRES OTHERWISE, REFERENCES TO THE PLURAL INCLUDE THE
SINGULAR, REFERENCES TO

 

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THE SINGULAR INCLUDE THE PLURAL, THE TERMS “INCLUDES” AND “INCLUDING” ARE NOT
LIMITING, THE TERM “OR” HAS, EXCEPT WHERE OTHERWISE INDICATED, THE INCLUSIVE
MEANING REPRESENTED BY THE PHRASE “AND/OR,” AND ANY PROVISION THAT IS SET FORTH
HEREIN AS PART OF A LIST OR SERIES IS TO BE CONSTRUED IN A MANNER THAT DOES NOT
RESULT IN DUPLICATION OF ANY OTHER PROVISION IN SUCH LIST OR SERIES. THE WORDS
“HEREOF,” “HEREIN,” “HEREBY,” “HEREUNDER,” AND SIMILAR TERMS IN THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT REFER TO THIS AGREEMENT OR SUCH OTHER LOAN DOCUMENT,
AS THE CASE MAY BE, AS A WHOLE AND NOT TO ANY PARTICULAR PROVISION OF THIS
AGREEMENT OR SUCH OTHER LOAN DOCUMENT, AS THE CASE MAY BE. SECTION, SUBSECTION,
CLAUSE, SCHEDULE, AND EXHIBIT REFERENCES HEREIN ARE TO THIS AGREEMENT UNLESS
OTHERWISE SPECIFIED. ANY REFERENCE IN THIS AGREEMENT OR IN THE OTHER LOAN
DOCUMENTS TO ANY AGREEMENT, INSTRUMENT, OR DOCUMENT SHALL INCLUDE ALL
ALTERATIONS, AMENDMENTS, CHANGES, EXTENSIONS, MODIFICATIONS, RENEWALS,
REPLACEMENTS, SUBSTITUTIONS, JOINDERS, AND SUPPLEMENTS, THERETO AND THEREOF, AS
APPLICABLE (SUBJECT TO ANY RESTRICTIONS ON SUCH ALTERATIONS, AMENDMENTS,
CHANGES, EXTENSIONS, MODIFICATIONS, RENEWALS, REPLACEMENTS, SUBSTITUTIONS,
JOINDERS, AND SUPPLEMENTS SET FORTH HEREIN). ANY REFERENCE HEREIN TO THE
SATISFACTION OR REPAYMENT IN FULL OF THE OBLIGATIONS SHALL MEAN THE REPAYMENT IN
FULL IN CASH (OR CASH COLLATERALIZATION IN ACCORDANCE WITH THE TERMS HEREOF) OF
ALL OBLIGATIONS OTHER THAN CONTINGENT INDEMNIFICATION OBLIGATIONS. ANY REFERENCE
HEREIN TO ANY PERSON SHALL BE CONSTRUED TO INCLUDE SUCH PERSON’S SUCCESSORS AND
ASSIGNS. ANY REQUIREMENT OF A WRITING CONTAINED HEREIN OR IN THE OTHER LOAN
DOCUMENTS SHALL BE SATISFIED BY THE TRANSMISSION OF A RECORD AND ANY RECORD
TRANSMITTED SHALL CONSTITUTE A REPRESENTATION AND WARRANTY AS TO THE ACCURACY
AND COMPLETENESS OF THE INFORMATION CONTAINED THEREIN.

 

1.5           SCHEDULES AND EXHIBITS. ALL OF THE SCHEDULES AND EXHIBITS ATTACHED
TO THIS AGREEMENT SHALL BE DEEMED INCORPORATED HEREIN BY REFERENCE.

 

1.6           CURRENCY CONVERSION. ALL REFERENCES TO MONETARY AMOUNTS HEREIN
SHALL BE TO U.S. DOLLARS. WITH RESPECT TO ANY AMOUNTS NOT DENOMINATED IN U.S.
DOLLARS AND REQUIRED FOR OR RELATED TO ANY TERM OR DEFINITION HEREUNDER,
BORROWER SHALL CONVERT SUCH NON-U.S. DOLLAR DENOMINATED AMOUNTS TO THE AMOUNT OF
U.S. DOLLARS THAT WOULD BE REQUIRED TO PURCHASE SUCH NON-U.S. DOLLAR DENOMINATED
AMOUNTS ON THE APPLICABLE DATE OF DETERMINATION BASED ON THE RATE AT WHICH ANY
APPLICABLE CURRENCY MAY BE EXCHANGED INTO DOLLARS, AS SET FORTH ON SUCH DATE ON
THE RELEVANT BLOOMBERG KEY CROSS CURRENCY RATES SCREEN AT OR ABOUT 11:00 A.M.,
LONDON TIME, ON SUCH DATE.

 

2.             LOAN AND TERMS OF PAYMENT.

 

2.1           MAKING OF LOANS.

 

(A)           MAKING OF ADVANCES. SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, ON AND AFTER THE CLOSING DATE AND PRIOR TO THE REVOLVER MATURITY
DATE, EACH LENDER AGREES TO MAKE SUCH PORTION OF THE ADVANCES TO BORROWERS IN AN
AMOUNT EQUAL TO SUCH LENDER’S PRO RATA SHARE OF THE THEN EXTANT REVOLVER
COMMITMENT; PROVIDED THAT ADVANCES SHALL BE MADE IN AN AGGREGATE AMOUNT NOT TO
EXCEED THE LESSER OF: (Y) THE MAXIMUM REVOLVER AMOUNT; AND (Z) THE BORROWING
BASE.

 

(B)           NOTHING TO THE CONTRARY IN THIS SECTION 2.1 NOTWITHSTANDING, AGENT
SHALL HAVE THE RIGHT TO ESTABLISH RESERVES IN SUCH AMOUNTS AS AGENT IN ITS
PERMITTED DISCRETION SHALL

 

2

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DEEM NECESSARY OR APPROPRIATE, AGAINST THE BORROWING BASE, INCLUDING RESERVES
WITH RESPECT TO (I) SUMS THAT BORROWERS ARE REQUIRED TO PAY BY ANY SECTION OF
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (SUCH AS TAXES, ASSESSMENTS, INSURANCE
PREMIUMS, ENVIRONMENTAL LIABILITIES, OR, IN THE CASE OF LEASED ASSETS, RENTS OR
OTHER AMOUNTS PAYABLE UNDER SUCH LEASES) AND HAVE FAILED TO PAY, AND (II)
AMOUNTS OWING BY BORROWERS TO ANY PERSON TO THE EXTENT SECURED BY A LIEN ON, OR
TRUST OVER, ANY OF THE COLLATERAL (OTHER THAN A PERMITTED LIEN), WHICH LIEN OR
TRUST, IN THE PERMITTED DISCRETION OF AGENT, LIKELY WOULD HAVE A PRIORITY
SUPERIOR TO THE AGENT’S LIENS (SUCH AS LIENS OR TRUSTS IN FAVOR OF LANDLORDS,
WAREHOUSEMEN, CARRIERS, MECHANICS, MATERIALMEN, LABORERS, OR SUPPLIERS, OR LIENS
OR TRUSTS FOR AD VALOREM, EXCISE, SALES, OR OTHER TAXES WHERE GIVEN PRIORITY
UNDER APPLICABLE LAW) IN AND TO SUCH ITEM OF THE COLLATERAL, TO THE EXTENT THAT
THE SUMS AND AMOUNTS DESCRIBED IN CLAUSES (I) AND (II) ABOVE EXCEED $250,000 IN
THE AGGREGATE.

 

(C)           THE OUTSTANDING UNPAID PRINCIPAL AMOUNT OF ADVANCES AND ALL
ACCRUED AND UNPAID INTEREST ON ADVANCES SHALL BE DUE AND PAYABLE ON THE EARLIER
OF:  (I) THE REVOLVER MATURITY DATE; AND (II) THE TERMINATION OF THIS AGREEMENT,
WHETHER BY ITS TERMS, BY PREPAYMENT, OR BY ACCELERATION. ALL ADVANCES AND ALL
ACCRUED AND UNPAID INTEREST ON ADVANCES SHALL CONSTITUTE OBLIGATIONS. AMOUNTS
BORROWED PURSUANT TO THIS SECTION 2.1 MAY BE REPAID AND, SUBJECT TO THE TERMS
AND CONDITIONS OF THIS AGREEMENT, REBORROWED AT ANY TIME PRIOR TO THE REVOLVER
MATURITY DATE. BORROWERS MAY ONLY REQUEST ADVANCES OF AT LEAST $100,000 AND
INTEGRAL MULTIPLES OF $100,000 IN EXCESS THEREOF, EXCEPT IN THE CASE OF AN
ADVANCE WHICH, IF MADE, WOULD RESULT IN THE AGGREGATE AMOUNT OF ADVANCES
EQUALING THE LESSER OF (Y) THE MAXIMUM REVOLVER AMOUNT AND (Z) THE BORROWING
BASE.

 

2.2           TERM LOANS.

 

(A)           SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, ON THE
CLOSING DATE, EACH LENDER AGREES TO MAKE TERM LOANS (COLLECTIVELY, THE “TERM
LOAN A”) TO BORROWERS IN AN AMOUNT EQUAL TO SUCH LENDER’S PRO RATA SHARE OF THE
TERM LOAN A COMMITMENT.

 

(B)           SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, FROM TIME
TO TIME DURING THE TERM LOAN B COMMITMENT PERIOD, EACH LENDER AGREES TO MAKE
TERM LOANS (COLLECTIVELY, THE “TERM LOAN B”) TO BORROWERS IN AN AGGREGATE AMOUNT
EQUAL TO SUCH LENDER’S PRO RATA SHARE OF THE TERM LOAN B COMMITMENT.

 

(C)           ALL AMOUNTS OUTSTANDING UNDER THE TERM LOANS SHALL CONSTITUTE
OBLIGATIONS. NO PORTION OF THE TERM LOANS WHICH IS REPAID OR PREPAID MAY BE
REBORROWED. THE TERM LOANS SHALL BE REPAID IN INSTALLMENTS AS SET FORTH IN THE
TABLES SET FORTH IN SUBSECTIONS (D) AND (E) BELOW; PROVIDED, HOWEVER, THAT THE
OUTSTANDING UNPAID PRINCIPAL BALANCE AND ALL ACCRUED AND UNPAID INTEREST UNDER
THE TERM LOANS SHALL BE DUE AND PAYABLE ON NOVEMBER 30, 2010 OR SUCH EARLIER
DATE OF TERMINATION OF THIS AGREEMENT, WHETHER BY PREPAYMENT, OR BY
ACCELERATION.

 

(D)           SUBJECT TO SUBSECTION (C) ABOVE, THE PRINCIPAL OF TERM LOAN A
SHALL BE REPAID IN INSTALLMENTS AS FOLLOWS:

 

(I)            COMMENCING DECEMBER 1, 2008, AND CONTINUING ON THE FIRST DAY OF
EACH OF THE 11 CONSECUTIVE MONTHS THEREAFTER, EQUAL INSTALLMENTS OF $50,000; AND

 

3

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(II)           COMMENCING ON DECEMBER 1, 2009, AND CONTINUING ON THE FIRST DAY
OF EACH OF THE 11 CONSECUTIVE MONTHS THEREAFTER, EQUAL INSTALLMENTS OF $120,000.

 

(E)           SUBJECT TO SUBSECTION (C) ABOVE, THE PRINCIPAL OF TERM LOAN B
SHALL BE REPAID IN INSTALLMENTS AS FOLLOWS:

 

(I)            COMMENCING ON JUNE 1, 2009 AND CONTINUING ON THE FIRST DAY OF
EACH OF THE 5 CONSECUTIVE MONTHS THEREAFTER, INSTALLMENTS EQUAL TO THE QUOTIENT
OF (X) 10% OF THE AGGREGATE TERM LOAN B AMOUNT (AS OF THE TERM LOAN B COMMITMENT
EXPIRY DATE) AND (Y) SIX; AND

 

(II)           COMMENCING ON DECEMBER 1, 2009, AND CONTINUING ON THE FIRST DAY
OF EACH OF THE 11 CONSECUTIVE MONTHS THEREAFTER, INSTALLMENTS EQUAL TO THE
QUOTIENT OF (X) 20% OF THE AGGREGATE TERM LOAN B AMOUNT (AS OF THE TERM LOAN B
COMMITMENT EXPIRY DATE) AND (Y) TWELVE.

 

2.3           BORROWING PROCEDURES.

 

(A)           GENERALLY.

 

(I)            EACH BORROWING OF A LOAN SHALL BE MADE BY AN IRREVOCABLE WRITTEN
REQUEST BY AN AUTHORIZED PERSON DELIVERED TO AGENT. SUCH NOTICE MUST BE RECEIVED
BY AGENT NO LATER THAN 10:00 A.M. (CALIFORNIA TIME) ON THE CLOSING DATE, OR IF
APPLICABLE, THEREAFTER ON THE BUSINESS DAY THAT IS ONE (1) BUSINESS DAY PRIOR TO
THE REQUESTED FUNDING DATE SPECIFYING (I) THE PERTINENT LOAN, AND (II) THE
REQUESTED FUNDING DATE, WHICH SHALL BE A BUSINESS DAY. AT AGENT’S ELECTION, IN
LIEU OF DELIVERING THE ABOVE-DESCRIBED WRITTEN REQUEST, ANY AUTHORIZED PERSON
MAY GIVE AGENT TELEPHONIC NOTICE OF SUCH REQUEST BY THE REQUIRED TIME. IN SUCH
CIRCUMSTANCES, BORROWERS AGREE THAT ANY SUCH TELEPHONIC NOTICE WILL BE CONFIRMED
IN WRITING WITHIN 24 HOURS OF THE GIVING OF SUCH TELEPHONIC NOTICE, BUT THE
FAILURE TO PROVIDE SUCH WRITTEN CONFIRMATION SHALL NOT AFFECT THE VALIDITY OF
THE REQUEST. EACH REQUEST FOR THE BORROWING OF AN ADVANCE SHALL BE ACCOMPANIED
BY THE CONCURRENT DELIVERY TO AGENT OF A COMPLETE AND EXECUTED BORROWING BASE
CERTIFICATE.

 

(II)           UNLESS AGENT RECEIVES NOTICE FROM A LENDER PRIOR TO 9:00 A.M.
(CALIFORNIA TIME) ON THE DATE OF A BORROWING THAT SUCH LENDER WILL NOT MAKE
AVAILABLE AS AND WHEN REQUIRED HEREUNDER TO AGENT FOR THE ACCOUNT OF BORROWERS
THE AMOUNT OF THAT LENDER’S PRO RATA SHARE OF THE BORROWING, AGENT MAY ASSUME
THAT EACH APPLICABLE LENDER HAS MADE OR WILL MAKE SUCH AMOUNT AVAILABLE TO AGENT
IN IMMEDIATELY AVAILABLE FUNDS ON THE FUNDING DATE AND AGENT MAY (BUT SHALL NOT
BE SO REQUIRED), IN RELIANCE UPON SUCH ASSUMPTION, MAKE AVAILABLE TO BORROWERS
ON SUCH DATE A CORRESPONDING AMOUNT. IF AND TO THE EXTENT ANY APPLICABLE LENDER
SHALL NOT HAVE MADE ITS FULL AMOUNT AVAILABLE TO AGENT IN IMMEDIATELY AVAILABLE
FUNDS AND AGENT IN SUCH CIRCUMSTANCES HAS MADE AVAILABLE TO BORROWERS SUCH
AMOUNT, THAT LENDER SHALL ON THE BUSINESS DAY FOLLOWING SUCH FUNDING DATE MAKE
SUCH AMOUNT AVAILABLE TO AGENT, TOGETHER WITH INTEREST AT THE DEFAULTING LENDER
RATE FOR EACH DAY DURING SUCH PERIOD. A NOTICE SUBMITTED BY AGENT TO ANY LENDER
WITH RESPECT TO AMOUNTS OWING UNDER THIS SUBSECTION SHALL BE CONCLUSIVE, ABSENT
MANIFEST ERROR. IF SUCH AMOUNT IS SO MADE AVAILABLE, SUCH PAYMENT TO AGENT SHALL
CONSTITUTE SUCH LENDER’S PORTION OF THE LOAN ON THE DATE OF BORROWING FOR ALL
PURPOSES OF THIS

 

4

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AGREEMENT. IF SUCH AMOUNT IS NOT MADE AVAILABLE TO AGENT ON THE BUSINESS DAY
FOLLOWING THE FUNDING DATE, AGENT WILL NOTIFY ADMINISTRATIVE BORROWER OF SUCH
FAILURE TO FUND AND, UPON DEMAND BY AGENT, BORROWERS SHALL PAY SUCH AMOUNT TO
AGENT FOR AGENT’S ACCOUNT, TOGETHER WITH INTEREST THEREON FOR EACH DAY ELAPSED
SINCE THE DATE OF SUCH BORROWING, AT A RATE PER ANNUM EQUAL TO THE INTEREST RATE
APPLICABLE AT THE TIME TO THE LOAN COMPRISING SUCH BORROWING.

 

(III)          BORROWERS SHALL BORROW PURSUANT TO SECTION 2.2(A) AN AMOUNT EQUAL
TO THE TERM LOAN A COMMITMENT IN A SINGLE DRAWING.

 

(IV)          SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS SECTION 2.3(A),
EACH LENDER SHALL MAKE THE AMOUNT OF SUCH LENDER’S PRO RATA SHARE OF THE
REQUESTED BORROWING AVAILABLE TO AGENT IN IMMEDIATELY AVAILABLE FUNDS, TO
AGENT’S ACCOUNT, NOT LATER THAN 10:00 A.M. (CALIFORNIA TIME) ON THE FUNDING DATE
APPLICABLE THERETO. AFTER AGENT’S RECEIPT OF SUCH FUNDS, AGENT SHALL MAKE SUCH
FUNDS AVAILABLE TO ADMINISTRATIVE BORROWER ON THE APPLICABLE FUNDING DATE BY
TRANSFERRING IMMEDIATELY AVAILABLE FUNDS EQUAL TO SUCH PROCEEDS RECEIVED BY
AGENT TO ADMINISTRATIVE BORROWER’S DESIGNATED ACCOUNT; PROVIDED, HOWEVER, THAT
AGENT SHALL NOT REQUEST ANY LENDER TO MAKE, AND NO LENDER SHALL HAVE THE
OBLIGATION TO MAKE, ANY PORTION OF THE APPLICABLE LOAN IF AGENT SHALL HAVE
ACTUAL KNOWLEDGE THAT ONE OR MORE OF THE APPLICABLE CONDITIONS PRECEDENT SET
FORTH IN SECTION 3 WILL NOT BE SATISFIED ON THE REQUESTED FUNDING DATE FOR THE
APPLICABLE BORROWING UNLESS SUCH CONDITION HAS BEEN WAIVED.

 

(V)           AGENT SHALL NOT BE OBLIGATED TO TRANSFER TO A DEFAULTING LENDER
ANY PAYMENTS RESPECTING THE LOAN MADE BY BORROWERS TO AGENT FOR THE DEFAULTING
LENDER’S BENEFIT, AND, IN THE ABSENCE OF SUCH TRANSFER TO THE DEFAULTING LENDER,
AGENT SHALL TRANSFER ANY SUCH PAYMENTS TO EACH OTHER NON-DEFAULTING LENDER
MEMBER OF THE LENDER GROUP RATABLY IN ACCORDANCE WITH THEIR COMMITMENTS (BUT
ONLY TO THE EXTENT THAT SUCH DEFAULTING LENDER’S PORTION OF THE LOAN WAS FUNDED
BY THE OTHER MEMBERS OF THE LENDER GROUP). SOLELY FOR THE PURPOSES OF VOTING OR
CONSENTING TO MATTERS WITH RESPECT TO THE LOAN DOCUMENTS, SUCH DEFAULTING LENDER
SHALL BE DEEMED NOT TO BE A “LENDER” AND SUCH LENDER’S COMMITMENT SHALL BE
DEEMED TO BE ZERO. THIS SECTION SHALL REMAIN EFFECTIVE WITH RESPECT TO SUCH
LENDER UNTIL (X) THE OBLIGATIONS UNDER THIS AGREEMENT SHALL HAVE BEEN DECLARED
OR SHALL HAVE BECOME IMMEDIATELY DUE AND PAYABLE, (Y) THE NON-DEFAULTING
LENDERS, AGENT, AND ADMINISTRATIVE BORROWER SHALL HAVE WAIVED SUCH DEFAULTING
LENDER’S DEFAULT IN WRITING, OR (Z) THE DEFAULTING LENDER MAKES ITS PRO RATA
SHARE OF THE APPLICABLE PORTION OF THE LOAN AND PAYS TO AGENT ALL AMOUNTS OWING
BY DEFAULTING LENDER IN RESPECT THEREOF. THE OPERATION OF THIS SECTION SHALL NOT
BE CONSTRUED TO INCREASE OR OTHERWISE AFFECT THE COMMITMENT OF ANY LENDER, TO
RELIEVE OR EXCUSE THE PERFORMANCE BY SUCH DEFAULTING LENDER OR ANY OTHER LENDER
OF ITS DUTIES AND OBLIGATIONS HEREUNDER, OR TO RELIEVE OR EXCUSE THE PERFORMANCE
BY BORROWERS OF THEIR DUTIES AND OBLIGATIONS HEREUNDER TO AGENT OR TO THE
LENDERS OTHER THAN SUCH DEFAULTING LENDER. ANY SUCH FAILURE TO FUND BY ANY
DEFAULTING LENDER SHALL CONSTITUTE A MATERIAL BREACH BY SUCH DEFAULTING LENDER
OF THIS AGREEMENT AND SHALL ENTITLE ADMINISTRATIVE BORROWER AT ITS OPTION, UPON
WRITTEN NOTICE TO AGENT, TO ARRANGE FOR A SUBSTITUTE LENDER TO ASSUME THE TOTAL
COMMITMENT OF SUCH DEFAULTING LENDER, SUCH SUBSTITUTE LENDER TO BE REASONABLY
ACCEPTABLE TO AGENT. IN CONNECTION WITH THE ARRANGEMENT OF SUCH A SUBSTITUTE
LENDER, THE DEFAULTING LENDER SHALL HAVE NO RIGHT TO REFUSE TO BE REPLACED
HEREUNDER, AND AGREES TO EXECUTE AND DELIVER A COMPLETED FORM OF ASSIGNMENT AND
ACCEPTANCE IN FAVOR OF THE SUBSTITUTE LENDER (AND AGREES THAT IT SHALL BE DEEMED
TO HAVE EXECUTED AND DELIVERED SUCH DOCUMENT IF IT FAILS TO DO SO) SUBJECT ONLY
TO BEING REPAID ITS SHARE OF THE OUTSTANDING OBLIGATIONS WITHOUT ANY

 

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PREMIUM OR PENALTY OF ANY KIND WHATSOEVER; PROVIDED HOWEVER, THAT ANY SUCH
ASSUMPTION OF THE COMMITMENT OF SUCH DEFAULTING LENDER SHALL NOT BE DEEMED TO
CONSTITUTE A WAIVER OF ANY OF THE LENDER GROUP’S OR BORROWERS’ RIGHTS OR
REMEDIES AGAINST ANY SUCH DEFAULTING LENDER ARISING OUT OF OR IN RELATION TO
SUCH FAILURE TO FUND.

 

(B)           NOTATION. AGENT SHALL RECORD ON ITS BOOKS THE PRINCIPAL AMOUNT OF
EACH OF THE ADVANCES AND TERM LOANS OWING TO EACH LENDER, AND THE INTERESTS
THEREIN OF EACH LENDER, FROM TIME TO TIME AND SUCH RECORDS SHALL, ABSENT
MANIFEST ERROR, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF AGENT,
CONCLUSIVELY BE PRESUMED TO BE CORRECT AND ACCURATE.

 

(C)           LENDERS’ FAILURE TO PERFORM. ALL LOANS SHALL BE MADE BY THE
LENDERS CONTEMPORANEOUSLY AND IN ACCORDANCE WITH THEIR PRO RATA SHARES AND
SUBJECT TO SECTIONS 2.1 AND 2.2. IT IS UNDERSTOOD THAT (I) NO LENDER SHALL BE
RESPONSIBLE FOR ANY FAILURE BY ANY OTHER LENDER TO PERFORM ITS OBLIGATION TO
MAKE ANY PORTION OF ANY LOAN (OR OTHER EXTENSIONS OF CREDIT) HEREUNDER, NOR
SHALL ANY COMMITMENT OF ANY LENDER BE INCREASED OR DECREASED AS A RESULT OF ANY
FAILURE BY ANY OTHER LENDER TO PERFORM ITS OBLIGATIONS HEREUNDER, AND (II) NO
FAILURE BY ANY LENDER TO PERFORM ITS OBLIGATIONS HEREUNDER SHALL EXCUSE ANY
OTHER LENDER FROM ITS OBLIGATIONS HEREUNDER.

 

(D)           SETTLEMENT. IT IS AGREED THAT EACH LENDER’S FUNDED PORTION OF THE
ADVANCES IS INTENDED BY THE LENDERS TO EQUAL, AT ALL TIMES, TO SUCH LENDER’S PRO
RATA SHARE OF THE OUTSTANDING ADVANCES. SUCH AGREEMENT NOTWITHSTANDING, AGENT
AND THE OTHER LENDERS AGREE (WHICH AGREEMENT SHALL NOT BE FOR THE BENEFIT OF
BORROWERS) THAT IN ORDER TO FACILITATE THE ADMINISTRATION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS, SETTLEMENT AMONG THE LENDERS AS TO THE ADVANCES SHALL
TAKE PLACE ON A PERIODIC BASIS IN ACCORDANCE WITH THE FOLLOWING PROVISIONS:

 

(I)            AGENT SHALL REQUEST SETTLEMENT (“SETTLEMENT”) WITH THE LENDERS ON
A WEEKLY BASIS, OR ON A MORE FREQUENT BASIS IF SO DETERMINED BY AGENT, BY
NOTIFYING THE LENDERS BY TELECOPY, TELEPHONE, OR OTHER SIMILAR FORM OF
TRANSMISSION, OF SUCH REQUESTED SETTLEMENT, NO LATER THAN 11:00 A.M. (CALIFORNIA
TIME) ON THE BUSINESS DAY IMMEDIATELY PRIOR TO THE DATE OF SUCH REQUESTED
SETTLEMENT (THE DATE OF SUCH REQUESTED SETTLEMENT BEING THE “SETTLEMENT DATE”).
SUCH NOTICE OF A SETTLEMENT DATE SHALL INCLUDE A SUMMARY STATEMENT OF THE AMOUNT
OF OUTSTANDING ADVANCES FOR THE PERIOD SINCE THE PRIOR SETTLEMENT DATE. SUBJECT
TO THE TERMS AND CONDITIONS CONTAINED HEREIN:  (Y) IF A LENDER’S BALANCE OF THE
ADVANCES EXCEEDS SUCH LENDER’S PRO RATA SHARE OF THE ADVANCES AS OF A SETTLEMENT
DATE, THEN AGENT SHALL, BY NO LATER THAN 12:00 P.M. (CALIFORNIA TIME) ON THE
SETTLEMENT DATE, TRANSFER IN IMMEDIATELY AVAILABLE FUNDS TO A DEPOSIT ACCOUNT OF
SUCH LENDER (AS SUCH LENDER MAY DESIGNATE), AN AMOUNT SUCH THAT EACH SUCH LENDER
SHALL, UPON RECEIPT OF SUCH AMOUNT, HAVE AS OF THE SETTLEMENT DATE, ITS PRO RATA
SHARE OF THE ADVANCES, AND (Z) IF A LENDER’S BALANCE OF THE ADVANCES IS LESS
THAN SUCH LENDER’S PRO RATA SHARE OF THE ADVANCES AS OF A SETTLEMENT DATE, SUCH
LENDER SHALL NO LATER THAN 12:00 P.M. (CALIFORNIA TIME) ON THE SETTLEMENT DATE
TRANSFER IN IMMEDIATELY AVAILABLE FUNDS TO THE AGENT’S ACCOUNT, AN AMOUNT SUCH
THAT EACH SUCH LENDER SHALL, UPON TRANSFER OF SUCH AMOUNT, HAVE AS OF THE
SETTLEMENT DATE, ITS PRO RATA SHARE OF THE ADVANCES. SUCH AMOUNTS MADE AVAILABLE
TO AGENT UNDER CLAUSE (Z) OF THE IMMEDIATELY PRECEDING SENTENCE SHALL CONSTITUTE
ADVANCES OF SUCH LENDERS. IF ANY SUCH AMOUNT IS NOT MADE AVAILABLE TO AGENT BY
ANY LENDER ON THE SETTLEMENT DATE APPLICABLE THERETO TO THE EXTENT REQUIRED BY
THE TERMS HEREOF, AGENT SHALL BE ENTITLED TO

 

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RECOVER FOR ITS ACCOUNT SUCH AMOUNT ON DEMAND FROM SUCH LENDER TOGETHER WITH
INTEREST THEREON AT THE DEFAULTING LENDER RATE.

 

(II)           IN DETERMINING WHETHER A LENDER’S BALANCE OF THE ADVANCES IS LESS
THAN, EQUAL TO, OR GREATER THAN SUCH LENDER’S PRO RATA SHARE OF THE ADVANCES AS
OF A SETTLEMENT DATE, AGENT SHALL, AS PART OF THE RELEVANT SETTLEMENT, APPLY TO
SUCH BALANCE THE PORTION OF PAYMENTS ACTUALLY RECEIVED IN GOOD FUNDS BY AGENT
WITH RESPECT TO PRINCIPAL, INTEREST AND FEES PAYABLE BY BORROWER AND ALLOCABLE
TO THE LENDERS HEREUNDER, AND PROCEEDS OF COLLATERAL. TO THE EXTENT THAT A NET
AMOUNT IS OWED TO ANY SUCH LENDER AFTER SUCH APPLICATION, SUCH NET AMOUNT SHALL
BE DISTRIBUTED BY AGENT TO THAT LENDER AS PART OF SUCH NEXT SETTLEMENT.

 

(III)          DURING THE PERIOD BETWEEN SETTLEMENT DATES, EACH LENDER (SUBJECT
TO THE EFFECT OF AGREEMENTS BETWEEN AGENT AND INDIVIDUAL LENDERS) WITH RESPECT
TO THE ADVANCES, SHALL BE ENTITLED TO INTEREST AT THE APPLICABLE RATE OR RATES
PAYABLE UNDER THIS AGREEMENT ON THE DAILY AMOUNT OF FUNDS EMPLOYED BY AGENT OR
THE LENDERS, AS APPLICABLE.

 

2.4           PAYMENTS.

 

(A)           PAYMENTS BY BORROWERS.

 

(I)            EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, ALL PAYMENTS BY
BORROWERS SHALL BE MADE IN DOLLARS TO AGENT’S ACCOUNT FOR THE ACCOUNT OF THE
LENDER GROUP AND SHALL BE MADE IN IMMEDIATELY AVAILABLE FUNDS, NO LATER THAN
5:00 P.M. (CALIFORNIA TIME) ON THE DATE SPECIFIED HEREIN. ANY PAYMENT SO
RECEIVED SHALL BE DEEMED TO HAVE BEEN RECEIVED THE FOLLOWING BUSINESS DAY. ANY
PAYMENT RECEIVED BY AGENT LATER THAN 5:00 P.M. (CALIFORNIA TIME) BUT BEFORE 5:00
P.M. (CALIFORNIA TIME) THE FOLLOWING BUSINESS DAY SHALL BE DEEMED TO HAVE BEEN
RECEIVED ON THE SECOND FOLLOWING BUSINESS DAY, AND ANY APPLICABLE INTEREST OR
FEE SHALL CONTINUE TO ACCRUE UNTIL SUCH FOLLOWING (OR, IF APPLICABLE, SECOND
FOLLOWING) BUSINESS DAY.

 

(II)           UNLESS AGENT RECEIVES NOTICE FROM ADMINISTRATIVE BORROWER PRIOR
TO THE DATE ON WHICH ANY PAYMENT IS DUE TO THE LENDERS THAT BORROWERS WILL NOT
MAKE SUCH PAYMENT IN FULL AS AND WHEN REQUIRED, AGENT MAY ASSUME THAT BORROWERS
HAVE MADE (OR WILL MAKE) SUCH PAYMENT IN FULL TO AGENT ON SUCH DATE IN
IMMEDIATELY AVAILABLE FUNDS AND AGENT MAY (BUT SHALL NOT BE SO REQUIRED), IN
RELIANCE UPON SUCH ASSUMPTION, DISTRIBUTE TO EACH LENDER ON SUCH DUE DATE AN
AMOUNT EQUAL TO THE AMOUNT THEN DUE SUCH LENDER. IF AND TO THE EXTENT BORROWERS
DO NOT MAKE SUCH PAYMENT IN FULL TO AGENT ON THE DATE WHEN DUE, EACH LENDER
SEVERALLY SHALL REPAY TO AGENT ON DEMAND SUCH AMOUNT DISTRIBUTED TO SUCH LENDER,
TOGETHER WITH INTEREST THEREON AT THE DEFAULTING LENDER RATE FOR EACH DAY FROM
THE DATE SUCH AMOUNT IS DISTRIBUTED TO SUCH LENDER UNTIL THE DATE REPAID.

 

(B)           APPORTIONMENT AND APPLICATION.

 

(I)            EXCEPT AS OTHERWISE PROVIDED WITH RESPECT TO DEFAULTING LENDERS
AND EXCEPT AS OTHERWISE PROVIDED IN CLAUSE (B)(IV) BELOW AND IN THE OTHER LOAN
DOCUMENTS (INCLUDING AGREEMENTS BETWEEN AGENT AND INDIVIDUAL LENDERS), AGGREGATE
PRINCIPAL AND INTEREST PAYMENTS SHALL BE APPORTIONED RATABLY AMONG THE REVOLVER
LENDERS, THE TERM LOAN A LENDERS AND THE TERM LOAN B LENDERS, AS APPLICABLE
(ACCORDING TO THE UNPAID PRINCIPAL BALANCE OF THE OBLIGATIONS TO WHICH SUCH
PAYMENTS RELATE HELD BY EACH LENDER), AND PAYMENTS OF FEES AND

 

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EXPENSES (OTHER THAN FEES OR EXPENSES THAT ARE FOR AGENT’S SEPARATE ACCOUNT,
AFTER GIVING EFFECT TO ANY AGREEMENTS BETWEEN AGENT AND INDIVIDUAL LENDERS)
SHALL BE APPORTIONED RATABLY AMONG THE REVOLVER LENDERS, THE TERM LOAN A LENDERS
AND THE TERM LOAN B LENDERS, AS APPLICABLE.

 

(II)           AT ANY TIME FOLLOWING THE OCCURRENCE OF AN EVENT OF DEFAULT AND
AT THE ELECTION OF AGENT, ALL PROCEEDS OF COLLATERAL AND OTHER PAYMENTS RECEIVED
BY AGENT SHALL BE APPLIED AGAINST SUCH PORTIONS OF THE OBLIGATIONS AND IN SUCH
ORDER AS AGENT MAY ELECT.

 

(III)          AGENT PROMPTLY SHALL DISTRIBUTE TO EACH LENDER, PURSUANT TO THE
APPLICABLE WIRE INSTRUCTIONS RECEIVED FROM EACH LENDER IN WRITING, SUCH FUNDS AS
IT MAY BE ENTITLED TO RECEIVE, SUBJECT TO A SETTLEMENT DELAY AS PROVIDED IN
SECTION 2.3(D).

 

(IV)          EXCEPT AS PROVIDED IN CLAUSE (B)(II) ABOVE, THIS SECTION 2.4(B)
SHALL NOT APPLY TO ANY PAYMENT MADE BY BORROWERS TO AGENT FOR THE PAYMENT OF
SPECIFIC OBLIGATIONS THEN DUE AND PAYABLE (OR PREPAYABLE) UNDER ANY PROVISION OF
THIS AGREEMENT.

 

(V)           FOR PURPOSES OF THE FOREGOING, “PAID IN FULL” MEANS PAYMENT OF ALL
AMOUNTS OWING UNDER THE LOAN DOCUMENTS ACCORDING TO THE TERMS THEREOF, INCLUDING
LOAN FEES, SERVICE FEES, PROFESSIONAL FEES, INTEREST (AND SPECIFICALLY INCLUDING
INTEREST ACCRUED AFTER THE COMMENCEMENT OF ANY INSOLVENCY PROCEEDING), DEFAULT
INTEREST, INTEREST ON INTEREST, AND EXPENSE REIMBURSEMENTS, EXCEPT TO THE EXTENT
THAT DEFAULT OR OVERDUE INTEREST (BUT NOT ANY OTHER INTEREST) AND LOAN FEES,
EACH ARISING FROM OR RELATED TO A DEFAULT, ARE DISALLOWED IN ANY INSOLVENCY
PROCEEDING.

 

(VI)          IN THE EVENT OF A DIRECT CONFLICT BETWEEN THE PRIORITY PROVISIONS
OF THIS SECTION 2.4 AND OTHER PROVISIONS CONTAINED IN ANY OTHER LOAN DOCUMENT,
IT IS THE INTENTION OF THE PARTIES HERETO THAT SUCH PRIORITY PROVISIONS IN SUCH
DOCUMENTS SHALL BE READ TOGETHER AND CONSTRUED, TO THE FULLEST EXTENT POSSIBLE,
TO BE IN CONCERT WITH EACH OTHER. IN THE EVENT OF ANY ACTUAL, IRRECONCILABLE
CONFLICT THAT CANNOT BE RESOLVED AS AFORESAID, THE TERMS AND PROVISIONS OF THIS
SECTION 2.4 SHALL CONTROL AND GOVERN.

 

(VII)         THE PROVISIONS OF THIS SECTION 2.4 CONSTITUTE AN AGREEMENT AMONG
BORROWERS AND THE LENDER GROUP AS TO THE APPLICATION OF PAYMENTS, COLLECTIONS
AND PROCEEDS OF COLLATERAL AND DO NOT CONSTITUTE ANY SUBORDINATION OF (X) ANY
OBLIGATIONS OR (Y) THE RIGHT TO PAYMENT OF ANY OBLIGATIONS.

 

(C)           MANDATORY PREPAYMENTS.

 

(I)            EXCEPT AS OTHERWISE MAY BE AGREED TO BY AGENT AND THE BORROWERS,
IMMEDIATELY UPON ANY VOLUNTARY OR INVOLUNTARY SALE OR DISPOSITION BY BORROWERS
OR ANY OF THEIR SUBSIDIARIES OF PROPERTY OR ASSETS (OTHER THAN SALES OR
DISPOSITIONS OF INVENTORY OR EQUIPMENT IN THE ORDINARY COURSE OF BUSINESS),
BORROWERS SHALL PREPAY THE OUTSTANDING OBLIGATIONS IN ACCORDANCE WITH CLAUSE (D)
BELOW IN AN AMOUNT EQUAL TO 100% OF THE NET CASH PROCEEDS RECEIVED BY SUCH
PERSON IN CONNECTION WITH SUCH SALES OR DISPOSITIONS TO THE EXTENT THAT THE
AGGREGATE AMOUNT OF NET CASH PROCEEDS RECEIVED BY BORROWERS AND THEIR
SUBSIDIARIES (AND NOT PAID TO AGENT AS A PREPAYMENT OF THE OBLIGATIONS) FOR ALL
SUCH SALES OR DISPOSITIONS SHALL EXCEED $150,000 IN ANY FISCAL YEAR. NOTHING
CONTAINED IN THIS SUBCLAUSE (II) SHALL PERMIT BORROWERS OR

 

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ANY OF THEIR SUBSIDIARIES TO SELL OR OTHERWISE DISPOSE OF ANY PROPERTY OR ASSETS
OTHER THAN IN ACCORDANCE WITH SECTION 6.4.

 

(II)           IMMEDIATELY UPON THE RECEIPT BY BORROWERS OR ANY OF THEIR
SUBSIDIARIES OF ANY EXTRAORDINARY RECEIPTS IN EXCESS OF $200,000 IN THE
AGGREGATE IN ANY FISCAL YEAR OF PARENT ENDING AFTER THE CLOSING DATE, BORROWERS
SHALL PREPAY THE OUTSTANDING OBLIGATIONS IN ACCORDANCE WITH CLAUSE (D) BELOW IN
AN AMOUNT EQUAL TO 100% OF SUCH EXTRAORDINARY RECEIPTS IN EXCESS OF $200,000 IN
THE AGGREGATE IN ANY FISCAL YEAR OF PARENT ENDING AFTER THE CLOSING DATE, NET OF
ANY REASONABLE EXPENSES INCURRED IN COLLECTING SUCH EXTRAORDINARY RECEIPTS.

 

(D)           APPLICATION OF PAYMENTS.

 

(I)            EACH PREPAYMENT PURSUANT TO SUBCLAUSES (C)(I) AND (C)(II) ABOVE
(IN EACH CASE EXCEPT WITH RESPECT TO INSURANCE PROCEEDS AND CONDEMNATION AWARDS
RELATED TO A CASUALTY OR LOSS OF COLLATERAL) SHALL BE APPLIED AGAINST THE
REMAINING INSTALLMENTS OF PRINCIPAL OF THE TERM LOANS (IF ANY) IN THE INVERSE
ORDER OF MATURITY.

 

(II)           EACH PREPAYMENT PURSUANT TO SUBCLAUSES (C)(I) ABOVE AND (C)(II)
WITH RESPECT TO INSURANCE PROCEEDS AND CONDEMNATION AWARDS RELATED TO A CASUALTY
OR LOSS OF COLLATERAL SHALL BE APPLIED AS FOLLOWS:

 

(1)           IF THE PROCEEDS ARE FROM ANY SALE OR DISPOSITION OF ANY ACCOUNTS
OR INVENTORY OR ANY INSURANCE POLICY OR CONDEMNATION AWARD WITH RESPECT TO
INVENTORY, SUCH PROCEEDS SHALL BE APPLIED AGAINST THE REMAINING INSTALLMENTS OF
PRINCIPAL OF THE TERM LOANS (IF ANY) IN THE INVERSE ORDER OF MATURITY; AND

 

(2)           IF THE PROCEEDS ARE FROM THE SALE OR DISPOSITION OF ANY OTHER
ASSETS OR ANY INSURANCE POLICY OR CONDEMNATION AWARD NOT DESCRIBED IN CLAUSE (1)
ABOVE, SUCH PROCEEDS SHALL BE APPLIED AGAINST THE REMAINING INSTALLMENTS OF
PRINCIPAL OF THE TERM LOANS (IF ANY) IN THE INVERSE ORDER OF MATURITY; PROVIDED,
HOWEVER, THAT, EXCEPT DURING THE CONTINUATION OF A DEFAULT OR AN EVENT OF
DEFAULT, SUCH PROCEEDS SHALL NOT BE REQUIRED TO BE SO APPLIED TO THE EXTENT THAT
SUCH PROCEEDS ARE USED TO REPLACE, REPAIR, OR RESTORE THE PROPERTIES OR ASSETS
IN RESPECT OF WHICH SUCH PROCEEDS WERE PAID IF (I) THE AMOUNT OF PROCEEDS
RECEIVED IN RESPECT OF SUCH SALES, DISPOSITIONS, INSURANCE POLICIES, OR
CONDEMNATION AWARDS ARE LESS THAN $5,000,000 IN THE AGGREGATE DURING THE TERM OF
THIS AGREEMENT, (II) BORROWERS DELIVER A CERTIFICATE TO AGENT WITHIN 10 DAYS
AFTER SUCH SALE OR 30 DAYS AFTER THE DATE OF SUCH LOSS, DESTRUCTION, OR TAKING,
AS THE CASE MAY BE, STATING THAT SUCH PROCEEDS SHALL BE USED TO REPLACE, REPAIR,
OR RESTORE SUCH PROPERTIES OR ASSETS WITHIN A PERIOD SPECIFIED IN SUCH
CERTIFICATE NOT TO EXCEED THE EARLIER OF (X) 180 DAYS AFTER THE RECEIPT OF SUCH
PROCEEDS AND (Y) THE MATURITY DATE (WHICH CERTIFICATE SHALL SET FORTH ESTIMATES
OF THE PROCEEDS TO BE SO EXPENDED), AND (III) SUCH PROCEEDS ARE IMMEDIATELY
DEPOSITED IN A DEPOSIT ACCOUNT SUBJECT TO A CONTROL AGREEMENT. IF ALL OR ANY
PORTION OF SUCH PROCEEDS NOT SO APPLIED TO THE PREPAYMENT OF THE OBLIGATIONS IN

 

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ACCORDANCE WITH THIS CLAUSE (2) ARE NOT USED IN ACCORDANCE WITH THE PRECEDING
SENTENCE WITHIN THE PERIOD SPECIFIED IN THE RELEVANT CERTIFICATE FURNISHED
PURSUANT HERETO, SUCH REMAINING PORTION SHALL BE APPLIED TO THE OBLIGATIONS IN
ACCORDANCE WITH THIS CLAUSE (2) ON THE LAST DAY OF SUCH SPECIFIED PERIOD.

 

(E)           OPTIONAL PREPAYMENT OF TERM LOANS. THE BORROWERS SHALL HAVE THE
PRIVILEGE OF MAKING FULL OR PARTIAL PREPAYMENTS OF THE TERM LOANS, UPON FIVE (5)
BUSINESS DAYS PRIOR WRITTEN NOTICE TO THE AGENT; PROVIDED THAT ANY SUCH
PREPAYMENT SHALL BE ACCOMPANIED BY THE APPLICABLE PREPAYMENT PREMIUM AS PROVIDED
IN THE FEE LETTER. ANY OPTIONAL PREPAYMENT OF THE TERM LOANS SHALL BE IN A
MINIMUM AMOUNT OF $1,000,000. EACH SUCH PREPAYMENT OF THE TERM LOANS SHALL BE
APPLIED AGAINST THE REMAINING INSTALLMENTS OF PRINCIPAL OF THE APPLICABLE TERM
LOAN IN THE INVERSE ORDER OF MATURITY. NOTWITHSTANDING ANYTHING TO CONTRARY
CONTAINED HEREIN, THE TERM LOAN B COMMITMENT SHALL BE REDUCED BY AN AMOUNT EQUAL
TO THE AMOUNT THAT THE PRINCIPAL BALANCE OF THE TERM LOAN B IS PREPAID PURSUANT
TO THIS SECTION 2.4(E).

 

2.5           OVERADVANCES. IF, AT ANY TIME OR FOR ANY REASON, THE AGGREGATE
AMOUNT OF OUTSTANDING PRINCIPAL OF THE ADVANCES ACCRUED AND PAYABLE BY BORROWERS
TO THE LENDER GROUP PURSUANT TO SECTION 2.1 IS GREATER THAN ANY OF THE
LIMITATIONS SET FORTH IN SECTION 2.1 (AN “OVERADVANCE”), BORROWERS IMMEDIATELY
SHALL PAY TO AGENT, IN CASH, THE AMOUNT OF SUCH EXCESS, WHICH AMOUNT SHALL BE
USED BY AGENT TO REDUCE THE AGGREGATE AMOUNT OF THE THEN OUTSTANDING ADVANCES.
IN ADDITION, BORROWERS HEREBY PROMISE TO PAY THE OBLIGATIONS (INCLUDING
PRINCIPAL, INTEREST, FEES, COSTS, AND EXPENSES) IN DOLLARS IN FULL AS AND WHEN
DUE AND PAYABLE UNDER THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

2.6           INTEREST:  RATES, PAYMENTS, AND CALCULATIONS.

 

(A)           INTEREST RATES. EXCEPT AS PROVIDED IN CLAUSE (B) BELOW, (I) TERM
LOANS SHALL BEAR INTEREST AT A PER ANNUM RATE EQUAL TO THE BASE RATE PLUS 4.25
PERCENTAGE POINTS, AND (II) ALL OTHER OBLIGATIONS SHALL BEAR INTEREST AT A PER
ANNUM RATE EQUAL TO THE BASE RATE PLUS 1.25 PERCENTAGE POINTS.

 

The foregoing notwithstanding, at no time shall: (x) any portion of the Term
Loans bear interest on the Daily Balance thereof at a per annum rate less than
12.50%, and (y) any portion of any other Obligations bear interest on the Daily
Balance thereof at a per annum rate less than 9.50%. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate.

 

(B)           DEFAULT RATE. UPON THE OCCURRENCE AND DURING THE CONTINUATION OF
AN EVENT OF DEFAULT (AND AT THE ELECTION OF AGENT OR THE REQUIRED LENDERS), ALL
OBLIGATIONS SHALL BEAR INTEREST ON THE DAILY BALANCE THEREOF AT A PER ANNUM RATE
EQUAL TO 4 PERCENTAGE POINTS ABOVE THE PER ANNUM RATE OTHERWISE APPLICABLE
HEREUNDER.

 

(C)           PAYMENT. EXCEPT AS PROVIDED TO THE CONTRARY IN SECTION 2.11,
INTEREST AND ALL FEES PAYABLE HEREUNDER SHALL BE DUE AND PAYABLE, IN ARREARS, ON
THE FIRST DAY OF EACH MONTH AT ANY TIME THAT OBLIGATIONS OR COMMITMENTS ARE
OUTSTANDING. ANY INTEREST OR FEES NOT PAID WHEN

 

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DUE SHALL BE COMPOUNDED AND SHALL ACCRUE INTEREST AT THE RATE THEN APPLICABLE TO
THE APPLICABLE LOAN.

 

(D)           COMPUTATION. ALL INTEREST AND FEES CHARGEABLE UNDER THE LOAN
DOCUMENTS SHALL BE COMPUTED ON THE BASIS OF A 360 DAY YEAR FOR THE ACTUAL NUMBER
OF DAYS ELAPSED. ANY CHANGE IN THE BASE RATE SHALL TAKE EFFECT ON THE FIRST DAY
OF THE MONTH FOLLOWING SUCH CHANGE AND SHALL CONTINUE IN EFFECT FOR THE BALANCE
OF SUCH MONTH.

 

(E)           INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. IN NO EVENT SHALL
THE INTEREST RATE OR RATES PAYABLE UNDER THIS AGREEMENT, PLUS ANY OTHER AMOUNTS
PAID IN CONNECTION HEREWITH, EXCEED THE HIGHEST RATE PERMISSIBLE UNDER ANY LAW
THAT A COURT OF COMPETENT JURISDICTION SHALL, IN A FINAL DETERMINATION, DEEM
APPLICABLE. BORROWERS AND THE LENDER GROUP, IN EXECUTING AND DELIVERING THIS
AGREEMENT, INTEND LEGALLY TO AGREE UPON THE RATE OR RATES OF INTEREST AND MANNER
OF PAYMENT STATED WITHIN IT; PROVIDED, HOWEVER, THAT, ANYTHING CONTAINED HEREIN
TO THE CONTRARY NOTWITHSTANDING, IF SAID RATE OR RATES OF INTEREST OR MANNER OF
PAYMENT EXCEEDS THE MAXIMUM ALLOWABLE UNDER APPLICABLE LAW, THEN, IPSO FACTO, AS
OF THE DATE OF THIS AGREEMENT, BORROWERS ARE AND SHALL BE LIABLE ONLY FOR THE
PAYMENT OF SUCH MAXIMUM AS ALLOWED BY LAW, AND PAYMENT RECEIVED FROM BORROWERS
IN EXCESS OF SUCH LEGAL MAXIMUM, WHENEVER RECEIVED, SHALL BE APPLIED TO REDUCE
THE PRINCIPAL BALANCE OF THE OBLIGATIONS TO THE EXTENT OF SUCH EXCESS.

 

2.7           CASH MANAGEMENT.

 

(A)           BORROWERS SHALL (I) ESTABLISH AND MAINTAIN CASH MANAGEMENT
SERVICES OF A TYPE AND ON TERMS SATISFACTORY TO AGENT AT ONE OR MORE OF THE
BANKS SET FORTH ON SCHEDULE 2.7(A) (EACH A “CASH MANAGEMENT BANK”), AND SHALL
REQUEST IN WRITING AND OTHERWISE TAKE SUCH REASONABLE STEPS TO ENSURE THAT ALL
ACCOUNT DEBTORS OF THE BORROWERS AND THE GUARANTORS FORWARD PAYMENT OF THE
AMOUNTS OWED BY THEM DIRECTLY TO SUCH CASH MANAGEMENT BANK, AND (II) DEPOSIT OR
CAUSE TO BE DEPOSITED PROMPTLY, AND IN ANY EVENT NO LATER THAN THE FIRST
BUSINESS DAY AFTER THE DATE OF RECEIPT THEREOF, ALL OF THEIR COLLECTIONS
(INCLUDING THOSE SENT DIRECTLY BY THEIR ACCOUNT DEBTORS TO BORROWERS OR SUCH
GUARANTORS) INTO A BANK ACCOUNT IN AGENT’S NAME (A “CASH MANAGEMENT ACCOUNT”) AT
ONE OF THE CASH MANAGEMENT BANKS.

 

(B)           EACH CASH MANAGEMENT BANK SHALL ESTABLISH AND MAINTAIN CASH
MANAGEMENT AGREEMENTS WITH AGENT AND BORROWERS, IN FORM AND SUBSTANCE REASONABLY
ACCEPTABLE TO AGENT. EACH SUCH CASH MANAGEMENT AGREEMENT SHALL PROVIDE, AMONG
OTHER THINGS, THAT (I) THE CASH MANAGEMENT BANK WILL COMPLY WITH ANY
INSTRUCTIONS ORIGINATED BY AGENT DIRECTING THE DISPOSITION OF THE FUNDS IN SUCH
CASH MANAGEMENT ACCOUNT WITHOUT FURTHER CONSENT BY BORROWERS OR ANY GUARANTOR,
(II) THE CASH MANAGEMENT BANK HAS NO RIGHTS OF SETOFF OR RECOUPMENT OR ANY OTHER
CLAIM AGAINST THE APPLICABLE CASH MANAGEMENT ACCOUNT, OTHER THAN FOR PAYMENT OF
ITS SERVICE FEES AND OTHER CHARGES DIRECTLY RELATED TO THE ADMINISTRATION OF
SUCH CASH MANAGEMENT ACCOUNT AND FOR RETURNED CHECKS OR OTHER ITEMS OF PAYMENT,
AND (III) IT WILL FORWARD BY DAILY SWEEP ALL AMOUNTS IN THE APPLICABLE CASH
MANAGEMENT ACCOUNT TO THE AGENT’S ACCOUNT; PROVIDED, THAT, TO THE EXTENT THERE
ARE NO ADVANCES THEN OUTSTANDING AND NO OTHER AMOUNTS THEN DUE AND PAYABLE, SO
LONG AS NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, THE AGENT SHALL
DIRECT THAT SUCH AMOUNTS BE DEPOSITED IN THE DESIGNATED ACCOUNT.

 

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(C)           SO LONG AS NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING,
ADMINISTRATIVE BORROWER MAY AMEND SCHEDULE 2.7(A) TO ADD OR REPLACE A CASH
MANAGEMENT BANK OR CASH MANAGEMENT ACCOUNT; PROVIDED, HOWEVER, THAT (I) SUCH
PROSPECTIVE CASH MANAGEMENT BANK SHALL BE REASONABLY SATISFACTORY TO AGENT, AND
(II) PRIOR TO THE TIME OF THE OPENING OF SUCH CASH MANAGEMENT ACCOUNT, A
BORROWER, AS APPLICABLE, AND SUCH PROSPECTIVE CASH MANAGEMENT BANK SHALL HAVE
EXECUTED AND DELIVERED TO AGENT A CASH MANAGEMENT AGREEMENT. BORROWERS SHALL
CLOSE ANY OF THEIR CASH MANAGEMENT ACCOUNTS (AND ESTABLISH REPLACEMENT CASH
MANAGEMENT ACCOUNTS IN ACCORDANCE WITH THE FOREGOING SENTENCE) PROMPTLY AND IN
ANY EVENT WITHIN 45 DAYS OF WRITTEN NOTICE FROM AGENT THAT THE CREDITWORTHINESS
OF ANY CASH MANAGEMENT BANK IS NO LONGER ACCEPTABLE IN AGENT’S REASONABLE
JUDGMENT, OR AS PROMPTLY AS PRACTICABLE AND IN ANY EVENT WITHIN 60 DAYS OF
NOTICE FROM AGENT THAT THE OPERATING PERFORMANCE, FUNDS TRANSFER, OR
AVAILABILITY PROCEDURES OR PERFORMANCE OF THE CASH MANAGEMENT BANK WITH RESPECT
TO CASH MANAGEMENT ACCOUNTS OR AGENT’S LIABILITY UNDER ANY CASH MANAGEMENT
AGREEMENT WITH SUCH CASH MANAGEMENT BANK IS NO LONGER ACCEPTABLE IN AGENT’S
REASONABLE JUDGMENT.

 

(D)           THE CASH MANAGEMENT ACCOUNTS SHALL BE CASH COLLATERAL ACCOUNTS
SUBJECT TO CONTROL AGREEMENTS.

 

2.8           CREDITING PAYMENTS. THE RECEIPT OF ANY PAYMENT ITEM BY AGENT
(WHETHER FROM TRANSFERS TO AGENT BY THE CASH MANAGEMENT BANKS PURSUANT TO THE
CASH MANAGEMENT AGREEMENTS OR OTHERWISE) SHALL NOT BE CONSIDERED A PAYMENT ON
ACCOUNT UNLESS SUCH PAYMENT ITEM IS A WIRE TRANSFER OF IMMEDIATELY AVAILABLE
FEDERAL FUNDS MADE TO THE AGENT’S ACCOUNT OR UNLESS AND UNTIL SUCH PAYMENT ITEM
IS HONORED WHEN PRESENTED FOR PAYMENT. SHOULD ANY PAYMENT ITEM NOT BE HONORED
WHEN PRESENTED FOR PAYMENT, THEN BORROWERS SHALL BE DEEMED NOT TO HAVE MADE SUCH
PAYMENT AND INTEREST SHALL BE CALCULATED ACCORDINGLY. ANYTHING TO THE CONTRARY
CONTAINED HEREIN NOTWITHSTANDING, ANY PAYMENT ITEM RECEIVED BY AGENT INTO THE
AGENT’S ACCOUNT ON A BUSINESS DAY ON OR BEFORE 5:00 P.M. (CALIFORNIA TIME) SHALL
BE DEEMED TO HAVE BEEN RECEIVED THE FOLLOWING BUSINESS DAY. IF ANY PAYMENT ITEM
IS RECEIVED INTO THE AGENT’S ACCOUNT ON A NON-BUSINESS DAY OR AFTER 5:00 P.M.
(CALIFORNIA TIME) ON A BUSINESS DAY BUT BEFORE 5:00 P.M. (CALIFORNIA TIME) THE
FOLLOWING BUSINESS DAY, IT SHALL BE DEEMED TO HAVE BEEN RECEIVED BY AGENT AS OF
THE OPENING OF BUSINESS ON THE SECOND FOLLOWING BUSINESS DAY.

 

2.9           DESIGNATED ACCOUNT. AGENT IS AUTHORIZED TO MAKE THE LOANS UNDER
THIS AGREEMENT BASED UPON TELEPHONIC OR OTHER INSTRUCTIONS RECEIVED FROM ANYONE
PURPORTING TO BE AN AUTHORIZED PERSON OR, WITHOUT INSTRUCTIONS, IF PURSUANT TO
SECTION 2.6(D). ADMINISTRATIVE BORROWER AGREES TO ESTABLISH AND MAINTAIN THE
DESIGNATED ACCOUNT WITH THE DESIGNATED ACCOUNT BANK FOR THE PURPOSE OF RECEIVING
THE PROCEEDS OF THE LOANS REQUESTED BY BORROWERS AND MADE BY AGENT OR THE
LENDERS HEREUNDER. UNLESS OTHERWISE AGREED BY AGENT AND ADMINISTRATIVE BORROWER,
ANY LOAN REQUESTED BY BORROWERS AND MADE BY AGENT OR THE LENDERS HEREUNDER SHALL
BE MADE TO THE DESIGNATED ACCOUNT.

 

2.10         [INTENTIONALLY OMITTED]

 

2.11         FEES. BORROWERS SHALL PAY TO AGENT, AS AND WHEN DUE AND PAYABLE
UNDER THE TERMS OF THE FEE LETTER, THE FEES SET FORTH IN THE FEE LETTER.

 

12

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2.12         [INTENTIONALLY OMITTED]

 

2.13         JOINT AND SEVERAL LIABILITY OF BORROWERS.

 

(A)           EACH BORROWER IS ACCEPTING JOINT AND SEVERAL LIABILITY HEREUNDER
AND UNDER THE OTHER LOAN DOCUMENTS IN CONSIDERATION OF THE FINANCIAL
ACCOMMODATIONS TO BE PROVIDED BY THE LENDER GROUP UNDER THIS AGREEMENT, FOR THE
MUTUAL BENEFIT, DIRECTLY AND INDIRECTLY, OF EACH BORROWER AND IN CONSIDERATION
OF THE UNDERTAKINGS OF THE OTHER BORROWERS TO ACCEPT JOINT AND SEVERAL LIABILITY
FOR THE OBLIGATIONS.

 

(B)           EACH BORROWER, JOINTLY AND SEVERALLY, HEREBY IRREVOCABLY AND
UNCONDITIONALLY ACCEPTS, NOT MERELY AS A SURETY BUT ALSO AS A CO-DEBTOR, JOINT
AND SEVERAL LIABILITY WITH THE OTHER BORROWERS, WITH RESPECT TO THE PAYMENT AND
PERFORMANCE OF ALL OF THE OBLIGATIONS (INCLUDING, WITHOUT LIMITATION, ANY
OBLIGATIONS ARISING UNDER THIS SECTION 2.13), IT BEING THE INTENTION OF THE
PARTIES HERETO THAT ALL THE OBLIGATIONS SHALL BE THE JOINT AND SEVERAL
OBLIGATIONS OF EACH BORROWER WITHOUT PREFERENCES OR DISTINCTION AMONG THEM.

 

(C)           IF AND TO THE EXTENT THAT ANY BORROWER SHALL FAIL TO MAKE ANY
PAYMENT WITH RESPECT TO ANY OF THE OBLIGATIONS AS AND WHEN DUE OR TO PERFORM ANY
OF THE OBLIGATIONS IN ACCORDANCE WITH THE TERMS THEREOF, THEN IN EACH SUCH EVENT
THE OTHER BORROWERS WILL MAKE SUCH PAYMENT WITH RESPECT TO, OR PERFORM, SUCH
OBLIGATION.

 

(D)           THE OBLIGATIONS OF EACH BORROWER UNDER THE PROVISIONS OF THIS
SECTION 2.13 CONSTITUTE THE ABSOLUTE AND UNCONDITIONAL, FULL RECOURSE
OBLIGATIONS OF EACH BORROWER ENFORCEABLE AGAINST EACH BORROWER TO THE FULL
EXTENT OF ITS PROPERTIES AND ASSETS, IRRESPECTIVE OF THE VALIDITY, REGULARITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY OTHER CIRCUMSTANCES WHATSOEVER.

 

(E)           EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, EACH
BORROWER HEREBY WAIVES NOTICE OF ACCEPTANCE OF ITS JOINT AND SEVERAL LIABILITY,
NOTICE OF ANY LOANS MADE UNDER OR PURSUANT TO THIS AGREEMENT, NOTICE OF THE
OCCURRENCE OF ANY DEFAULT, EVENT OF DEFAULT, OR OF ANY DEMAND FOR ANY PAYMENT
UNDER THIS AGREEMENT, NOTICE OF ANY ACTION AT ANY TIME TAKEN OR OMITTED BY AGENT
OR LENDERS UNDER OR IN RESPECT OF ANY OF THE OBLIGATIONS, ANY REQUIREMENT OF
DILIGENCE OR TO MITIGATE DAMAGES AND, GENERALLY, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ALL DEMANDS, NOTICES AND OTHER FORMALITIES OF EVERY KIND IN
CONNECTION WITH THIS AGREEMENT (EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT).
EACH BORROWER HEREBY ASSENTS TO, AND WAIVES NOTICE OF, ANY EXTENSION OR
POSTPONEMENT OF THE TIME FOR THE PAYMENT OF ANY OF THE OBLIGATIONS, THE
ACCEPTANCE OF ANY PAYMENT OF ANY OF THE OBLIGATIONS, THE ACCEPTANCE OF ANY
PARTIAL PAYMENT THEREON, ANY WAIVER, CONSENT OR OTHER ACTION OR ACQUIESCENCE BY
AGENT OR LENDERS AT ANY TIME OR TIMES IN RESPECT OF ANY DEFAULT BY ANY BORROWER
IN THE PERFORMANCE OR SATISFACTION OF ANY TERM, COVENANT, CONDITION OR PROVISION
OF THIS AGREEMENT, ANY AND ALL OTHER INDULGENCES WHATSOEVER BY AGENT OR LENDERS
IN RESPECT OF ANY OF THE OBLIGATIONS, AND THE TAKING, ADDITION, SUBSTITUTION OR
RELEASE, IN WHOLE OR IN PART, AT ANY TIME OR TIMES, OF ANY SECURITY FOR ANY OF
THE OBLIGATIONS OR THE ADDITION, SUBSTITUTION OR RELEASE, IN WHOLE OR IN PART,
OF ANY BORROWER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH BORROWER
ASSENTS TO ANY OTHER ACTION OR DELAY IN ACTING OR FAILURE TO ACT ON THE PART OF
ANY AGENT OR LENDER WITH RESPECT TO THE FAILURE BY ANY BORROWER TO COMPLY WITH
ANY OF ITS RESPECTIVE OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY FAILURE
STRICTLY

 

13

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OR DILIGENTLY TO ASSERT ANY RIGHT OR TO PURSUE ANY REMEDY OR TO COMPLY FULLY
WITH APPLICABLE LAWS OR REGULATIONS THEREUNDER, WHICH MIGHT, BUT FOR THE
PROVISIONS OF THIS SECTION 2.13 AFFORD GROUNDS FOR TERMINATING, DISCHARGING OR
RELIEVING ANY BORROWER, IN WHOLE OR IN PART, FROM ANY OF ITS OBLIGATIONS UNDER
THIS SECTION 2.13, IT BEING THE INTENTION OF EACH BORROWER THAT, SO LONG AS ANY
OF THE OBLIGATIONS HEREUNDER REMAIN UNSATISFIED, THE OBLIGATIONS OF EACH
BORROWER UNDER THIS SECTION 2.13 SHALL NOT BE DISCHARGED EXCEPT BY PERFORMANCE
AND THEN ONLY TO THE EXTENT OF SUCH PERFORMANCE. THE OBLIGATIONS OF EACH
BORROWER UNDER THIS SECTION 2.13 SHALL NOT BE DIMINISHED OR RENDERED
UNENFORCEABLE BY ANY WINDING UP, REORGANIZATION, ARRANGEMENT, LIQUIDATION,
RECONSTRUCTION OR SIMILAR PROCEEDING WITH RESPECT TO ANY BORROWER OR ANY AGENT
OR LENDER.

 

(F)            EACH BORROWER REPRESENTS AND WARRANTS TO AGENT AND LENDERS THAT
SUCH BORROWER IS CURRENTLY INFORMED OF THE FINANCIAL CONDITION OF BORROWERS AND
OF ALL OTHER CIRCUMSTANCES WHICH A DILIGENT INQUIRY WOULD REVEAL AND WHICH BEAR
UPON THE RISK OF NONPAYMENT OF THE OBLIGATIONS. EACH BORROWER FURTHER REPRESENTS
AND WARRANTS TO AGENT AND LENDERS THAT SUCH BORROWER HAS READ AND UNDERSTANDS
THE TERMS AND CONDITIONS OF THE LOAN DOCUMENTS. EACH BORROWER HEREBY COVENANTS
THAT SUCH BORROWER WILL CONTINUE TO KEEP INFORMED OF BORROWERS’ FINANCIAL
CONDITION, THE FINANCIAL CONDITION OF OTHER GUARANTORS, IF ANY, AND OF ALL OTHER
CIRCUMSTANCES WHICH BEAR UPON THE RISK OF NONPAYMENT OR NONPERFORMANCE OF THE
OBLIGATIONS.

 

(G)           EACH BORROWER WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN
ELECTION OF REMEDIES BY AGENT OR ANY LENDER, EVEN THOUGH THAT ELECTION OF
REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR A
GUARANTEED OBLIGATION, HAS DESTROYED AGENT’S OR SUCH LENDER’S RIGHTS OF
SUBROGATION AND REIMBURSEMENT AGAINST SUCH BORROWER BY THE OPERATION OF SECTION
580D OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR OTHERWISE.

 

(H)           IN THE EVENT THAT ANY OBLIGATIONS ARE AT ANY TIME SECURED BY REAL
PROPERTY, EACH BORROWER HEREBY WAIVES ALL RIGHTS AND DEFENSES THAT SUCH BORROWER
MAY HAVE AS A RESULT THEREOF. THIS MEANS, AMONG OTHER THINGS:

 

(I)            AGENT AND LENDERS MAY COLLECT FROM SUCH BORROWER WITHOUT FIRST
FORECLOSING ON ANY REAL PROPERTY OR OTHER COLLATERAL PLEDGED BY BORROWERS.

 

(II)           IF AGENT OR ANY LENDER FORECLOSES ON ANY REAL PROPERTY PLEDGED BY
BORROWERS:

 

(A)          THE AMOUNT OF THE OBLIGATIONS MAY BE REDUCED ONLY BY THE PRICE FOR
WHICH THAT COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN IF THE COLLATERAL IS
WORTH MORE THAN THE SALE PRICE.

 

(B)           AGENT AND LENDERS MAY COLLECT FROM SUCH BORROWER EVEN IF AGENT OR
LENDERS, BY FORECLOSING ON THE REAL PROPERTY, HAS DESTROYED ANY RIGHT SUCH
BORROWER MAY HAVE TO COLLECT FROM THE OTHER BORROWERS.

 

This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.

 

14

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(I)            THE PROVISIONS OF THIS SECTION 2.13 ARE MADE FOR THE BENEFIT OF
AGENT, LENDERS AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND MAY BE ENFORCED
BY IT OR THEM FROM TIME TO TIME AGAINST ANY OR ALL BORROWERS AS OFTEN AS
OCCASION THEREFOR MAY ARISE AND WITHOUT REQUIREMENT ON THE PART OF ANY SUCH
AGENT, LENDER, SUCCESSOR OR ASSIGN FIRST TO MARSHAL ANY OF ITS OR THEIR CLAIMS
OR TO EXERCISE ANY OF ITS OR THEIR RIGHTS AGAINST ANY BORROWER OR TO EXHAUST ANY
REMEDIES AVAILABLE TO IT OR THEM AGAINST ANY BORROWER OR TO RESORT TO ANY OTHER
SOURCE OR MEANS OF OBTAINING PAYMENT OF ANY OF THE OBLIGATIONS HEREUNDER OR TO
ELECT ANY OTHER REMEDY. THE PROVISIONS OF THIS SECTION 2.13 SHALL REMAIN IN
EFFECT UNTIL ALL OF THE OBLIGATIONS SHALL HAVE BEEN PAID IN FULL OR OTHERWISE
FULLY SATISFIED. IF AT ANY TIME, ANY PAYMENT, OR ANY PART THEREOF, MADE IN
RESPECT OF ANY OF THE OBLIGATIONS, IS RESCINDED OR MUST OTHERWISE BE RESTORED OR
RETURNED BY ANY AGENT OR LENDER UPON THE INSOLVENCY, BANKRUPTCY OR
REORGANIZATION OF ANY BORROWER, OR OTHERWISE, THE PROVISIONS OF THIS SECTION
2.13 WILL FORTHWITH BE REINSTATED IN EFFECT, AS THOUGH SUCH PAYMENT HAD NOT BEEN
MADE.

 

(J)            EACH BORROWER HEREBY AGREES THAT IT WILL NOT ENFORCE ANY OF ITS
RIGHTS OF CONTRIBUTION OR SUBROGATION AGAINST ANY OTHER BORROWER WITH RESPECT TO
ANY LIABILITY INCURRED BY IT HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS,
ANY PAYMENTS MADE BY IT TO AGENT OR LENDERS WITH RESPECT TO ANY OF THE
OBLIGATIONS OR ANY COLLATERAL SECURITY THEREFOR UNTIL SUCH TIME AS ALL OF THE
OBLIGATIONS HAVE BEEN PAID IN FULL IN CASH. ANY CLAIM WHICH ANY BORROWER MAY
HAVE AGAINST ANY OTHER BORROWER WITH RESPECT TO ANY PAYMENTS TO ANY AGENT OR
LENDER HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENTS ARE HEREBY EXPRESSLY MADE
SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT, WITHOUT LIMITATION AS TO ANY
INCREASES IN THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER, TO THE PRIOR
PAYMENT IN FULL IN CASH OF THE OBLIGATIONS AND, IN THE EVENT OF ANY INSOLVENCY,
BANKRUPTCY, RECEIVERSHIP, LIQUIDATION, REORGANIZATION OR OTHER SIMILAR
PROCEEDING UNDER THE LAWS OF ANY JURISDICTION RELATING TO ANY BORROWER, ITS
DEBTS OR ITS ASSETS, WHETHER VOLUNTARY OR INVOLUNTARY, ALL SUCH OBLIGATIONS
SHALL BE PAID IN FULL IN CASH BEFORE ANY PAYMENT OR DISTRIBUTION OF ANY
CHARACTER, WHETHER IN CASH, SECURITIES OR OTHER PROPERTY, SHALL BE MADE TO ANY
OTHER BORROWER THEREFOR.

 

(K)           EACH BORROWER HEREBY AGREES THAT, AFTER THE OCCURRENCE AND DURING
THE CONTINUANCE OF ANY DEFAULT OR EVENT OF DEFAULT, THE PAYMENT OF ANY AMOUNTS
DUE WITH RESPECT TO THE INDEBTEDNESS OWING BY ANY BORROWER TO ANY OTHER BORROWER
IS HEREBY SUBORDINATED TO THE PRIOR PAYMENT IN FULL IN CASH OF THE OBLIGATIONS.
EACH BORROWER HEREBY AGREES THAT AFTER THE OCCURRENCE AND DURING THE CONTINUANCE
OF ANY DEFAULT OR EVENT OF DEFAULT, SUCH BORROWER WILL NOT DEMAND, SUE FOR OR
OTHERWISE ATTEMPT TO COLLECT ANY INDEBTEDNESS OF ANY OTHER BORROWER OWING TO
SUCH BORROWER UNTIL THE OBLIGATIONS SHALL HAVE BEEN PAID IN FULL IN CASH. IF,
NOTWITHSTANDING THE FOREGOING SENTENCE, SUCH BORROWER SHALL COLLECT, ENFORCE OR
RECEIVE ANY AMOUNTS IN RESPECT OF SUCH INDEBTEDNESS, SUCH AMOUNTS SHALL BE
COLLECTED, ENFORCED AND RECEIVED BY SUCH BORROWER AS TRUSTEE FOR AGENT, AND SUCH
BORROWER SHALL DELIVER ANY SUCH AMOUNTS TO AGENT FOR APPLICATION TO THE
OBLIGATIONS IN ACCORDANCE WITH SECTION 2.4(B).

 

2.14         REGISTERED NOTES. AGENT, ACTING SOLELY FOR THIS PURPOSE AS A
NON-FIDUCIARY AGENT ON BEHALF OF BORROWERS (OR IN THE CASE OF AN ASSIGNMENT NOT
RECORDED IN THE REGISTER IN ACCORDANCE WITH SECTION 13.1(I), THE ASSIGNING
LENDER) AGREES TO RECORD THE COMMITMENTS AND LOANS ON THE REGISTER (OR IN THE
CASE OF AN ASSIGNMENT NOT RECORDED IN THE REGISTER IN ACCORDANCE WITH
SECTION 13.1(I), A RELATED PARTY REGISTER). EACH COMMITMENT AND LOAN RECORDED ON
THE REGISTER (OR RELATED PARTY REGISTER) MAY NOT BE EVIDENCED BY PROMISSORY
NOTES OTHER THAN

 

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REGISTERED NOTES (AS DEFINED BELOW). UPON THE REGISTRATION OF EACH COMMITMENT
AND LOAN, EACH BORROWER AGREES, AT THE REQUEST OF ANY LENDER, TO EXECUTE AND
DELIVER TO SUCH LENDER A PROMISSORY NOTE, IN CONFORMITY WITH THE TERMS OF THIS
AGREEMENT, IN REGISTERED FORM TO EVIDENCE SUCH REGISTERED LOAN, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO SUCH LENDER, AND REGISTERED AS PROVIDED IN
SECTION 13.1(I) (A “REGISTERED NOTE”), PAYABLE TO THE ORDER OF SUCH LENDER OR
ITS REGISTERED ASSIGNS AND OTHERWISE DULY COMPLETED. ONCE RECORDED ON THE
REGISTER (OR RELATED PARTY REGISTER), NO COMMITMENT OR LOAN MAY BE REMOVED FROM
THE REGISTER (OR RELATED PARTY REGISTER) SO LONG AS IT OR THEY REMAIN
OUTSTANDING, AND A REGISTERED NOTE MAY NOT BE EXCHANGED FOR A PROMISSORY NOTE
THAT IS NOT A REGISTERED NOTE.

 

3.             CONDITIONS; TERM OF AGREEMENT.

 

3.1           CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. THE
OBLIGATION OF EACH LENDER TO MAKE ITS INITIAL EXTENSION OF CREDIT PROVIDED FOR
HEREUNDER, IS SUBJECT TO THE FULFILLMENT, TO THE SATISFACTION OF AGENT AND EACH
LENDER OF EACH OF THE CONDITIONS PRECEDENT SET FORTH ON SCHEDULE 3.1 (THE MAKING
OF SUCH INITIAL EXTENSION OF CREDIT BY A LENDER BEING CONCLUSIVELY DEEMED TO BE
ITS SATISFACTION OR WAIVER OF THE CONDITIONS PRECEDENT).

 

3.2           CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT; SPECIAL
CONDITIONS PRECEDENT TO TERM LOAN B.

 

(A)           SUBJECT TO SECTION 3.1, THE OBLIGATION OF THE LENDER GROUP (OR ANY
MEMBER THEREOF) TO MAKE ANY ADVANCES OR ANY PORTION OF EITHER TERM LOAN
HEREUNDER AT ANY TIME (OR TO EXTEND ANY OTHER CREDIT HEREUNDER) SHALL BE SUBJECT
TO THE FOLLOWING CONDITIONS PRECEDENT:

 

(I)            THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT
AND IN THE OTHER LOAN DOCUMENTS SHALL BE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS ON AND AS OF THE DATE OF SUCH EXTENSION OF CREDIT, AS THOUGH MADE ON
AND AS OF SUCH DATE (EXCEPT TO THE EXTENT THAT SUCH REPRESENTATIONS AND
WARRANTIES RELATE SOLELY TO AN EARLIER DATE);

 

(II)           NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING ON THE DATE OF SUCH EXTENSION OF CREDIT, NOR SHALL EITHER RESULT FROM
THE MAKING THEREOF;

 

(III)          NO INJUNCTION, WRIT, RESTRAINING ORDER, OR OTHER ORDER OF ANY
NATURE RESTRICTING OR PROHIBITING, DIRECTLY OR INDIRECTLY, THE EXTENDING OF SUCH
CREDIT SHALL HAVE BEEN ISSUED AND REMAIN IN FORCE BY ANY GOVERNMENTAL AUTHORITY
AGAINST ANY BORROWER, AGENT, ANY LENDER, OR ANY OF THEIR AFFILIATES;

 

(IV)          NO MATERIAL ADVERSE CHANGE SHALL HAVE OCCURRED; AND

 

(V)           WITH RESPECT TO ANY ADVANCE, A BORROWING BASE CERTIFICATE.

 

(B)           SUBJECT TO SECTIONS 3.1 AND 3.2(A), THE OBLIGATION OF THE TERM
LOAN B LENDERS (OR ANY MEMBER THEREOF) TO MAKE ANY PORTION OF THE TERM LOAN B
HEREUNDER DURING THE TERM LOAN B COMMITMENT PERIOD SHALL BE SUBJECT TO THE
FOLLOWING ADDITIONAL CONDITIONS PRECEDENT:

 

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(I)            THE PROCEEDS SHALL BE USED FOR THE ACQUISITION (WHETHER BY MERGER
OR OTHERWISE) BY ANY BORROWER OR ANY SUBSIDIARY OF THE BORROWER OF EIGHTY
PERCENT (80%) OF THE OUTSTANDING CAPITAL STOCK, MEMBERSHIP INTEREST, 
PARTNERSHIP INTEREST OR OTHER SIMILAR OWNERSHIP INTEREST OF A PERSON WHICH IS
ENGAGED IN A LINE OF BUSINESS SIMILAR TO THE BUSINESS OF SUCH BORROWER OR SUCH
SUBSIDIARY OF THE BORROWER, OR THE PURCHASE OF ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OWNED BY SUCH PERSON;

 

(II)           AGENT SHALL HAVE RECEIVED FIFTEEN (15) DAYS PRIOR WRITTEN NOTICE
OF SUCH PROPOSED ACQUISITION FROM THE ACQUIRING PERSON;

 

(III)          SUCH ACQUISITION HAS BEEN (A) APPROVED BY THE BOARD OF DIRECTORS
OR OTHER APPROPRIATE GOVERNING BODY OF THE PERSON THAT IS THE SUBJECT OF THE
ACQUISITION OR (B) AGREED TO BY THE REQUISITE SHAREHOLDERS, MEMBERS, PARTNERS OR
OWNERS OF THE PERSON THAT IS THE SUBJECT OF THE ACQUISITION, AS REQUIRED UNDER
APPLICABLE LAW OR BY THE GOVERNING DOCUMENTS OF SUCH PERSON;

 

(IV)          NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING OR WOULD RESULT AFTER GIVING EFFECT TO SUCH ACQUISITION;

 

(V)           SUCH ACQUISITION IS UNDERTAKEN IN ACCORDANCE WITH ALL APPLICABLE
REQUIREMENTS OF LAW;

 

(VI)          IF THE CONSIDERATION TO BE PAID IN CONNECTION WITH SUCH
ACQUISITION INCLUDES AN “EARN OUT”, THE APPLICABLE PURCHASE AGREEMENT RELATED TO
SUCH ACQUISITION INCLUDES A MAXIMUM DOLLAR AMOUNT THAT MAY BE PAYABLE PURSUANT
TO THE “EARN OUT” PROVISIONS;

 

(VII)         AGENT SHALL HAVE RECEIVED A PRO FORMA BALANCE SHEET AND INCOME
STATEMENTS OF THE ACQUIRING PERSON AND ITS SUBSIDIARIES (AFTER GIVING EFFECT TO
THE PROPOSED ACQUISITION) AS OF THE THEN MOST RECENT FISCAL QUARTER ENDED FOR
WHICH A FINANCIAL STATEMENT HAS BEEN DELIVERED IN ACCORDANCE WITH SECTION 5.3,
TOGETHER WITH A CERTIFICATE OF THE ACQUIRING PERSON, IN FORM AND SUBSTANCE
SATISFACTORY TO AGENT, DEMONSTRATING THAT UPON THE CONSUMMATION OF SUCH
ACQUISITION, THE BORROWERS WILL BE IN COMPLIANCE WITH THE FINANCIAL COVENANTS
CONTAINED IN SECTION 6.16, SUCH EVIDENCE OF COMPLIANCE TO BE IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO AGENT;

 

(VIII)        AGENT SHALL HAVE RECEIVED FINANCIAL STATEMENTS WHICH INCLUDE
BALANCE SHEETS, INCOME STATEMENTS AND STATEMENTS OF CASH FLOWS OF THE PERSON
BEING ACQUIRED, (A) IN THE SAME FORM AND SUBSTANCE AS THOSE REQUIRED TO BE
DELIVERED BY THE BORROWERS UNDER SECTION 5.3, TO THE EXTENT SUCH ARE AVAILABLE,
OR (B) IF UNAVAILABLE, IN THE FORM RELIED UPON BY THE ACQUIRING PERSON IN
CONNECTION WITH SUCH TRANSACTION, IN EACH CASE FOR THE PREVIOUS THREE (3) FISCAL
YEARS, OR IF LESS THAN THREE (3) YEARS ARE EXISTING, FOR SUCH SHORTER PERIOD OF
TIME AS DOES EXIST;

 

(IX)           AGENT SHALL HAVE RECEIVED LIEN SEARCHES OR OTHER EVIDENCE
SATISFACTORY TO AGENT THAT THE SHARES OR OTHER INTEREST IN THE PERSON, OR THE
ASSETS OF THE PERSON, WHICH IS THE SUBJECT OF THE PROPOSED ACQUISITION ARE (OR
WILL BE AT THE CLOSING OF THE PROPOSED ACQUISITION) FREE AND CLEAR OF ALL LIENS,
EXCEPT PERMITTED LIENS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO THE
ACQUISITION OF SHARES OR OTHER EQUITY INTERESTS, FREE OF ANY RESTRICTIONS ON

 

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TRANSFER OTHER THAN RESTRICTIONS APPLICABLE TO THE SALE OF SECURITIES UNDER
FEDERAL AND STATE SECURITIES LAWS AND REGULATIONS GENERALLY;

 

(X)            THE AGGREGATE CONSIDERATION TO BE PAID IN CONNECTION WITH SUCH
ACQUISITION SHALL NOT EXCEED THE GREATER OF (A) THE GREATER OF (I) THREE (3)
TIMES EBITDA (ADJUSTED FOR ACTUAL EXPENSES INCURRED IN CONNECTION WITH SUCH
ACQUISITION) CALCULATED IN ACCORDANCE WITH THE TERMS HEREOF, FOR THE MOST RECENT
FISCAL YEAR ENDED, AS REFLECTED IN THE FINANCIAL STATEMENTS REFERRED TO IN
CLAUSE (VII) ABOVE AND (II) AN AMOUNT EQUAL TO THE PRO FORMA BORROWING BASE FOR
THE PERSON THAT IS THE SUBJECT OF THE ACQUISITION, CALCULATED IN ACCORDANCE WITH
THE TERMS HEREOF AS OF THE DATE OF SUCH PROPOSED ACQUISITION AND (B) AN AMOUNT
MUTUALLY AGREED UPON BY THE BORROWERS, AGENT AND THE LENDER GROUP TAKING INTO
CONSIDERATION THE TOTALITY OF ALL INFORMATION RELATING TO THE PERSON THAT IS THE
SUBJECT OF THE ACQUISITION, WHICH AGREEMENT BY AGENT AND THE LENDER GROUP SHALL
NOT BE UNREASONABLY WITHHELD;

 

(XI)           AGENT SHALL HAVE RECEIVED THE FAVORABLE LEGAL OPINION OF THE
APPLICABLE BORROWER’S COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO AGENT;

 

(XII)          AGENT SHALL HAVE RECEIVED A TRUE AND CORRECT COPY OF THE
ACQUISITION DOCUMENTS, AS WELL AS EVIDENCE OF ALL REQUISITE APPROVALS AND
PERMITS, ALL OF WHICH SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO AGENT; AND

 

(XIII)         AGENT SHALL HAVE RECEIVED SUCH OTHER DOCUMENTS AND INSTRUMENTS AS
AGENT IN ITS REASONABLE DISCRETION MAY REQUIRE.

 

3.3           TERM.

 

(A)           THIS AGREEMENT SHALL CONTINUE IN FULL FORCE AND EFFECT FOR A TERM
ENDING ON NOVEMBER 30, 2010 (THE “MATURITY DATE”), UNLESS TERMINATED EARLIER IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. THE FOREGOING NOTWITHSTANDING, THE
LENDER GROUP, UPON THE ELECTION OF THE REQUIRED LENDERS, SHALL HAVE THE RIGHT TO
TERMINATE ITS OBLIGATIONS UNDER THIS AGREEMENT PURSUANT TO SECTION 8.1.

 

(B)           NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (A), ALL OBLIGATIONS
(OTHER THAN THE PRINCIPAL AMOUNT OF THE TERM LOANS), INCLUDING ACCRUED INTEREST
TO THE DATE OF PRINCIPAL PAYMENT, SHALL BE DUE AND PAYABLE NO LATER THAN
NOVEMBER 30, 2008 (THE “REVOLVER MATURITY DATE”); PROVIDED, HOWEVER, THAT BY
WRITTEN NOTICE TO AGENT (THE “REVOLVER RENEWAL NOTICE”), BORROWERS MAY ELECT TO
REQUIRE THE LENDERS TO RENEW THE REVOLVER COMMITMENT TWO TIMES, EACH FOR A
PERIOD OF ONE YEAR, SO LONG AS EACH OF THE FOLLOWING CONDITIONS PRECEDENT HAVE
FULFILLED, TO THE SATISFACTION OF AGENT, IN WHICH CASE SUCH RENEWAL DATE SHALL
BECOME THE NEW REVOLVER MATURITY DATE:

 

(I)            ADMINISTRATIVE BORROWER DELIVERS THE REVOLVER RENEWAL NOTICE TO
AGENT NO LATER THAN FORTY-FIVE (45) DAYS PRIOR TO THE THEN EXTANT REVOLVER
MATURITY DATE;

 

(II)           NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED SINCE THE CLOSING
DATE (WHETHER OR NOT THEN CONTINUING); AND

 

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(III)          CONCURRENTLY WITH ADMINISTRATIVE BORROWER’S DELIVERY OF THE
REVOLVER RENEWAL NOTICE, BORROWER PAYS AGENT A RENEWAL FEE (THE “REVOLVER
RENEWAL FEE”) EQUAL TO ONE PERCENT (1%) OF THE MAXIMUM REVOLVER AMOUNT.

 

Each Borrower hereby acknowledges and agrees that each Revolver Renewal Fee is
fully earned and non-refundable on the date such fee is due and payable as
provided in this Section 3.3(b).

 

3.4           EFFECT OF TERMINATION. ON THE DATE OF TERMINATION OF THIS
AGREEMENT, ALL OBLIGATIONS IMMEDIATELY SHALL BECOME DUE AND PAYABLE WITHOUT
NOTICE OR DEMAND. NO TERMINATION OF THIS AGREEMENT, HOWEVER, SHALL RELIEVE OR
DISCHARGE BORROWERS OF THEIR DUTIES, OBLIGATIONS, OR COVENANTS HEREUNDER OR
UNDER ANY OTHER LOAN DOCUMENT AND THE AGENT’S LIENS IN THE COLLATERAL SHALL
REMAIN IN EFFECT UNTIL ALL OBLIGATIONS HAVE BEEN PAID IN FULL AND THE LENDER
GROUP’S OBLIGATIONS TO PROVIDE ADDITIONAL CREDIT HEREUNDER HAVE BEEN TERMINATED.
WHEN THIS AGREEMENT HAS BEEN TERMINATED AND ALL OF THE OBLIGATIONS HAVE BEEN
PAID IN FULL AND THE LENDER GROUP’S OBLIGATIONS TO PROVIDE ADDITIONAL CREDIT
UNDER THE LOAN DOCUMENTS HAVE BEEN TERMINATED IRREVOCABLY, AGENT WILL, AT
BORROWERS’ SOLE EXPENSE, EXECUTE AND DELIVER ANY TERMINATION STATEMENTS, LIEN
RELEASES, MORTGAGE RELEASES, RE-ASSIGNMENTS OF TRADEMARKS, DISCHARGES OF
SECURITY INTERESTS, AND OTHER SIMILAR DISCHARGE OR RELEASE DOCUMENTS (AND, IF
APPLICABLE, IN RECORDABLE FORM) AS ARE REASONABLY NECESSARY TO RELEASE, AS OF
RECORD, THE AGENT’S LIENS AND ALL NOTICES OF SECURITY INTERESTS AND LIENS
PREVIOUSLY FILED BY AGENT WITH RESPECT TO THE OBLIGATIONS.

 

3.5           EARLY TERMINATION BY BORROWERS. BORROWERS HAVE THE OPTION, AT ANY
TIME UPON 30 DAYS PRIOR WRITTEN NOTICE BY ADMINISTRATIVE BORROWER TO AGENT, TO
TERMINATE THIS AGREEMENT BY PAYING TO AGENT, IN CASH, THE OBLIGATIONS IN FULL
INCLUDING, WITHOUT LIMITATION, ANY AMOUNTS DUE UNDER THE FEE LETTER. IF
ADMINISTRATIVE BORROWER HAS SENT A NOTICE OF TERMINATION PURSUANT TO THE
PROVISIONS OF THIS SECTION, THEN THE COMMITMENTS SHALL TERMINATE AND BORROWERS
SHALL BE OBLIGATED TO REPAY IN CASH THE OBLIGATIONS IN FULL ON THE DATE SET
FORTH AS THE DATE OF TERMINATION OF THIS AGREEMENT IN SUCH NOTICE.

 

3.6           CONDITIONS SUBSEQUENT TO EXTENSIONS OF CREDIT.

 

(A)           THE OBLIGATION OF THE LENDER GROUP (OR ANY MEMBER THEREOF) TO
CONTINUE TO MAKE ADVANCES OR LEND ANY PORTION OF THE TERM LOANS (OR OTHERWISE
EXTEND CREDIT HEREUNDER) IS SUBJECT TO THE FULFILLMENT, ON OR BEFORE THE DATE
APPLICABLE THERETO (UNLESS SUCH DATE IS EXTENDED IN WRITING BY AGENT), OF EACH
OF THE CONDITIONS SUBSEQUENT SET FORTH BELOW (THE FAILURE BY BORROWERS TO SO
PERFORM OR CAUSE TO BE PERFORMED CONSTITUTING AN EVENT OF DEFAULT):

 

(I)            WITHIN THIRTY (30) DAYS AFTER THE CLOSING DATE, THE BORROWERS AND
THEIR SUBSIDIARIES, AS APPLICABLE, SHALL HAVE ENTERED INTO CONTROL AGREEMENTS
WITH LLOYDS TSB BANK PLC, IN FORM AND SUBSTANCE SATISFACTORY TO AGENT, WITH
RESPECT TO ALL ACCOUNTS OF THE BORROWERS AND THEIR UK SUBSIDIARIES LOCATED IN
THE UNITED KINGDOM.

 

(II)           WITHIN NINETY (90) DAYS AFTER THE CLOSING DATE, ALL ACCOUNTS OF
THE BORROWERS LOCATED IN THE UNITED STATES SHALL BE PAYABLE TO ACCOUNTS AT EAST
WEST BANK AND THE BORROWERS SHALL HAVE ENTERED INTO CONTROL AGREEMENTS WITH EAST
WEST BANK, IN FORM AND SUBSTANCE SATISFACTORY TO AGENT, WITH RESPECT TO SUCH
ACCOUNTS.

 

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(III)          TO THE EXTENT NOT PAID DIRECTLY BY THE AGENT, WITHIN FIVE (5)
BUSINESS DAYS AFTER THE CLOSING DATE, THE IFN CREDIT FACILITY SHALL HAVE BEEN
PAID IN FULL AND AGENT SHALL HAVE RECEIVED EVIDENCE SATISFACTORY TO IT THAT (A)
THE IFN CREDIT FACILITY HAS BEEN PAID OFF IN FULL, (B) ALL LIENS ASSOCIATED WITH
THE IFN CREDIT FACILITY HAVE BEEN RELEASED OR DISCHARGED AND (C) ALL ACCOUNTS OF
THE FRENCH SUBSIDIARY WITH IFN FINANCE S.A. HAVE BEEN CLOSED.

 

(IV)          TO THE EXTENT NOT PAID DIRECTLY BY THE AGENT, WITHIN FIVE (5)
BUSINESS DAYS AFTER THE CLOSING DATE, THE LLOYDS CREDIT FACILITY SHALL HAVE BEEN
PAID IN FULL AND AGENT SHALL HAVE RECEIVED EVIDENCE SATISFACTORY TO IT THAT (A)
THE LLOYDS CREDIT FACILITY HAS BEEN PAID OFF IN FULL AND (B) ALL LIENS
ASSOCIATED WITH THE LLOYDS CREDIT FACILITY HAVE BEEN RELEASED OR DISCHARGED.

 

(V)           TO THE EXTENT NOT PAID DIRECTLY BY THE AGENT, WITHIN TWO (2)
BUSINESS DAYS AFTER THE CLOSING DATE, THE WELLS FARGO CREDIT FACILITY SHALL HAVE
BEEN PAID IN FULL AND AGENT SHALL HAVE RECEIVED EVIDENCE SATISFACTORY TO IT THAT
(A) THE WELLS FARGO CREDIT FACILITY HAS BEEN PAID OFF IN FULL AND (B) ALL LIENS
ASSOCIATED WITH THE WELLS FARGO CREDIT FACILITY HAVE BEEN RELEASED OR
DISCHARGED.

 

(VI)          WITHIN SEVEN (7) BUSINESS DAYS AFTER THE CLOSING DATE, AGENT OR
ITS COUNSEL SHALL HAVE RECEIVED CERTIFICATES REPRESENTING THE PLEDGED INTERESTS
(AS SUCH TERM IS DEFINED IN THE SECURITY AGREEMENT), THE SECURITIES (AS SUCH
TERM IS DEFINED IN THE UK SHARE PLEDGE) AND THE CHARGED SHARES (AS SUCH TERM IS
DEFINED IN THE UK DEBENTURE) IN EACH CASE WITH AN EXECUTED STOCK POWER OR POWERS
WITH RESPECT THERETO ENDORSED IN BLANK.

 

(B)           THE OBLIGATION OF THE LENDER GROUP (OR ANY MEMBER THEREOF) TO
CONTINUE TO PROVIDE THE BORROWERS WITH ANY BORROWING BASE CREDIT WITH RESPECT TO
ELIGIBLE FINISHED GOODS INVENTORY OR ELIGIBLE RAW MATERIALS INVENTORY STORED AT
THE LOCATIONS NOTED IN SCHEDULE 4.5 IS SUBJECT TO THE FULFILLMENT, ON OR BEFORE
THE DATE APPLICABLE THERETO, OF EACH OF THE CONDITIONS SUBSEQUENT SET FORTH
BELOW:

 

(I)            WITHIN THIRTY (30) DAYS AFTER THE CLOSING DATE, AGENT SHALL HAVE
RECEIVED COLLATERAL ACCESS AGREEMENTS, ALL IN FORM AND SUBSTANCE SATISFACTORY TO
AGENT, WITH RESPECT TO THE LOCATIONS NOTED IN SCHEDULE 4.5 PART I.

 

(II)           WITHIN SEVENTY-FIVE (75) DAYS AFTER THE CLOSING DATE, AGENT SHALL
HAVE RECEIVED COLLATERAL ACCESS AGREEMENTS, ALL IN FORM AND SUBSTANCE
SATISFACTORY TO AGENT, WITH RESPECT TO THE LOCATIONS NOTED IN SCHEDULE 4.5 PART
II.

 

IF THE AGENT DOES NOT RECEIVE COLLATERAL ACCESS AGREEMENTS WITHIN THE TIME
PERIODS NOTED IN THIS SECTION 3.6(B), ANY INVENTORY STORED AT SUCH LOCATIONS
SHALL CEASE TO BE DEEMED “ELIGIBLE FINISHED GOODS INVENTORY” OR “ELIGIBLE RAW
MATERIALS INVENTORY,” AS APPLICABLE, FOR PURPOSES OF DETERMINATION OF THE
BORROWING BASE; PROVIDED, HOWEVER, THAT INVENTORY STORED AT LOCATIONS FOR WHICH
COLLATERAL ACCESS AGREEMENTS HAVE NOT BEEN PROVIDED MAY STILL BE DEEMED
“ELIGIBLE FINISHED GOODS INVENTORY” OR “ELIGIBLE RAW MATERIALS INVENTORY,” AS
APPLICABLE, IF THE AGGREGATE AMOUNT OF ALL INVENTORY (INCLUDING, WITHOUT
LIMITATION, ELIGIBLE FINISHED GOODS INVENTORY AND ELIGIBLE RAW MATERIALS
INVENTORY) STORED AT ANY ONE LOCATION DOES NOT EXCEED $100,000 AND SUCH

 

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INVENTORY OTHERWISE QUALIFIES AS “ELIGIBLE FINISHED GOODS INVENTORY” OR
“ELIGIBLE RAW MATERIALS INVENTORY.”

 

4.             REPRESENTATIONS AND WARRANTIES.

 

In order to induce the Lender Group to enter into this Agreement, each Borrower
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete as of the Closing Date, and at and as of
the date of the making of each Advance (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:

 

4.1           NO ENCUMBRANCES. EACH BORROWER HAS GOOD AND INDEFEASIBLE TITLE TO,
OR A VALID LEASEHOLD INTEREST IN, THEIR PERSONAL PROPERTY ASSETS AND GOOD AND
MARKETABLE TITLE TO, OR A VALID LEASEHOLD INTEREST IN, THEIR REAL PROPERTY, IN
EACH CASE, FREE AND CLEAR OF LIENS EXCEPT FOR PERMITTED LIENS.

 

4.2           ACCOUNTS. AS TO EACH ACCOUNT THAT IS IDENTIFIED BY BORROWERS AS AN
ELIGIBLE ACCOUNT IN A BORROWING BASE REPORT SUBMITTED TO AGENT, SUCH ACCOUNT IS
(A) A BONA FIDE EXISTING PAYMENT OBLIGATION OF THE APPLICABLE ACCOUNT DEBTOR
CREATED BY THE SALE AND DELIVERY OF INVENTORY OR, IF APPLICABLE, THE RENDITION
OF SERVICES TO SUCH ACCOUNT DEBTOR IN THE ORDINARY COURSE OF BORROWERS’
BUSINESS, (B) OWED TO A BORROWER WITHOUT ANY KNOWN DEFENSES, DISPUTES, OFFSETS,
COUNTERCLAIMS, OR RIGHTS OF RETURN OR CANCELLATION, AND (C) NOT EXCLUDED AS
INELIGIBLE BY VIRTUE OF ONE OR MORE OF THE EXCLUDING CRITERIA SET FORTH IN THE
DEFINITION OF ELIGIBLE ACCOUNTS.

 

4.3           INVENTORY. AS TO EACH ITEM OF INVENTORY THAT IS IDENTIFIED BY
BORROWERS AS ELIGIBLE INVENTORY IN A BORROWING BASE REPORT SUBMITTED TO AGENT,
SUCH INVENTORY IS (A) OF GOOD AND MERCHANTABLE QUALITY, FREE FROM KNOWN DEFECTS,
AND (B) NOT EXCLUDED AS INELIGIBLE BY VIRTUE OF ONE OR MORE OF THE EXCLUDING
CRITERIA SET FORTH IN THE DEFINITION OF ELIGIBLE INVENTORY.

 

4.4           EQUIPMENT. EACH ITEM OF EQUIPMENT OF BORROWERS AND THEIR
SUBSIDIARIES IS USED OR HELD FOR USE IN THEIR BUSINESS AND IS IN GOOD WORKING
ORDER, ORDINARY WEAR AND TEAR AND DAMAGE BY CASUALTY EXCEPTED.

 

4.5           LOCATION OF INVENTORY AND EQUIPMENT. THE INVENTORY AND EQUIPMENT
(OTHER THAN VEHICLES OR EQUIPMENT OUT FOR REPAIR) OF BORROWERS AND THE UK
SUBSIDIARIES ARE NOT STORED WITH A BAILEE, WAREHOUSEMAN, OR SIMILAR PARTY EXCEPT
AS SET FORTH IN SCHEDULE 4.5 AND ARE LOCATED ONLY AT, OR IN-TRANSIT BETWEEN, THE
LOCATIONS IDENTIFIED ON SCHEDULE 4.5 (AS SUCH SCHEDULE MAY BE UPDATED PURSUANT
TO SECTION 5.9).

 

4.6           INVENTORY RECORDS. EACH BORROWER KEEPS CORRECT AND ACCURATE
RECORDS ITEMIZING AND DESCRIBING THE TYPE, QUALITY, AND QUANTITY OF ITS
INVENTORY AND THE BOOK VALUE THEREOF IN ALL MATERIAL RESPECTS.

 

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4.7           STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.

 

(A)           THE NAME AND JURISDICTION OF ORGANIZATION OF EACH BORROWER AND
EACH OF ITS SUBSIDIARIES IS SET FORTH ON SCHEDULE 4.7(A).

 

(B)           THE CHIEF EXECUTIVE OFFICE OF EACH BORROWER AND, AS OF THE CLOSING
DATE,  EACH OF ITS SUBSIDIARIES, IS LOCATED AT THE ADDRESS INDICATED ON SCHEDULE
4.7(B).

 

(C)           EACH BORROWER’S AND EACH OF ITS SUBSIDIARIES’ ORGANIZATIONAL
IDENTIFICATION NUMBER, IF ANY, IS IDENTIFIED ON SCHEDULE 4.7(C).

 

(D)           AS OF THE CLOSING DATE, BORROWERS AND THEIR SUBSIDIARIES DO NOT
HOLD ANY COMMERCIAL TORT CLAIMS.

 

4.8           DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

 

(A)           EACH BORROWER IS DULY ORGANIZED AND EXISTING AND IN GOOD STANDING
UNDER THE LAWS OF THE JURISDICTION OF ITS ORGANIZATION AND QUALIFIED TO DO
BUSINESS IN ANY STATE OR JURISDICTION WHERE THE FAILURE TO BE SO QUALIFIED
REASONABLY COULD BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE.

 

(B)           SET FORTH ON SCHEDULE 4.8(B) IS A COMPLETE AND ACCURATE
DESCRIPTION OF THE AUTHORIZED CAPITAL STOCK OF EACH BORROWER, BY CLASS, AND, AS
OF THE CLOSING DATE, A DESCRIPTION OF THE NUMBER OF SHARES OF EACH SUCH CLASS
THAT ARE ISSUED AND OUTSTANDING. OTHER THAN AS DESCRIBED ON SCHEDULE 4.8(B),
THERE ARE NO SUBSCRIPTIONS, OPTIONS, WARRANTS, OR CALLS RELATING TO ANY SHARES
OF EACH BORROWER’S CAPITAL STOCK, INCLUDING ANY RIGHT OF CONVERSION OR EXCHANGE
UNDER ANY OUTSTANDING SECURITY OR OTHER INSTRUMENT. NO BORROWER IS SUBJECT TO
ANY OBLIGATION (CONTINGENT OR OTHERWISE) TO REPURCHASE OR OTHERWISE ACQUIRE OR
RETIRE ANY SHARES OF ITS CAPITAL STOCK OR ANY SECURITY CONVERTIBLE INTO OR
EXCHANGEABLE FOR ANY OF ITS CAPITAL STOCK.

 

(C)           SET FORTH ON SCHEDULE 4.8(C) IS A COMPLETE AND ACCURATE LIST OF
EACH BORROWER’S DIRECT AND INDIRECT SUBSIDIARIES, SHOWING: (I) THE JURISDICTION
OF ITS ORGANIZATION, (II) THE NUMBER OF SHARES OF EACH CLASS OF COMMON AND
PREFERRED STOCK AUTHORIZED FOR EACH OF SUCH SUBSIDIARIES, AND (III) THE NUMBER
AND THE PERCENTAGE OF THE OUTSTANDING SHARES OF EACH SUCH CLASS OWNED DIRECTLY
OR INDIRECTLY BY THE APPLICABLE BORROWER. ALL OF THE OUTSTANDING CAPITAL STOCK
OF EACH SUCH SUBSIDIARY HAS BEEN VALIDLY ISSUED AND IS FULLY PAID AND
NON-ASSESSABLE.

 

(D)           THERE ARE NO SUBSCRIPTIONS, OPTIONS, WARRANTS, OR CALLS RELATING
TO ANY SHARES OF ANY BORROWER’S SUBSIDIARIES’ CAPITAL STOCK, INCLUDING ANY RIGHT
OF CONVERSION OR EXCHANGE UNDER ANY OUTSTANDING SECURITY OR OTHER INSTRUMENT. NO
BORROWER OR ANY OF ITS RESPECTIVE SUBSIDIARIES IS SUBJECT TO ANY OBLIGATION
(CONTINGENT OR OTHERWISE) TO REPURCHASE OR OTHERWISE ACQUIRE OR RETIRE ANY
SHARES OF ANY BORROWER’S SUBSIDIARIES’ CAPITAL STOCK OR ANY SECURITY CONVERTIBLE
INTO OR EXCHANGEABLE FOR ANY SUCH CAPITAL STOCK.

 

(E)           OTHER THAN THE UK GUARANTOR SUBSIDIARIES, NO OTHER UK SUBSIDIARY
HAS ASSETS IN EXCESS OF $5,000.

 

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4.9           DUE AUTHORIZATION; NO CONFLICT.

 

(A)           AS TO EACH BORROWER, THE EXECUTION, DELIVERY, AND PERFORMANCE BY
SUCH BORROWER OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A
PARTY HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION ON THE PART OF SUCH
BORROWER.

 

(B)           AS TO EACH BORROWER, THE EXECUTION, DELIVERY, AND PERFORMANCE BY
SUCH BORROWER OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A
PARTY DO NOT AND WILL NOT (I) VIOLATE ANY PROVISION OF FEDERAL, STATE, OR LOCAL
LAW OR REGULATION APPLICABLE TO ANY BORROWER, THE GOVERNING DOCUMENTS OF ANY
BORROWER, OR ANY ORDER, JUDGMENT, OR DECREE OF ANY COURT OR OTHER GOVERNMENTAL
AUTHORITY BINDING ON ANY BORROWER, (II) CONFLICT WITH, RESULT IN A BREACH OF, OR
CONSTITUTE (WITH DUE NOTICE OR LAPSE OF TIME OR BOTH) A DEFAULT UNDER ANY
MATERIAL CONTRACTUAL OBLIGATION OF ANY BORROWER, (III) RESULT IN OR REQUIRE THE
CREATION OR IMPOSITION OF ANY LIEN OF ANY NATURE WHATSOEVER UPON ANY PROPERTIES
OR ASSETS OF ANY BORROWER, OTHER THAN PERMITTED LIENS, OR (IV) REQUIRE ANY
APPROVAL OF ANY BORROWER’S INTEREST HOLDERS OR ANY APPROVAL OR CONSENT OF ANY
PERSON UNDER ANY MATERIAL CONTRACTUAL OBLIGATION OF ANY BORROWER, OTHER THAN
CONSENTS OR APPROVALS THAT HAVE BEEN OBTAINED AND THAT ARE STILL IN FORCE AND
EFFECT.

 

(C)           OTHER THAN THE FILING OF FINANCING STATEMENTS AND THE RECORDING IN
THE US COPYRIGHT OFFICE OR THE US PATENT AND TRADEMARK OFFICE OF A NOTICE OF
AGENT’S SECURITY INTEREST IN PERTINENT INTELLECTUAL PROPERTY, THE EXECUTION,
DELIVERY, AND PERFORMANCE BY EACH BORROWER OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH SUCH BORROWER IS A PARTY DO NOT AND WILL NOT REQUIRE ANY
REGISTRATION WITH, CONSENT, OR APPROVAL OF, OR NOTICE TO, OR OTHER ACTION WITH
OR BY, ANY GOVERNMENTAL AUTHORITY, OTHER THAN CONSENTS OR APPROVALS THAT HAVE
BEEN OBTAINED AND THAT ARE STILL IN FORCE AND EFFECT.

 

(D)           AS TO EACH BORROWER, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
TO WHICH SUCH BORROWER IS A PARTY, AND ALL OTHER DOCUMENTS CONTEMPLATED HEREBY
AND THEREBY, WHEN EXECUTED AND DELIVERED BY SUCH BORROWER WILL BE THE LEGALLY
VALID AND BINDING OBLIGATIONS OF SUCH BORROWER, ENFORCEABLE AGAINST SUCH
BORROWER IN ACCORDANCE WITH THEIR RESPECTIVE TERMS, EXCEPT AS ENFORCEMENT MAY BE
LIMITED BY EQUITABLE PRINCIPLES OR BY BANKRUPTCY, INSOLVENCY, REORGANIZATION,
MORATORIUM, OR SIMILAR LAWS RELATING TO OR LIMITING CREDITORS’ RIGHTS GENERALLY.

 

(E)           THE AGENT’S LIENS ARE VALIDLY CREATED, PERFECTED AND FIRST
PRIORITY LIENS, SUBJECT ONLY TO PERMITTED LIENS.

 

4.10         LITIGATION. THERE ARE NO MATERIAL ACTIONS, SUITS, OR PROCEEDINGS
PENDING OR, TO THE BEST KNOWLEDGE OF BORROWERS, THREATENED AGAINST BORROWERS, OR
ANY OF THEIR SUBSIDIARIES, AS APPLICABLE, EXCEPT FOR (A) MATTERS THAT ARE FULLY
COVERED BY INSURANCE (SUBJECT TO CUSTOMARY DEDUCTIBLES) AND (B) MATTERS ARISING
AFTER THE CLOSING DATE THAT, IF DECIDED ADVERSELY TO BORROWERS, OR ANY OF THEIR
SUBSIDIARIES, AS APPLICABLE, REASONABLY COULD NOT BE EXPECTED TO RESULT IN A
MATERIAL ADVERSE CHANGE.

 

4.11         NO MATERIAL ADVERSE CHANGE. ALL FINANCIAL STATEMENTS OF BORROWERS
AND THEIR SUBSIDIARIES THAT HAVE BEEN DELIVERED BY BORROWERS TO THE LENDER GROUP
HAVE BEEN PREPARED IN ACCORDANCE WITH GAAP (EXCEPT, IN THE CASE OF UNAUDITED
FINANCIAL STATEMENTS, FOR THE LACK OF FOOTNOTES AND BEING SUBJECT TO YEAR-END
AUDIT ADJUSTMENTS) AND PRESENT FAIRLY IN ALL MATERIAL RESPECTS, BORROWERS’ AND
THEIR SUBSIDIARIES’ FINANCIAL CONDITION AS OF THE DATE THEREOF AND RESULTS OF
OPERATIONS FOR THE PERIOD THEN ENDED. THERE HAS NOT BEEN A MATERIAL ADVERSE
CHANGE WITH

 

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RESPECT TO BORROWERS AND THEIR SUBSIDIARIES SINCE THE DATE OF THE LATEST
CONSOLIDATED FINANCIAL STATEMENTS SUBMITTED TO AGENT ON OR BEFORE THE CLOSING
DATE.

 

4.12         FRAUDULENT TRANSFER.

 

(A)           EACH BORROWER IS SOLVENT.

 

(B)           NO TRANSFER OF PROPERTY IS BEING MADE BY ANY BORROWER OR ANY
SUBSIDIARY AND NO OBLIGATION IS BEING INCURRED BY ANY BORROWER OR ANY SUBSIDIARY
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS WITH THE INTENT TO HINDER, DELAY, OR DEFRAUD EITHER PRESENT OR
FUTURE CREDITORS OF BORROWERS OR THEIR SUBSIDIARIES.

 

(C)           NONE OF THE BORROWERS AT THIS TIME CONTEMPLATES FILING A PETITION
IN BANKRUPTCY OR FOR AN ARRANGEMENT OR REORGANIZATION OR SIMILAR PROCEEDING
UNDER ANY LAW OF ANY JURISDICTION, NOR, TO THE KNOWLEDGE OF THE BORROWERS, IS
THE SUBJECT OF ANY ACTUAL, PENDING OR THREATENED BANKRUPTCY, INSOLVENCY OR
SIMILAR PROCEEDINGS UNDER ANY LAW OF ANY JURISDICTION.

 

4.13         EMPLOYEE BENEFITS. EXCEPT AS SET FORTH ON SCHEDULE 4.13, NONE OF
BORROWERS, ANY OF THEIR SUBSIDIARIES, OR ANY OF THEIR ERISA AFFILIATES
MAINTAINS, CONTRIBUTES TO, OR HAS ANY LIABILITY (CONTINGENT OR OTHERWISE) WITH
RESPECT TO, ANY BENEFIT PLAN OR MULTIEMPLOYER PLAN. EACH OF BORROWERS, THEIR
SUBSIDIARIES AND THEIR ERISA AFFILIATES HAVE SATISFIED THE MINIMUM FUNDING
STANDARDS OF ERISA AND THE IRC WITH RESPECT TO EACH BENEFIT PLAN TO WHICH IT IS
OBLIGATED TO CONTRIBUTE AND HAS MADE ALL CONTRIBUTIONS REQUIRED UNDER THE TERMS
OF EACH MULTIEMPLOYER PLAN TO WHICH IT IS OBLIGATED TO CONTRIBUTE. NO ERISA
EVENT HAS OCCURRED NOR HAS ANY OTHER EVENT OCCURRED THAT MAY RESULT IN AN ERISA
EVENT THAT REASONABLY COULD BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE.
NONE OF BORROWERS, ANY OF THEIR SUBSIDIARIES, OR ANY OF THEIR ERISA AFFILIATES
IS REQUIRED TO PROVIDE SECURITY TO ANY BENEFIT PLAN UNDER SECTION 401(A)(29) OF
THE IRC. EACH PLAN HAS BEEN MAINTAINED IN ALL MATERIAL RESPECTS WITH ERISA AND
THE IRC, TO THE EXTENT APPLICABLE, AND OTHER APPLICABLE LAW.

 

4.14         ENVIRONMENTAL CONDITION.

 

(A)           THE OPERATIONS OF THE BORROWERS AND THEIR RESPECTIVE SUBSIDIARIES
ARE IN COMPLIANCE WITH ALL APPLICABLE LIMITATIONS, RESTRICTIONS, CONDITIONS,
STANDARDS, PROHIBITIONS, REQUIREMENTS AND OBLIGATIONS OF ENVIRONMENTAL LAWS AND
RELATED ORDERS OF ANY COURT OR OTHER GOVERNMENTAL AUTHORITY;

 

(B)           THERE ARE NOT ANY EXISTING, PENDING OR, TO THE KNOWLEDGE OF ANY
BORROWER, THREATENED ACTIONS, SUITS, CLAIMS, INVESTIGATIONS, INQUIRIES OR
PROCEEDINGS BY OR BEFORE ANY COURT OR ANY OTHER GOVERNMENTAL AUTHORITY DIRECTED
AGAINST BORROWERS OR THEIR RESPECTIVE SUBSIDIARIES THAT PERTAIN OR RELATE TO
(I) ANY REMEDIAL OBLIGATIONS UNDER ANY APPLICABLE ENVIRONMENTAL LAW,
(II) VIOLATIONS BY ANY BORROWER OR ANY OF ITS SUBSIDIARIES OF ANY ENVIRONMENTAL
LAW, (III) PERSONAL INJURY OR PROPERTY DAMAGE CLAIMS RELATING TO A RELEASE OF
CHEMICALS OR HAZARDOUS MATERIALS, OR (IV) RESPONSE, REMOVAL, OR REMEDIAL COSTS
UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT
(“CERCLA”) OR ANY SIMILAR STATE LAW;

 

(C)           WITH RESPECT TO PERMITS AND LICENSES, (I) ALL LICENSES, PERMITS,
CONSENTS, OR OTHER APPROVALS REQUIRED UNDER ENVIRONMENTAL LAWS THAT ARE
NECESSARY TO THE OPERATIONS OF ANY

 

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BORROWER OR ANY OF ITS SUBSIDIARIES HAVE BEEN OBTAINED AND ARE IN FULL FORCE,
AND EFFECT AND NO BORROWER HAS KNOWLEDGE OF ANY BASIS FOR REVOCATION OR
SUSPENSION OF ANY SUCH LICENSES, PERMITS, CONSENTS OR OTHER APPROVALS; (II) ALL
OPERATIONS OF EACH BORROWER AND ITS SUBSIDIARIES WERE CONSTRUCTED AND HAVE BEEN
OPERATED IN ACCORDANCE WITH THE REPRESENTATIONS AND CONDITIONS MADE OR SET FORTH
IN THE PERMIT APPLICATIONS AND THE PERMITS FOR EACH BORROWER AND ITS
SUBSIDIARIES; AND (III) EACH BORROWER AND ITS SUBSIDIARIES HAVE BEEN OPERATED IN
COMPLIANCE WITH SUCH PERMITS, LICENSES, CONSENTS, OR APPROVALS, AND AT THE
PRODUCTION LEVELS OR EMISSION LEVELS SPECIFIED IN SUCH PERMITS, LICENSES,
CONSENTS, OR APPROVALS;

 

(D)           NO PORTION OF ANY PROPERTY CURRENTLY OR FORMERLY OWNED, LEASED OR
OPERATED BY ANY BORROWER OR ANY OF ITS SUBSIDIARIES IS PART OF A SITE LISTED ON
THE NATIONAL PRIORITIES LIST UNDER CERCLA OR ANY SIMILAR RANKING OR LISTING
UNDER ANY STATE LAW;

 

(E)           ALL HAZARDOUS MATERIALS GENERATED BY EACH BORROWER AND ITS
SUBSIDIARIES HAVE BEEN TRANSPORTED, STORED, TREATED AND DISPOSED OF BY CARRIERS
OR TREATMENT, STORAGE AND DISPOSAL FACILITIES AUTHORIZED OR MAINTAINING VALID
PERMITS UNDER ALL APPLICABLE ENVIRONMENTAL LAWS;

 

(F)            TO THE KNOWLEDGE OF THE BORROWERS AND THEIR SUBSIDIARIES, NO
PERSON HAS DISPOSED OR RELEASED ANY HAZARDOUS MATERIALS ON, AT, OR UNDER ANY
PROPERTY CURRENTLY OR FORMERLY OWNED, LEASED OR OPERATED BY ANY BORROWER OR ANY
OF ITS SUBSIDIARIES;

 

(G)           NO BORROWER OR ANY OF ITS SUBSIDIARIES IS CURRENTLY OPERATING OR
REQUIRED TO OPERATE UNDER ANY COMPLIANCE ORDER, SCHEDULE, DECREE OR AGREEMENT,
ANY CONSENT DECREE, ORDER OR AGREEMENT, OR CORRECTIVE ACTION DECREE, ORDER OR
AGREEMENT ISSUED OR ENTERED INTO UNDER ANY ENVIRONMENTAL LAW; AND

 

(H)           THERE ARE NO UNDERGROUND STORAGE TANKS LOCATED ON, AT OR UNDER ANY
PROPERTY CURRENTLY OR FORMERLY OWNED, LEASED OR OPERATED BY ANY BORROWER OR ANY
OF ITS SUBSIDIARIES.

 

4.15         INTELLECTUAL PROPERTY.

 

(A)           EACH BORROWER AND EACH SUBSIDIARY OF A BORROWER OWNS OR HAS A
RIGHT TO USE ALL PATENTS, COPYRIGHTS, TRADEMARKS AND LICENSES THAT ARE NECESSARY
TO THE CONDUCT OF ITS BUSINESS AS CURRENTLY CONDUCTED. ATTACHED HERETO AS
SCHEDULE 4.15 (AS UPDATED SEMI-ANNUALLY) IS A TRUE, CORRECT, AND COMPLETE
LISTING OF PATENTS, COPYRIGHTS AND TRADEMARKS AS TO WHICH EACH BORROWER AND EACH
SUBSIDIARY OF A BORROWER IS THE OWNER OR IS AN EXCLUSIVE LICENSEE (COLLECTIVELY,
THE “SCHEDULED INTELLECTUAL PROPERTY COLLATERAL”).

 

(B)           EXCEPT AS SET FORTH IN SCHEDULE 4.15:

 

(I)            EACH BORROWER AND EACH SUBSIDIARY OF A BORROWER IS THE SOLE OWNER
OR IS AN EXCLUSIVE LICENSEE OF ITS SCHEDULED INTELLECTUAL PROPERTY COLLATERAL,
FREE AND CLEAR OF ANY LIEN (OTHER THAN ANY PERMITTED LIEN) WITHOUT THE PAYMENT
OF ANY MONIES OR ROYALTY EXCEPT WITH RESPECT TO OFF-THE-SHELF SOFTWARE;

 

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(II)           EACH BORROWER AND EACH SUBSIDIARY OF A BORROWER HAS TAKEN, AND
WILL CONTINUE TO TAKE, ALL ACTIONS WHICH ARE NECESSARY OR ADVISABLE TO ACQUIRE
AND PROTECT ITS SCHEDULED INTELLECTUAL PROPERTY COLLATERAL, INCLUDING, AS
APPLICABLE: (X) REGISTERING ALL COPYRIGHTS INCLUDED WITHIN THE SCHEDULED
INTELLECTUAL PROPERTY COLLATERAL WHICH, IN SUCH BORROWER’S OR SUBSIDIARY’S
BUSINESS JUDGMENT, ARE OF SUFFICIENT VALUE TO MERIT SUCH TREATMENT, IN THE U.S.
COPYRIGHT OFFICE, AND (Y) REGISTERING ALL PATENTS AND TRADEMARKS INCLUDED WITHIN
THE SCHEDULED INTELLECTUAL PROPERTY COLLATERAL WHICH, IN SUCH BORROWER’S OR
SUBSIDIARY’S BUSINESS JUDGMENT, ARE OF SUFFICIENT VALUE TO MERIT SUCH TREATMENT,
IN THE UNITED STATES PATENT AND TRADEMARK OFFICE;

 

(III)          EACH BORROWER’S AND EACH SUBSIDIARY OF A BORROWER’S RIGHTS IN THE
SCHEDULED INTELLECTUAL PROPERTY COLLATERAL ARE VALID AND ENFORCEABLE;

 

(IV)          NO BORROWER OR SUBSIDIARY OF A BORROWER HAS RECEIVED ANY MATERIAL
DEMAND, CLAIM, NOTICE OR INQUIRY FROM ANY PERSON IN RESPECT OF THE SCHEDULED
INTELLECTUAL PROPERTY COLLATERAL WHICH CHALLENGES, THREATENS TO CHALLENGE OR
INQUIRIES AS TO WHETHER THERE IS ANY BASIS TO CHALLENGE, THE VALIDITY OF, THE
RIGHTS OF BORROWERS AND THEIR SUBSIDIARIES IN OR THE RIGHT OF BORROWERS AND
THEIR SUBSIDIARIES TO USE, ANY SUCH SCHEDULED INTELLECTUAL PROPERTY COLLATERAL,
AND BORROWERS AND THEIR SUBSIDIARIES KNOW OF NO BASIS FOR ANY SUCH CHALLENGE;

 

(V)           BORROWERS AND THEIR SUBSIDIARIES HAVE NOT RECEIVED ANY WRITTEN
NOTICE OF ANY VIOLATION OR INFRINGEMENT OF ANY PROPRIETARY RIGHTS OF ANY OTHER
PERSON THAT COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE;

 

(VI)          BORROWERS AND THEIR SUBSIDIARIES HAVE NOT GRANTED ANY LICENSE WITH
RESPECT TO ANY SCHEDULED INTELLECTUAL PROPERTY COLLATERAL TO ANY PERSON; AND

 

(VII)         BORROWERS AND THEIR SUBSIDIARIES ARE NOT PURSUING ANY CLAIMS OR
CAUSES OF ACTIONS AGAINST ANY PERSON FOR INFRINGEMENT OF THE SCHEDULED
INTELLECTUAL PROPERTY COLLATERAL THAT COULD REASONABLY BE EXPECTED TO RESULT IN
A MATERIAL ADVERSE CHANGE.

 

4.16         LEASES. SET FORTH ON SCHEDULE 4.16 IS A COMPLETE AND ACCURATE LIST
OF ALL LEASES FOR EQUIPMENT AND REAL PROPERTY ENTERED INTO BY EACH BORROWER OR
ANY OF ITS SUBSIDIARIES, SHOWING: (I) THE DATE ON WHICH SUCH LEASE WAS ENTERED
INTO, (II) THE AMOUNT OF RENT DUE UNDER SUCH LEASE, (III) THE DATE ON WHICH SUCH
RENT IS DUE, AND (IV) THE TERM OF SUCH LEASE AND ANY RENEWAL OR OTHER EXTENSION
OPTIONS. BORROWERS ENJOY PEACEFUL AND UNDISTURBED POSSESSION UNDER ALL LEASES OF
EQUIPMENT AND REAL PROPERTY MATERIAL TO THEIR BUSINESS AND TO WHICH THEY ARE
PARTIES OR UNDER WHICH THEY ARE OPERATING, AND ALL OF SUCH MATERIAL LEASES ARE
VALID AND SUBSISTING AND NO MATERIAL DEFAULT BY BORROWERS EXISTS UNDER ANY OF
THEM. BORROWERS’ SUBSIDIARIES ENJOY PEACEFUL AND UNDISTURBED POSSESSION UNDER
ALL LEASES OF EQUIPMENT AND REAL PROPERTY MATERIAL TO THE BUSINESS OF THE
BORROWERS AND THEIR SUBSIDIARIES, TAKEN AS A WHOLE, AND TO WHICH THEY ARE
PARTIES OR UNDER WHICH THEY ARE OPERATING, AND ALL OF SUCH MATERIAL LEASES ARE
VALID AND SUBSISTING AND NO DEFAULT MATERIAL TO THE BUSINESS OF THE BORROWERS
AND THEIR SUBSIDIARIES, TAKEN AS A WHOLE, BY ANY OF BORROWERS’ SUBSIDIARIES
EXISTS UNDER ANY OF THEM.

 

4.17         DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. SET FORTH ON SCHEDULE
4.17 IS A LISTING OF ALL OF BORROWERS’ AND THEIR SUBSIDIARIES’ DEPOSIT ACCOUNTS
AND SECURITIES ACCOUNTS,

 

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INCLUDING, WITH RESPECT TO EACH BANK OR SECURITIES INTERMEDIARY (A) THE NAME AND
ADDRESS OF SUCH PERSON, AND (B) THE ACCOUNT NUMBERS OF THE DEPOSIT ACCOUNTS OR
SECURITIES ACCOUNTS MAINTAINED WITH SUCH PERSON. SUBJECT TO SECTION 6.12, EACH
OF THE DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS SET FORTH ON SCHEDULE 4.17 IS
THE SUBJECT OF A CONTROL AGREEMENT.

 

4.18         COMPLETE DISCLOSURE. ALL FACTUAL INFORMATION (TAKEN AS A WHOLE)
FURNISHED BY OR ON BEHALF OF BORROWERS OR THEIR SUBSIDIARIES IN WRITING TO AGENT
OR ANY LENDER (INCLUDING ALL INFORMATION CONTAINED IN THE SCHEDULES HERETO OR IN
THE OTHER LOAN DOCUMENTS) FOR PURPOSES OF OR IN CONNECTION WITH THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN IS,
AND ALL OTHER SUCH FACTUAL INFORMATION HEREAFTER FURNISHED BY OR ON BEHALF OF
BORROWERS OR THEIR SUBSIDIARIES IN WRITING TO AGENT OR ANY LENDER WILL BE, TRUE
AND ACCURATE IN ALL MATERIAL RESPECTS ON THE DATE AS OF WHICH SUCH INFORMATION
IS DATED OR CERTIFIED AND NOT INCOMPLETE BY OMITTING TO STATE ANY FACT NECESSARY
TO MAKE SUCH INFORMATION NOT MISLEADING AT SUCH TIME IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH SUCH INFORMATION WAS PROVIDED. ON THE CLOSING DATE,
THE CLOSING DATE PROJECTIONS REPRESENT, AND AS OF THE DATE ON WHICH ANY OTHER
PROJECTIONS ARE DELIVERED TO AGENT, SUCH ADDITIONAL PROJECTIONS REPRESENT
PARENT’S GOOD FAITH ESTIMATE OF ITS CONSOLIDATED FUTURE PERFORMANCE FOR THE
PERIODS COVERED THEREBY.

 

4.19         INDEBTEDNESS. SET FORTH ON SCHEDULE 4.19 IS A TRUE AND COMPLETE
LIST OF ALL INDEBTEDNESS OF EACH BORROWER AND EACH SUBSIDIARY OF EACH BORROWER
OUTSTANDING IMMEDIATELY PRIOR TO THE CLOSING DATE THAT IS TO REMAIN OUTSTANDING
AFTER THE CLOSING DATE, AND SUCH SCHEDULE ACCURATELY REFLECTS THE AGGREGATE
PRINCIPAL AMOUNT OF SUCH INDEBTEDNESS AS OF THE CLOSING DATE.

 

4.20         REGULATION U. NO ACTION HAS BEEN TAKEN OR IS CURRENTLY PLANNED BY
BORROWERS OR ANY OF THEIR SUBSIDIARIES WHICH WOULD CAUSE THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS TO VIOLATE REGULATION U OR ANY OTHER REGULATION OF
THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, OR TO VIOLATE THE EXCHANGE
ACT, IN EACH CASE AS IN EFFECT NOW OR AS THE SAME MAY HEREAFTER BE IN EFFECT.
BORROWER IS NOT ENGAGED IN THE BUSINESS OF EXTENDING CREDIT FOR THE PURPOSE OF
PURCHASING OR CARRYING MARGIN STOCK AS ONE OF ITS IMPORTANT ACTIVITIES AND,
EXCEPT AS MAY BE EXPRESSLY AGREED TO AND DOCUMENTED BETWEEN BORROWER AND AGENT,
NONE OF THE PROCEEDS OF THE ADVANCES OR THE TERM LOANS WILL BE USED DIRECTLY OR
INDIRECTLY FOR SUCH PURPOSE.

 

4.21         TAXES. EACH BORROWER AND ITS SUBSIDIARIES HAVE TIMELY FILED ALL
FEDERAL, STATE, FOREIGN (IF APPLICABLE) AND LOCAL TAX RETURNS AND OTHER REPORTS
WHICH ARE REQUIRED BY LAW TO BE FILED BY THEM, AND EACH BORROWER AND ITS
SUBSIDIARIES HAVE PAID OR CAUSED TO BE PAID TO THE PROPER AUTHORITIES WHEN DUE
ALL TAXES (INCLUDING, WITHOUT LIMITATION, PAYROLL AND OTHER EMPLOYMENT RELATED
TAXES) THAT ARE DUE AND PAYABLE, EXCEPT ONLY FOR TAXES SUBJECT TO A PERMITTED
PROTEST.

 

4.22         COMPLIANCE WITH LAW, ETC. NONE OF THE BORROWERS IS IN VIOLATION OF
ITS GOVERNING DOCUMENTS. NO BORROWER IS IN VIOLATION OF ANY LAW (INCLUDING,
WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS), RULE, REGULATION, JUDGMENT OR ORDER
OF ANY GOVERNMENTAL AUTHORITY APPLICABLE TO IT OR ANY OF ITS PROPERTY OR ASSETS,
OR ANY TERM OF ANY AGREEMENT OR INSTRUMENT BINDING ON OR OTHERWISE AFFECTING IT
OR ANY OF ITS PROPERTIES, WHICH VIOLATION COULD REASONABLY BE EXPECTED TO RESULT
IN, EITHER INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE CHANGE. NO
DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING.

 

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4.23         ADVERSE AGREEMENTS, ETC. NO BORROWER IS A PARTY TO ANY AGREEMENT OR
INSTRUMENT, OR SUBJECT TO ANY GOVERNING DOCUMENT RESTRICTION OR ANY JUDGMENT,
ORDER, REGULATION, RULING OR OTHER REQUIREMENT OF A COURT OR OTHER GOVERNMENTAL
AUTHORITY, WHICH HAS RESULTED IN, OR COULD REASONABLY BE EXPECTED TO RESULT IN,
A MATERIAL ADVERSE CHANGE.

 

4.24         PERMITS, ETC. EACH BORROWER HAS BEEN, AND IS, IN COMPLIANCE WITH,
ALL PERMITS, LICENSES, AUTHORIZATIONS, APPROVALS, ENTITLEMENTS AND
ACCREDITATIONS REQUIRED FOR SUCH PERSON LAWFULLY TO OWN, LEASE, MANAGE OR
OPERATE, OR TO ACQUIRE, EACH BUSINESS CURRENTLY OWNED, LEASED, MANAGED OR
OPERATED, OR TO BE ACQUIRED, BY SUCH PERSON, OTHER THAN THOSE PERMITS, LICENSES,
AUTHORIZATIONS, ENTITLEMENTS AND ACCELERATIONS, THE LACK OF WHICH, OR THE
FAILURE TO BE IN COMPLIANCE WITH WHICH, COULD NOT REASONABLY BE EXPECTED TO
RESULT IN, EITHER INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE CHANGE.
AS OF THE CLOSING DATE, NO CONDITION EXISTS OR EVENT HAS OCCURRED WHICH, IN
ITSELF OR WITH THE GIVING OF NOTICE OR LAPSE OF TIME OR BOTH, WOULD RESULT IN
THE SUSPENSION, REVOCATION, IMPAIRMENT, FORFEITURE OR NON-RENEWAL OF ANY SUCH
PERMIT, LICENSE, AUTHORIZATION, APPROVAL, ENTITLEMENT OR ACCREDITATION, AND, TO
THE KNOWLEDGE OF ANY BORROWER, THERE IS NO CLAIM THAT ANY THEREOF IS NOT IN FULL
FORCE AND EFFECT IN ALL MATERIAL RESPECTS.

 

4.25         INSURANCE. AS OF THE CLOSING DATE, EACH BORROWER AND EACH OF THEIR
RESPECTIVE SUBSIDIARIES KEEPS ITS PROPERTY ADEQUATELY INSURED AND MAINTAINS (I)
INSURANCE TO SUCH EXTENT AND AGAINST SUCH RISKS, INCLUDING FIRE, AS IS CUSTOMARY
WITH SIMILARLY SITUATED COMPANIES IN THE SAME OR SIMILAR BUSINESSES, (II)
WORKER’S COMPENSATION INSURANCE IN THE AMOUNT REQUIRED BY APPLICABLE LAW, (III)
PUBLIC LIABILITY INSURANCE, WHICH SHALL INCLUDE PRODUCT LIABILITY INSURANCE, IN
THE AMOUNT CUSTOMARY WITH SIMILARLY SITUATED COMPANIES IN THE SAME OR SIMILAR
BUSINESS AGAINST CLAIMS FOR PERSONAL INJURY OR DEATH ON PROPERTIES OWNED,
OCCUPIED OR CONTROLLED BY IT, AND (IV) SUCH OTHER INSURANCE AS MAY BE REQUIRED
BY LAW OR AS MAY BE REQUIRED BY AGENT, IN THE EXERCISE OF ITS REASONABLE
JUDGMENT (INCLUDING, WITHOUT LIMITATION, AGAINST LARCENY, EMBEZZLEMENT OR OTHER
CRIMINAL MISAPPROPRIATION AND MEDICAL MALPRACTICE AND PROFESSIONAL LIABILITY
INSURANCE). SUCH POLICIES ARE IN FULL FORCE AND EFFECT ON THE CLOSING DATE, AND
NO BORROWER NOR ANY OF THEIR RESPECTIVE SUBSIDIARIES HAS RECEIVED NOTICE OF
CANCELLATION WITH RESPECT TO ANY SUCH POLICY.

 

4.26         EMPLOYEE AND LABOR MATTERS. THERE IS (I) NO UNFAIR LABOR PRACTICE
COMPLAINT PENDING OR, TO THE KNOWLEDGE OF ANY BORROWER, THREATENED AGAINST ANY
BORROWER OR ANY SUBSIDIARY OF ANY BORROWER BEFORE ANY GOVERNMENTAL AUTHORITY AND
NO GRIEVANCE OR ARBITRATION PROCEEDING PENDING OR THREATENED AGAINST ANY
BORROWER OR ANY SUBSIDIARY OF ANY BORROWER WHICH ARISES OUT OF OR UNDER ANY
COLLECTIVE BARGAINING AGREEMENT WHICH HAS HAD OR COULD REASONABLY BE EXPECTED TO
RESULT IN, EITHER INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL ADVERSE CHANGE,
(II) NO STRIKE, LABOR DISPUTE, SLOWDOWN, STOPPAGE OR SIMILAR ACTION OR GRIEVANCE
PENDING OR THREATENED AGAINST ANY BORROWER OR ANY SUBSIDIARY OF ANY BORROWER,
OTHER THAN EMPLOYEE GRIEVANCES ARISING IN THE ORDINARY COURSE OF BUSINESS WHICH
COULD NOT REASONABLY BE EXPECTED TO RESULT IN, EITHER INDIVIDUALLY OR IN THE
AGGREGATE, A MATERIAL ADVERSE CHANGE OR (III) AS OF THE CLOSING DATE, TO THE
KNOWLEDGE OF ANY BORROWER, NO UNION REPRESENTATION QUESTION EXISTING WITH
RESPECT TO THE EMPLOYEES OF ANY BORROWER OR ANY SUBSIDIARY OF ANY BORROWER AND
NO UNION ORGANIZING ACTIVITY TAKING PLACE WITH RESPECT TO ANY OF THE EMPLOYEES
OF ANY BORROWER OR ANY SUBSIDIARY OF ANY BORROWER. AS OF THE CLOSING DATE, NO
ANY BORROWER OR ANY SUBSIDIARY OF ANY BORROWER HAS INCURRED ANY LIABILITY OR
OBLIGATION UNDER THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT OR
SIMILAR STATE LAW, WHICH REMAINS UNPAID OR UNSATISFIED. THE HOURS WORKED AND
PAYMENTS MADE TO EMPLOYEES OF ANY BORROWER OR ANY SUBSIDIARY OF ANY BORROWER
HAVE NOT

 

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BEEN IN VIOLATION OF THE FAIR LABOR STANDARDS ACT OR ANY OTHER APPLICABLE LEGAL
REQUIREMENTS, EXCEPT TO THE EXTENT SUCH VIOLATIONS COULD NOT, INDIVIDUALLY OR IN
THE AGGREGATE, REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE.
ALL MATERIAL PAYMENTS DUE FROM ANY BORROWER OR ANY SUBSIDIARY OF ANY BORROWER ON
ACCOUNT OF WAGES AND EMPLOYEE HEALTH AND WELFARE INSURANCE AND OTHER BENEFITS
HAVE BEEN PAID OR ACCRUED AS A LIABILITY ON THE BOOKS OF ANY BORROWER OR ANY
SUBSIDIARY OF ANY BORROWER, EXCEPT WHERE THE FAILURE TO DO SO COULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO RESULT IN A MATERIAL
ADVERSE CHANGE. AS OF THE CLOSING DATE, NO BORROWER NOR ANY OF THEIR RESPECTIVE
SUBSIDIARIES IS A PARTY TO ANY COLLECTIVE BARGAINING AGREEMENT.

 

4.27         MATERIAL CONTRACTS. EACH OF THE BORROWERS HAS HERETOFORE MADE
AVAILABLE TO AGENT TRUE AND COMPLETE COPIES OF ALL OF THE MATERIAL CONTRACTS TO
WHICH ANY BORROWER IS A PARTY, EACH OF WHICH IS SET FORTH ON SCHEDULE 4.28. AS
OF THE CLOSING DATE, TO THE KNOWLEDGE OF ANY BORROWER, ALL OF THE MATERIAL
CONTRACTS ARE VALID AND IN FULL FORCE AND EFFECT (EXCEPT AS MAY BE LIMITED BY
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR OTHER SIMILAR
LAWS OR BY GENERAL EQUITABLE PRINCIPLES RELATING TO ENFORCEABILITY, AND EXCEPT
TO THE EXTENT ANY SUCH MATERIAL CONTRACT SHALL HAVE EXPIRED IN ACCORDANCE WITH
ITS TERMS), AND NO BREACH OR DEFAULT, OR EVENT WHICH, WITH NOTICE OR LAPSE OF
TIME OR BOTH, WOULD CONSTITUTE A BREACH OR DEFAULT BY ANY BORROWER EXISTS, WITH
RESPECT THERETO. NO BORROWER HAS RECEIVED ANY NOTICE OF CANCELLATION OR
NON-RENEWAL OF ANY OF THE MATERIAL CONTRACTS. AS OF THE CLOSING DATE, TO THE
KNOWLEDGE OF ANY BORROWER, NONE OF THE MATERIAL CONTRACTS NOR ANY RIGHTS
THEREUNDER WILL BE IMPAIRED BY THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.

 

4.28         CAPACITY. EACH BORROWER AND EACH OF ITS SUBSIDIARIES, BY REASON OF
ITS OWN BUSINESS AND FINANCIAL EXPERIENCE HAS THE “CAPACITY TO PROTECT ITS OWN
INTERESTS” IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
WITHIN THE MEANING OF SECTION 25118(F)(2) AND SECTION 25118(G) OF THE CALIFORNIA
CORPORATIONS CODE.

 

4.29         INVESTMENT COMPANY ACTS. NONE OF THE BORROWERS OR ANY OF ITS
SUBSIDIARIES IS AN “INVESTMENT COMPANY” OR AN “AFFILIATED PERSON” OR “PROMOTER”
OF, OR “PRINCIPAL UNDERWRITER” OF OR FOR, AN “INVESTMENT COMPANY”, AS SUCH TERMS
ARE DEFINED IN THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.

 

4.30         THE IFN CREDIT FACILITY. THE TOTAL OUTSTANDING AMOUNT OF THE IFN
CREDIT FACILITY AS OF THE CLOSING DATE IS €845,688.

 

4.31         THE LLOYDS CREDIT FACILITY. THE TOTAL OUTSTANDING AMOUNT OF THE
LLOYDS CREDIT FACILITY AS OF THE CLOSING DATE IS THE SUM OF $968,209.49 AND
£808,512.14.

 

4.32         THE WELLS FARGO CREDIT FACILITY. THE TOTAL OUTSTANDING AMOUNT OF
THE WELLS FARGO CREDIT FACILITY AS OF THE CLOSING DATE IS $1,926,773.53.

 

5.             AFFIRMATIVE COVENANTS.

 

Each Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, Borrowers shall and shall
cause each of their respective Subsidiaries to do all of the following
(provided, however, that only Administrative Borrower is

 

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required to comply with Section 5.2 and Section 5.3, in each case on behalf of
itself and the other Borrowers):

 

5.1           ACCOUNTING SYSTEM. MAINTAIN A SYSTEM OF ACCOUNTING THAT ENABLES
BORROWERS TO PRODUCE FINANCIAL STATEMENTS IN ACCORDANCE WITH GAAP AND MAINTAIN
RECORDS PERTAINING TO THE COLLATERAL THAT CONTAIN INFORMATION AS FROM TIME TO
TIME REASONABLY MAY BE REQUESTED BY AGENT. BORROWERS ALSO SHALL KEEP A REPORTING
SYSTEM THAT SHOWS ALL ADDITIONS, SALES, CLAIMS, RETURNS AND ALLOWANCES WITH
RESPECT TO THEIR SALES.

 

5.2           COLLATERAL REPORTING. PROVIDE AGENT (AND IF SO REQUESTED BY AGENT,
WITH COPIES FOR EACH LENDER) WITH EACH OF THE REPORTS SET FORTH ON SCHEDULE 5.2
AT THE TIMES SPECIFIED THEREIN. IN ADDITION, EACH BORROWER AGREES TO REASONABLY
COOPERATE FULLY WITH AGENT TO MAINTAIN A SYSTEM OF ELECTRONIC COLLATERAL
REPORTING IN ORDER TO PROVIDE ELECTRONIC REPORTING OF EACH OF THE ITEMS SET
FORTH ABOVE.

 

5.3           FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. DELIVER TO AGENT,
WITH COPIES TO EACH LENDER, EACH OF THE FINANCIAL STATEMENTS, REPORTS, OR OTHER
ITEMS SET FORTH ON SCHEDULE 5.3 AT THE TIME SPECIFIED HEREIN. IN ADDITION,
PARENT AGREES THAT NO SUBSIDIARY OF PARENT WILL HAVE A FISCAL YEAR END DIFFERENT
FROM THAT OF PARENT, OTHER THAN AS REQUIRED BY APPLICABLE LAW.

 

5.4           APPRAISAL. PERMIT AGENT TO HAVE THE INVENTORY REAPPRAISED BY AN
APPRAISAL COMPANY SELECTED BY AGENT FROM TIME TO TIME AFTER THE CLOSING DATE FOR
THE PURPOSE OF REDETERMINING THE BORROWING BASE.

 

5.5           INSPECTION. PERMIT AGENT, EACH LENDER, AND EACH OF THEIR DULY
AUTHORIZED REPRESENTATIVES OR AGENTS TO VISIT ANY OF ITS PROPERTIES AND INSPECT
ANY OF ITS ASSETS OR BOOKS AND RECORDS, TO EXAMINE AND MAKE COPIES OF ITS BOOKS
AND RECORDS, AND TO DISCUSS ITS AFFAIRS, FINANCES, AND ACCOUNTS WITH, ITS
OFFICERS AND EMPLOYEES AT SUCH REASONABLE TIMES AND INTERVALS AS AGENT OR ANY
SUCH LENDER MAY DESIGNATE AND, SO LONG AS NO DEFAULT OR EVENT OF DEFAULT EXISTS
AND IS CONTINUING, WITH REASONABLE PRIOR NOTICE TO ADMINISTRATIVE BORROWER.

 

5.6           MAINTENANCE OF PROPERTIES. MAINTAIN AND PRESERVE ALL OF ITS
PROPERTIES WHICH ARE NECESSARY OR USEFUL IN THE PROPER CONDUCT TO ITS BUSINESS
IN GOOD WORKING ORDER AND CONDITION, ORDINARY WEAR, TEAR, AND CASUALTY EXCEPTED
(AND EXCEPT WHERE THE FAILURE TO DO SO COULD NOT BE REASONABLY EXPECTED TO
RESULT IN A MATERIAL ADVERSE CHANGE), AND COMPLY IN ALL MATERIAL RESPECTS AT ALL
TIMES WITH THE PROVISIONS OF ALL MATERIAL LEASES TO WHICH IT IS A PARTY AS
LESSEE, SO AS TO PREVENT ANY MATERIAL LOSS OR FORFEITURE THEREOF OR THEREUNDER.

 

5.7           TAXES. PAY OR DISCHARGE, AND CAUSE EACH OF ITS SUBSIDIARIES TO PAY
OR DISCHARGE, WHEN DUE, (A) ALL TAXES, ASSESSMENTS AND CHARGES OF ANY
GOVERNMENTAL AUTHORITY (INCLUDING, WITHOUT LIMITATION, F.I.C.A., F.U.T.A., STATE
DISABILITY, AND FEDERAL, STATE AND LOCAL INCOME TAXES) LEVIED OR IMPOSED UPON IT
OR UPON ITS INCOME OR PROFITS OR UPON ANY PROPERTIES BELONGING TO IT (INCLUDING,
WITHOUT LIMITATION, THE COLLATERAL), PRIOR TO THE DATE ON WHICH PENALTIES ATTACH
THERETO AND (B) ALL TAXES REQUIRED TO BE WITHHELD BY IT; PROVIDED, THAT NO
BORROWER OR SUBSIDIARY SHALL BE REQUIRED TO PAY OR DISCHARGE ANY SUCH TAX,
ASSESSMENT, CHARGE OR CLAIM THAT IS THE SUBJECT OF A PERMITTED PROTEST.
BORROWERS WILL AND WILL CAUSE THEIR SUBSIDIARIES TO, UPON REQUEST, FURNISH AGENT
WITH PROOF REASONABLY SATISFACTORY TO AGENT INDICATING THAT THE APPLICABLE
BORROWER OR

 

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SUBSIDIARY HAS MADE SUCH PAYMENTS OR DEPOSITS. EACH BORROWER WILL TIMELY FILE,
AND WILL CAUSE ITS SUBSIDIARIES TO TIMELY FILE, ALL TAX RETURNS REQUIRED TO BE
FILED IN CONNECTION WITH THE PAYMENT OF TAXES REQUIRED BY THIS SECTION 5.7. NO
BORROWER WILL CHANGE ITS FEDERAL TAX EMPLOYER IDENTIFICATION NUMBER WITHOUT
PROVIDING NOT LESS THAN THIRTY (30) DAYS ADVANCE WRITTEN NOTICE TO AGENT, OR
REVOKE, ALTER OR AMEND ANY TAX INFORMATION AUTHORIZATION (ON IRS FORM 8821 OR
OTHERWISE) GIVEN TO AGENT.

 

5.8           INSURANCE.

 

(A)           AT BORROWERS’ EXPENSE, MAINTAIN INSURANCE RESPECTING THEIR AND
THEIR SUBSIDIARIES’ ASSETS WHEREVER LOCATED, COVERING LOSS OR DAMAGE BY FIRE,
THEFT, EXPLOSION, AND ALL OTHER HAZARDS AND RISKS AS ORDINARILY ARE INSURED
AGAINST BY OTHER PERSONS ENGAGED IN THE SAME OR SIMILAR BUSINESSES. BORROWERS
ALSO SHALL MAINTAIN BUSINESS INTERRUPTION, PUBLIC LIABILITY, AND PRODUCT
LIABILITY INSURANCE, AS WELL AS INSURANCE AGAINST LARCENY AND EMBEZZLEMENT. ALL
SUCH POLICIES OF INSURANCE SHALL BE IN SUCH AMOUNTS AS ARE ORDINARILY MAINTAINED
BY PERSONS ENGAGED IN THE SAME OR SIMILAR BUSINESSES AND WITH SUCH INSURANCE
COMPANIES AS ARE REASONABLY SATISFACTORY TO AGENT. OTHER THAN BUSINESS
INTERRUPTION INSURANCE POLICIES, BORROWERS SHALL DELIVER OR HAS DELIVERED
CERTIFICATES OF INSURANCE EVIDENCING ALL REQUIRED COVERAGES TO AGENT WITH AN
ENDORSEMENT NAMING AGENT AS LOSS PAYEE (UNDER A SATISFACTORY LENDER’S LOSS
PAYABLE ENDORSEMENT) OR ADDITIONAL INSURED, AS APPROPRIATE. EACH CERTIFICATE OF
INSURANCE OR ENDORSEMENT SHALL CONTAIN A CLAUSE REQUIRING THE INSURER TO GIVE
NOT LESS THAN 30 DAYS’ PRIOR WRITTEN NOTICE TO AGENT IN THE EVENT OF
CANCELLATION OF THE POLICY FOR ANY REASON WHATSOEVER.

 

(B)           ADMINISTRATIVE BORROWER SHALL GIVE AGENT PROMPT NOTICE OF ANY LOSS
OF THE COLLATERAL EXCEEDING $100,000 COVERED BY SUCH INSURANCE. BORROWERS SHALL
HAVE THE EXCLUSIVE RIGHT TO ADJUST ANY SUCH LOSSES PAYABLE UNDER ANY SUCH
INSURANCE POLICIES WHICH ARE LESS THAN $100,000. IN THE CASE OF ANY LOSSES OF
THE COLLATERAL PAYABLE UNDER SUCH INSURANCE EXCEEDING $100,000, TO THE EXTENT
PERMITTED UNDER SUCH INSURANCE POLICIES, AGENT SHALL HAVE THE EXCLUSIVE RIGHT TO
ADJUST ANY LOSSES PAYABLE UNDER ANY SUCH INSURANCE POLICIES (OTHER THAN BUSINESS
INTERRUPTION INSURANCE POLICIES), WITHOUT ANY LIABILITY TO BORROWERS WHATSOEVER
IN RESPECT OF SUCH ADJUSTMENTS. ANY MONIES RECEIVED AS PAYMENT FOR ANY LOSS
UNDER ANY INSURANCE POLICY MENTIONED ABOVE (OTHER THAN LIABILITY OR BUSINESS
INTERRUPTION INSURANCE POLICIES) OR AS PAYMENT OF ANY AWARD OR COMPENSATION FOR
CONDEMNATION OR TAKING BY EMINENT DOMAIN OF COLLATERAL, SHALL BE PAID OVER TO
AGENT AND APPLIED AS PROVIDED IN SECTION 2.4(D)(II).

 

5.9           LOCATION OF INVENTORY AND EQUIPMENT. KEEP THE INVENTORY AND
EQUIPMENT ONLY AT THE LOCATIONS IDENTIFIED ON SCHEDULE 4.5 OR IN TRANSIT FROM
ONE SUCH LOCATION TO ANOTHER; PROVIDED, HOWEVER, THAT ADMINISTRATIVE BORROWER
MAY AMEND SCHEDULE 4.5 SO LONG AS SUCH AMENDMENT OCCURS BY WRITTEN NOTICE TO
AGENT NOT LESS THAN 30 DAYS PRIOR TO THE DATE ON WHICH SUCH INVENTORY OR
EQUIPMENT IS MOVED TO SUCH NEW LOCATION, SO LONG AS SUCH NEW LOCATION IS WITHIN
THE ORIGINAL COUNTRY OF ORIGIN (I.E. CONTINENTAL UNITED STATES, FRANCE, UNITED
KINGDOM OR JAPAN), AND SO LONG AS, AT THE TIME OF SUCH WRITTEN NOTIFICATION, IF
SUCH LOCATION IS NOT OWNED BY A BORROWER, THE APPLICABLE BORROWER PROVIDES AGENT
A COLLATERAL ACCESS AGREEMENT WITH RESPECT THERETO.

 

5.10         COMPLIANCE WITH LAWS. COMPLY WITH THE REQUIREMENTS OF ALL
APPLICABLE LAWS, RULES, REGULATIONS, AND ORDERS OF ANY GOVERNMENTAL AUTHORITY,
OTHER THAN LAWS, RULES, REGULATIONS,

 

31

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AND ORDERS THE NON-COMPLIANCE WITH WHICH, INDIVIDUALLY OR IN THE AGGREGATE,
COULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE.

 

5.11         LEASES. PAY, OR CAUSE TO BE PAID, WHEN DUE ALL RENTS AND OTHER
AMOUNTS PAYABLE UNDER ANY MATERIAL LEASES TO WHICH ANY BORROWER OR ANY
SUBSIDIARY OF A BORROWER IS A PARTY OR BY WHICH ANY BORROWER’S OR ANY OF ITS
SUBSIDIARIES’ PROPERTIES AND ASSETS ARE BOUND.

 

5.12         EXISTENCE. AT ALL TIMES PRESERVE AND KEEP IN FULL FORCE AND EFFECT
EACH BORROWER’S AND EACH OF ITS SUBSIDIARIES’ VALID EXISTENCE AND GOOD STANDING
AND ANY RIGHTS AND FRANCHISES, IN EACH CASE, MATERIAL TO THE BORROWERS’
BUSINESSES TAKEN AS A WHOLE.

 

5.13         ENVIRONMENTAL.

 

(A)           KEEP ANY PROPERTY OWNED, LEASED OR OPERATED BY ANY BORROWER OR ANY
SUBSIDIARY OF A BORROWER FREE OF ANY ENVIRONMENTAL LIENS OR POST BONDS OR OTHER
FINANCIAL ASSURANCES SUFFICIENT TO SATISFY THE OBLIGATIONS OR LIABILITY
EVIDENCED BY SUCH ENVIRONMENTAL LIENS, (B) COMPLY, IN ALL MATERIAL RESPECTS,
WITH ENVIRONMENTAL LAWS AND PROVIDE TO AGENT DOCUMENTATION OF SUCH COMPLIANCE
WHICH AGENT REASONABLY REQUESTS, (C) PROMPTLY NOTIFY AGENT OF ANY RELEASE OF A
HAZARDOUS MATERIAL IN ANY REPORTABLE QUANTITY FROM OR ONTO PROPERTY OWNED,
LEASED OR OPERATED BY ANY BORROWER OR ANY SUBSIDIARY OF A BORROWER AND TAKE ANY
REMEDIAL ACTIONS REQUIRED TO ABATE SAID RELEASE OR OTHERWISE TO COME INTO
COMPLIANCE WITH APPLICABLE ENVIRONMENTAL LAW, AND (D) PROMPTLY, BUT IN ANY EVENT
WITHIN 5 DAYS OF ITS RECEIPT THEREOF, PROVIDE AGENT WITH WRITTEN NOTICE OF ANY
OF THE FOLLOWING:  (I) NOTICE THAT AN ENVIRONMENTAL LIEN HAS BEEN FILED AGAINST
ANY OF THE REAL OR PERSONAL PROPERTY OF ANY BORROWER THAT IS NOT A PERMITTED
LIEN, (II) COMMENCEMENT OF ANY ENVIRONMENTAL ACTION OR NOTICE THAT AN
ENVIRONMENTAL ACTION WILL BE FILED AGAINST ANY BORROWER OR ANY SUBSIDIARY OF A
BORROWER WHICH COULD REASONABLY BE EXPECTED TO CAUSE A MATERIAL ADVERSE CHANGE,
AND (III) NOTICE OF A VIOLATION, CITATION, OR OTHER ADMINISTRATIVE ORDER WHICH
REASONABLY COULD BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE.

 

5.14         DISCLOSURE UPDATES. PROMPTLY AND IN NO EVENT LATER THAN 5 BUSINESS
DAYS AFTER OBTAINING KNOWLEDGE THEREOF, NOTIFY AGENT IF ANY WRITTEN INFORMATION,
EXHIBIT, OR REPORT FURNISHED TO THE LENDER GROUP CONTAINED, AT THE TIME IT WAS
FURNISHED, ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITTED TO STATE ANY
MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS CONTAINED THEREIN NOT MISLEADING
IN LIGHT OF THE FACTS AND CIRCUMSTANCES IN WHICH SUCH STATEMENT WAS MADE OR
KNOWN BY ANY BORROWER OR ANY SUBSIDIARY OF A BORROWER TO EXIST AT THE TIME SUCH
STATEMENT WAS MADE.

 

5.15         CONTROL AGREEMENTS. TAKE ALL REASONABLE STEPS IN ORDER FOR AGENT TO
OBTAIN CONTROL IN ACCORDANCE WITH SECTIONS 8106, 9104, 9105, 9106, AND 9107 OF
THE CODE WITH RESPECT TO (SUBJECT TO THE PROVISO CONTAINED IN SECTION 6.12) ALL
OF ITS SECURITIES ACCOUNTS, DEPOSIT ACCOUNTS, ELECTRONIC CHATTEL PAPER,
INVESTMENT PROPERTY, AND LETTER OF CREDIT RIGHTS.

 

5.16         ASSIGNMENT OF PROCEEDS. EXECUTE AND DELIVER TO AGENT ANY AND ALL
ADDITIONAL DOCUMENTS THAT AGENT MAY REQUEST IN ITS PERMITTED DISCRETION, IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO AGENT, PROVIDING FOR THE ASSIGNMENT OF
ALL PROCEEDS TO AGENT ARISING FROM ANY LICENSE OR ROYALTY AGREEMENT ENTERED INTO
BY ANY BORROWER WITH RESPECT TO SUCH BORROWER’S GENERAL INTANGIBLES.

 

32

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5.17         EMPLOYEE BENEFITS.

 

(A)           DELIVER TO AGENT:  (I) PROMPTLY, AND IN ANY EVENT WITHIN 10
BUSINESS DAYS AFTER BORROWERS OR THEIR SUBSIDIARIES KNOW OR HAVE REASON TO KNOW
THAT AN ERISA EVENT HAS OCCURRED THAT REASONABLY COULD BE EXPECTED TO RESULT IN
A MATERIAL ADVERSE CHANGE, A WRITTEN STATEMENT OF THE CHIEF FINANCIAL OFFICER OF
SUCH BORROWER OR SUCH SUBSIDIARY DESCRIBING SUCH ERISA EVENT AND ANY ACTION THAT
IS BEING TAKING WITH RESPECT THERETO BY BORROWERS OR THEIR SUBSIDIARIES OR THEIR
ERISA AFFILIATES, AND ANY ACTION TAKEN OR THREATENED BY THE IRS, DEPARTMENT OF
LABOR, OR PBGC; BORROWERS AND SUBSIDIARIES SHALL BE DEEMED TO KNOW ALL FACTS
KNOWN BY THE ADMINISTRATOR OF ANY BENEFIT PLAN OF WHICH IT IS THE PLAN SPONSOR,
(II) PROMPTLY, AND IN ANY EVENT WITHIN THREE BUSINESS DAYS AFTER THE FILING
THEREOF WITH THE IRS, A COPY OF EACH FUNDING WAIVER REQUEST FILED WITH RESPECT
TO ANY BENEFIT PLAN AND ALL COMMUNICATIONS RECEIVED BY BORROWERS OR THEIR
SUBSIDIARIES OR, TO THE KNOWLEDGE OF BORROWERS OR THEIR SUBSIDIARIES, ANY ERISA
AFFILIATE WITH RESPECT TO SUCH REQUEST, AND (III) PROMPTLY, AND IN ANY EVENT
WITHIN THREE BUSINESS DAYS AFTER RECEIPT BY BORROWERS OR THEIR SUBSIDIARIES OR,
TO THE KNOWLEDGE OF BORROWERS OR THEIR SUBSIDIARIES OR ANY OF THEIR ERISA
AFFILIATES, OF THE PBGC’S INTENTION TO TERMINATE A BENEFIT PLAN OR TO HAVE A
TRUSTEE APPOINTED TO ADMINISTER A BENEFIT PLAN, COPIES OF EACH SUCH NOTICE.

 

(B)           CAUSE TO BE DELIVERED TO AGENT, UPON AGENT’S REQUEST, EACH OF THE
FOLLOWING:  (I) A COPY OF EACH PLAN (OR, WHERE ANY SUCH PLAN IS NOT IN WRITING,
COMPLETE DESCRIPTION THEREOF) (AND IF APPLICABLE, RELATED TRUST AGREEMENTS OR
OTHER FUNDING INSTRUMENTS) AND ALL AMENDMENTS THERETO, ALL MATERIAL WRITTEN
INTERPRETATIONS THEREOF AND MATERIAL WRITTEN DESCRIPTIONS THEREOF THAT HAVE BEEN
DISTRIBUTED TO EMPLOYEES OR FORMER EMPLOYEES OF BORROWERS OR THEIR SUBSIDIARIES;
(II) THE MOST RECENT DETERMINATION LETTER ISSUED BY THE IRS WITH RESPECT TO EACH
BENEFIT PLAN; (III) FOR THE THREE MOST RECENT PLAN YEARS, ANNUAL REPORTS ON FORM
5500 SERIES REQUIRED TO BE FILED WITH ANY GOVERNMENTAL AGENCY FOR EACH BENEFIT
PLAN; (IV) ALL ACTUARIAL REPORTS PREPARED FOR THE LAST THREE PLAN YEARS FOR EACH
BENEFIT PLAN; (V) A LISTING OF ALL MULTIEMPLOYER PLANS, WITH THE AGGREGATE
AMOUNT OF THE MOST RECENT ANNUAL CONTRIBUTIONS REQUIRED TO BE MADE BY BORROWERS
OR THEIR SUBSIDIARIES OR ANY OF THEIR ERISA AFFILIATES TO EACH SUCH PLAN AND
COPIES OF THE COLLECTIVE BARGAINING AGREEMENTS REQUIRING SUCH CONTRIBUTIONS;
(VI) ANY INFORMATION THAT HAS BEEN PROVIDED TO BORROWERS OR THEIR SUBSIDIARIES
OR ANY OF THEIR ERISA AFFILIATES REGARDING WITHDRAWAL LIABILITY UNDER ANY
MULTIEMPLOYER PLAN; AND (VII) THE AGGREGATE AMOUNT OF THE MOST RECENT ANNUAL
PAYMENTS MADE TO FORMER EMPLOYEES OF BORROWERS OR ITS SUBSIDIARIES UNDER ANY
RETIREE HEALTH PLAN.

 

5.18         FORMATION OF SUBSIDIARIES. AT THE TIME THAT ANY BORROWER FORMS ANY
DIRECT OR INDIRECT SUBSIDIARY OR ACQUIRES ANY DIRECT OR INDIRECT SUBSIDIARY
AFTER THE CLOSING DATE, SUCH BORROWER SHALL (A), IF SUCH NEW SUBSIDIARY IS A
DOMESTIC SUBSIDIARY, CAUSE SUCH NEW SUBSIDIARY TO PROVIDE TO AGENT A JOINDER TO
THIS AGREEMENT, TOGETHER WITH SUCH OTHER SECURITY DOCUMENTS (INCLUDING, IF
REQUESTED BY AGENT, MORTGAGES WITH RESPECT TO ANY REAL PROPERTY OF SUCH NEW
SUBSIDIARY), AS WELL AS APPROPRIATE FINANCING STATEMENTS (AND WITH RESPECT TO
ALL PROPERTY SUBJECT TO A MORTGAGE, FIXTURE FILINGS), ALL IN FORM AND SUBSTANCE
SATISFACTORY TO AGENT (INCLUDING BEING SUFFICIENT TO GRANT LENDER A FIRST
PRIORITY LIEN (SUBJECT TO PERMITTED LIENS) IN AND TO THE ASSETS OF SUCH NEWLY
FORMED OR ACQUIRED SUBSIDIARY), (B) PROVIDE TO AGENT A PLEDGE AGREEMENT AND
APPROPRIATE CERTIFICATES AND POWERS OR FINANCING STATEMENTS, HYPOTHECATING ALL
OF THE DIRECT OR BENEFICIAL OWNERSHIP INTEREST IN ANY SUCH NEW SUBSIDIARY, IN
FORM AND SUBSTANCE SATISFACTORY TO AGENT, AND (C) PROVIDE TO AGENT ALL OTHER
DOCUMENTATION, INCLUDING ONE OR MORE OPINIONS OF COUNSEL SATISFACTORY TO AGENT,
WHICH IN ITS OPINION IS APPROPRIATE WITH RESPECT TO THE EXECUTION

 

33

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AND DELIVERY OF THE APPLICABLE DOCUMENTATION REFERRED TO ABOVE (INCLUDING
POLICIES OF TITLE INSURANCE OR OTHER DOCUMENTATION WITH RESPECT TO ALL PROPERTY
SUBJECT TO A MORTGAGE). ANY DOCUMENT, AGREEMENT, OR INSTRUMENT EXECUTED OR
ISSUED PURSUANT TO THIS SECTION 5.18 SHALL BE A LOAN DOCUMENT.

 

5.19         ADEQUATE RESERVES. SET UP AND MAINTAIN ON ITS BOOKS SUCH RESERVES
AS MAY BE REQUIRED BY GAAP WITH RESPECT TO DOUBTFUL ACCOUNTS AND ALL TAXES,
ASSESSMENTS, CHARGES, LEVIES AND CLAIMS WITH RESPECT TO ITS BUSINESS, AND
INCLUDE SUCH RESERVES IN ITS QUARTERLY AS WELL AS YEAR-END FINANCIAL STATEMENTS.

 

5.20         DESIGNATED PAYMENTS. WITHIN SEVEN (7) BUSINESS DAYS OF THE CLOSING
DATE, PROVIDE EVIDENCE SATISFACTORY TO AGENT THAT ALL THE DESIGNATED PAYMENTS
REFERENCED IN SCHEDULE 3.1(R) HAVE BEEN PAID IN ACCORDANCE WITH THE DESIGNATED
PAYMENTS LIST.

 

6.             NEGATIVE COVENANTS.

 

Each Borrower covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, Borrowers will not and will
not permit any of their respective Subsidiaries to do any of the following
without the prior written consent of Agent:

 

6.1           INDEBTEDNESS. CREATE, INCUR, ASSUME, SUFFER TO EXIST, GUARANTEE,
OR OTHERWISE BECOME OR REMAIN, DIRECTLY OR INDIRECTLY, LIABLE WITH RESPECT TO
ANY INDEBTEDNESS, EXCEPT:

 

(A)           INDEBTEDNESS EVIDENCED BY THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS,

 

(B)           INDEBTEDNESS SET FORTH ON SCHEDULE 4.19,

 

(C)           PERMITTED PURCHASE MONEY INDEBTEDNESS,

 

(D)           INDEBTEDNESS RELATING TO LETTERS OF CREDIT, GUARANTIES AND
PERFORMANCE BONDS OF BORROWER IN AN AGGREGATE PRINCIPAL AMOUNT AT ANY TIME NOT
TO EXCEED THE LESSER OF (X) $1,000,000 AND (Y) THE AMOUNT OF ADVANCES WHICH THE
BORROWER WOULD BE ABLE TO BORROW AT SUCH TIME UNDER SECTION 2.1(C),

 

(E)           OTHER UNSECURED INDEBTEDNESS IN AN AGGREGATE PRINCIPAL AMOUNT AT
ANY TIME OUTSTANDING NOT TO EXCEED $250,000,

 

(F)            REFINANCINGS, RENEWALS, OR EXTENSIONS OF INDEBTEDNESS PERMITTED
UNDER CLAUSES (B) THROUGH (E) OF THIS SECTION 6.1 OR THIS SECTION 6.1(F) (AND
CONTINUANCE OR RENEWAL OF ANY PERMITTED LIENS ASSOCIATED THEREWITH) SO LONG AS:
(I) SUCH REFINANCINGS, RENEWALS, OR EXTENSIONS DO NOT RESULT IN AN INCREASE IN
THE PRINCIPAL AMOUNT OF, OR INTEREST RATE WITH RESPECT TO, THE INDEBTEDNESS SO
REFINANCED, RENEWED, OR EXTENDED OR ADD ONE OR MORE BORROWERS AS LIABLE WITH
RESPECT THERETO IF SUCH ADDITIONAL BORROWERS WERE NOT LIABLE WITH RESPECT TO THE
ORIGINAL INDEBTEDNESS, (II) SUCH REFINANCINGS, RENEWALS, OR EXTENSIONS DO NOT
RESULT IN A SHORTENING OF THE AVERAGE WEIGHTED MATURITY OF THE INDEBTEDNESS SO
REFINANCED, RENEWED, OR EXTENDED, NOR ARE THEY ON TERMS OR CONDITIONS, THAT,
TAKEN AS A WHOLE, ARE MATERIALLY MORE BURDENSOME OR RESTRICTIVE TO THE
APPLICABLE BORROWER, (III) IF THE INDEBTEDNESS THAT IS REFINANCED, RENEWED, OR
EXTENDED WAS SUBORDINATED IN RIGHT OF PAYMENT TO THE OBLIGATIONS, THEN THE TERMS
AND CONDITIONS OF THE

 

34

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REFINANCING, RENEWAL, OR EXTENSION INDEBTEDNESS MUST INCLUDE SUBORDINATION TERMS
AND CONDITIONS THAT ARE AT LEAST AS FAVORABLE TO THE LENDER GROUP AS THOSE THAT
WERE APPLICABLE TO THE REFINANCED, RENEWED, OR EXTENDED INDEBTEDNESS, AND (IV)
THE INDEBTEDNESS THAT IS REFINANCED, RENEWED, OR EXTENDED IS NOT RECOURSE TO ANY
PERSON THAT IS LIABLE ON ACCOUNT OF THE OBLIGATIONS OTHER THAN THOSE PERSONS
WHICH WERE OBLIGATED WITH RESPECT TO THE INDEBTEDNESS THAT WAS REFINANCED,
RENEWED, OR EXTENDED,

 

(G)           ENDORSEMENT OF INSTRUMENTS OR OTHER PAYMENT ITEMS FOR DEPOSIT, AND

 

(H)           INDEBTEDNESS COMPRISING PERMITTED INVESTMENTS.

 

6.2           LIENS. CREATE, INCUR, ASSUME, OR SUFFER TO EXIST, DIRECTLY OR
INDIRECTLY, ANY LIEN ON OR WITH RESPECT TO ANY OF ITS ASSETS, OF ANY KIND,
WHETHER NOW OWNED OR HEREAFTER ACQUIRED, OR ANY INCOME OR PROFITS THEREFROM,
EXCEPT FOR PERMITTED LIENS (INCLUDING LIENS THAT ARE REPLACEMENTS OF PERMITTED
LIENS TO THE EXTENT THAT THE ORIGINAL INDEBTEDNESS IS REFINANCED, RENEWED, OR
EXTENDED UNDER SECTION 6.1(E) AND SO LONG AS THE REPLACEMENT LIENS ONLY ENCUMBER
THOSE ASSETS THAT SECURED THE REFINANCED, RENEWED, OR EXTENDED INDEBTEDNESS).

 

6.3           RESTRICTIONS ON FUNDAMENTAL CHANGES.

 

(A)           ENTER INTO ANY MERGER OR CONSOLIDATION, REORGANIZATION OR
RECAPITALIZATION (OTHER THAN ANY MERGER (X) BETWEEN ANY DOMESTIC SUBSIDIARY AND
PARENT IN WHICH PARENT IS THE SURVIVING CORPORATION OR (Y) BETWEEN TWO FOREIGN
SUBSIDIARIES) NOT OTHERWISE PERMITTED UNDER THE LOAN DOCUMENTS, OR RECLASSIFY
ITS STOCK OTHER THAN PURSUANT TO THE TERMS OF SUCH STOCK;

 

(B)           LIQUIDATE, WIND UP, OR DISSOLVE ITSELF (OR SUFFER ANY LIQUIDATION
OR DISSOLUTION),

 

(C)           CONVEY, SELL, LEASE, LICENSE, ASSIGN, TRANSFER, OR OTHERWISE
DISPOSE OF, IN ONE TRANSACTION OR A SERIES OF TRANSACTIONS, ALL OR SUBSTANTIALLY
ALL OF ITS ASSETS, OR

 

(D)           OTHER THAN PERMITTED DISPOSITIONS, SUSPEND OR GO OUT OF A
SUBSTANTIAL PORTION OF ITS OR THEIR BUSINESS.

 

6.4           DISPOSAL OF ASSETS. OTHER THAN PERMITTED DISPOSITIONS, CONVEY,
SELL, LEASE, LICENSE, ASSIGN, TRANSFER, OR OTHERWISE DISPOSE OF ANY OF THE
ASSETS OF ANY BORROWER OR ANY SUBSIDIARY OF A BORROWER.

 

6.5           CHANGE NAME. CHANGE ANY BORROWER’S OR ANY OF ITS SUBSIDIARIES’
NAME, ORGANIZATIONAL IDENTIFICATION NUMBER, STATE OF ORGANIZATION, OR
ORGANIZATIONAL IDENTITY; PROVIDED, HOWEVER, THAT A BORROWER OR A SUBSIDIARY OF A
BORROWER MAY CHANGE ITS NAME UPON AT LEAST 30 DAYS’ PRIOR WRITTEN NOTICE BY
ADMINISTRATIVE BORROWER TO AGENT OF SUCH CHANGE AND SO LONG AS, AT THE TIME OF
SUCH WRITTEN NOTIFICATION, SUCH BORROWER OR SUCH SUBSIDIARY PROVIDES ANY
FINANCING STATEMENTS NECESSARY TO PERFECT AND CONTINUE PERFECTED THE AGENT’S
LIENS.

 

6.6           NATURE OF BUSINESS. MAKE ANY CHANGE IN THE PRINCIPAL NATURE OF
THEIR BUSINESS.

 

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6.7           PREPAYMENTS AND AMENDMENTS. EXCEPT IN CONNECTION WITH A
REFINANCING PERMITTED BY SECTION 6.1(E):

 

(A)           OPTIONALLY PREPAY, REDEEM, DEFEASE, PURCHASE, OR OTHERWISE ACQUIRE
ANY INDEBTEDNESS OF ANY BORROWER OR A SUBSIDIARY OF A BORROWER, OTHER THAN THE
OBLIGATIONS IN ACCORDANCE WITH THIS AGREEMENT,

 

(B)           MAKE ANY PAYMENT ON ACCOUNT OF INDEBTEDNESS THAT HAS BEEN
CONTRACTUALLY SUBORDINATED IN RIGHT OF PAYMENT IF SUCH PAYMENT IS NOT PERMITTED
AT SUCH TIME UNDER THE SUBORDINATION TERMS AND CONDITIONS, OR

 

(C)           DIRECTLY OR INDIRECTLY, AMEND, MODIFY, ALTER, INCREASE, OR CHANGE
ANY OF THE TERMS OR CONDITIONS OF ANY AGREEMENT, INSTRUMENT, DOCUMENT,
INDENTURE, OR OTHER WRITING EVIDENCING OR CONCERNING INDEBTEDNESS PERMITTED
UNDER SECTION 6.1(B).

 

6.8           CHANGE OF CONTROL. CAUSE OR PERMIT, DIRECTLY OR INDIRECTLY, ANY
CHANGE OF CONTROL.

 

6.9           CONSIGNMENTS. CONSIGN ANY OF THEIR INVENTORY OR SELL ANY OF THEIR
INVENTORY ON BILL AND HOLD, SALE OR RETURN, SALE ON APPROVAL, OR OTHER
CONDITIONAL TERMS OF SALE.

 

6.10         DISTRIBUTIONS. OTHER THAN DISTRIBUTIONS OR DECLARATION AND PAYMENT
OF DIVIDENDS BY A BORROWER TO ANOTHER BORROWER, BY ANY SUBSIDIARY TO A BORROWER,
OR BY ANY FOREIGN SUBSIDIARY TO ANY OTHER SUBSIDIARY, MAKE ANY DISTRIBUTION OR
DECLARE OR PAY ANY DIVIDENDS (IN CASH OR OTHER PROPERTY, OTHER THAN COMMON
STOCK) ON, OR PURCHASE, ACQUIRE, REDEEM, OR RETIRE ANY OF ANY STOCK OF ANY
BORROWER, OF ANY CLASS, WHETHER NOW OR HEREAFTER OUTSTANDING.

 

6.11         ACCOUNTING METHODS. MODIFY OR CHANGE THEIR FISCAL YEAR OR
MATERIALLY MODIFY OR CHANGE THEIR METHOD OF ACCOUNTING (OTHER THAN AS MAY BE
REQUIRED TO CONFORM TO GAAP) OR ENTER INTO, MODIFY, OR TERMINATE ANY AGREEMENT
CURRENTLY EXISTING OR AT ANY TIME HEREAFTER ENTERED INTO WITH ANY THIRD PARTY
ACCOUNTING FIRM OR SERVICE BUREAU FOR THE PREPARATION OR STORAGE OF BORROWERS’
ACCOUNTING RECORDS IN A MANNER THAT WOULD RESULT IN SAID ACCOUNTING FIRM OR
SERVICE BUREAU DECLINING TO PROVIDE AGENT INFORMATION REGARDING BORROWERS’ AND
THEIR SUBSIDIARIES’ FINANCIAL CONDITION.

 

6.12         INVESTMENTS. EXCEPT FOR PERMITTED INVESTMENTS, DIRECTLY OR
INDIRECTLY, MAKE OR ACQUIRE ANY INVESTMENT, OR INCUR ANY LIABILITIES (INCLUDING
CONTINGENT OBLIGATIONS) OTHER THAN INDEBTEDNESS PERMITTED UNDER SECTION 6.1 FOR
OR IN CONNECTION WITH ANY INVESTMENT; PROVIDED, HOWEVER, THAT BORROWERS SHALL
NOT HAVE PERMITTED INVESTMENTS (OTHER THAN IN THE CASH MANAGEMENT ACCOUNTS) IN
DEPOSIT ACCOUNTS OR SECURITIES ACCOUNTS IN AN AGGREGATE AMOUNT IN EXCESS OF
$50,000 IN EACH OF THE UNITED STATES, THE UNITED KINGDOM, FRANCE AND JAPAN AT
ANY ONE TIME UNLESS ADMINISTRATIVE BORROWER AND THE APPLICABLE SECURITIES
INTERMEDIARY OR BANK HAVE ENTERED INTO CONTROL AGREEMENTS (OR HAVE OTHERWISE
PROVIDED SUFFICIENT SECURITY TO AGENT’S SATISFACTION) GOVERNING SUCH PERMITTED
INVESTMENTS IN ORDER TO PERFECT (AND FURTHER ESTABLISH) THE AGENT’S LIENS IN
SUCH PERMITTED INVESTMENTS. SUBJECT TO THE FOREGOING PROVISO, BORROWERS SHALL
NOT ESTABLISH OR MAINTAIN ANY DEPOSIT ACCOUNT OR SECURITIES ACCOUNT UNLESS AGENT
SHALL HAVE RECEIVED A CONTROL AGREEMENT IN RESPECT OF SUCH DEPOSIT ACCOUNT OR
SECURITIES ACCOUNT.

 

36

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6.13         TRANSACTIONS WITH AFFILIATES. DIRECTLY OR INDIRECTLY ENTER INTO OR
PERMIT TO EXIST ANY TRANSACTION WITH ANY AFFILIATE OF ANY BORROWER EXCEPT FOR
TRANSACTIONS THAT (A) ARE UPON FAIR AND REASONABLE TERMS, AND (B) ARE NO LESS
FAVORABLE TO BORROWERS OR THEIR RESPECTIVE SUBSIDIARIES, AS APPLICABLE, THAN
WOULD BE OBTAINED IN AN ARM’S LENGTH TRANSACTION WITH A NON-AFFILIATE.

 

6.14         USE OF PROCEEDS. USE THE PROCEEDS OF:  (A) THE ADVANCES FOR ANY
PURPOSE OTHER THAN (I) ON THE CLOSING DATE, TO PAY TRANSACTIONAL FEES, COSTS,
AND EXPENSES INCURRED IN CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, (II) AS OF THE
CLOSING DATE AND THEREAFTER, FOR WORKING CAPITAL, AND (III) AFTER THE CLOSING
DATE, CONSISTENT WITH THE TERMS AND CONDITIONS HEREOF, FOR BORROWERS’ LAWFUL AND
PERMITTED PURPOSES, (B) THE TERM LOAN A FOR ANY PURPOSE OTHER THAN, AS OF THE
CLOSING DATE, TO PAY CERTAIN SPECIFIED OBLIGATIONS OF BORROWER, INCLUDING THE
EXISTING CREDIT FACILITIES, AND (C) THE TERM LOAN B FOR ANY PURPOSE OTHER THAN,
AS OF THE CLOSING DATE AND THEREAFTER, TO FUND THE PURCHASE PRICE OF PERMITTED
ACQUISITIONS.

 

6.15         INVENTORY AND EQUIPMENT WITH BAILEES. EXCEPT AS SET FORTH ON
SCHEDULE 4.5, STORE ANY INVENTORY OR EQUIPMENT OF BORROWERS AT ANY TIME NOW OR
HEREAFTER WITH A BAILEE, WAREHOUSEMAN, OR SIMILAR PARTY WITHOUT AGENT’S PRIOR
WRITTEN CONSENT.

 

6.16         FINANCIAL COVENANTS.

 

(A)           MINIMUM EBITDA. FAIL TO ACHIEVE EBITDA, MEASURED ON A FISCAL
QUARTER-END BASIS, OF NOT LESS THAN THE REQUIRED AMOUNT SET FORTH IN THE
FOLLOWING TABLE FOR THE APPLICABLE PERIOD SET FORTH OPPOSITE THERETO; PROVIDED,
HOWEVER, THAT ANY EBITDA IN EXCESS OF THE AMOUNTS REQUIRED IN ANY GIVEN QUARTER
MAY BE USED TO SATISFY FUTURE MINIMUM EBITDA QUARTERLY REQUIREMENTS AND
PROVIDED, FURTHER, THAT SUCH EXCESS SHALL NOT BE APPLIED TO ANY QUARTER MORE
THAN TWELVE (12) MONTHS FOLLOWING THE END OF THE QUARTER AS TO WHICH SUCH EXCESS
EXISTED:

 

Applicable Period

 

Applicable Amount

 

 

 

 

 

For Borrowers’ fiscal quarter ending in December 2007

 

$

866,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in March 2008

 

$

(50,000

)

 

 

 

 

For Borrowers’ fiscal quarter ending in June 2008

 

$

400,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in September 2008

 

$

625,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in December 2008

 

$

1,116,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in March 2009

 

$

792,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in June 2009

 

$

1,056,000

 

 

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For Borrowers’ fiscal quarter ending in September 2009

 

$

1,069,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in December 2009

 

$

1,419,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in March 2010

 

$

1,130,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in June 2010

 

$

1,403,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in September 2010

 

$

1,528,000

 

 

 

 

 

For Borrowers’ fiscal quarter ending in December 2010

 

$

2,033,000

 

 

(B)           DEBT SERVICE COVERAGE RATIO. FAIL TO ACHIEVE A DEBT SERVICE
COVERAGE RATIO, MEASURED QUARTERLY AT THE END OF EACH CALENDAR QUARTER, OF NOT
LESS THAN THE AMOUNT SET FORTH IN THE FOLLOWING TABLE FOR THE APPLICABLE PERIOD
SET FORTH OPPOSITE THERETO OR 1.10:1.00, WHICHEVER IS LESS; PROVIDED, HOWEVER,
THAT ANY EBITDA IN EXCESS OF THE AMOUNTS REQUIRED IN ANY GIVEN QUARTER MAY BE
USED TO SATISFY FUTURE DEBT SERVICE COVERAGE RATIO REQUIREMENTS AND PROVIDED,
FURTHER, THAT SUCH EXCESS SHALL NOT BE APPLIED TO ANY QUARTER MORE THAN TWELVE
(12) MONTHS FOLLOWING THE END OF THE QUARTER AS TO WHICH SUCH EXCESS EXISTED:

 

Applicable Period

 

Fixed Charge Coverage Ratio

 

 

 

 

 

For Borrowers’ fiscal quarter ending in December 2007

 

0.40:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in March 2008

 

(0.26):1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in June 2008

 

0.44:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in September 2008

 

0.85:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in December 2008

 

1.20:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in March 2009

 

0.68:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in June 2009

 

1.09:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in September 2009

 

1.09:1.00

 

 

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For Borrowers’ fiscal quarter ending in December 2009

 

1.15:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in March 2010

 

1.04:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in June 2010

 

1.45:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in September 2010

 

1.62:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in December 2010

 

0.36:1.00

 

 

(C)           MAXIMUM LEVERAGE RATIO. FAIL TO ACHIEVE A LEVERAGE RATIO, MEASURED
QUARTERLY AT THE END OF EACH CALENDAR QUARTER, OF NOT GREATER THAN THE AMOUNT
SET FORTH IN THE FOLLOWING TABLE FOR THE APPLICABLE PERIOD SET FORTH OPPOSITE
THERETO:

 

Applicable Period

 

Maximum Leverage Ratio

 

 

 

 

 

For Borrowers’ fiscal quarter ending in December 2007

 

1.25:1.00

 

 

39

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For Borrowers’ fiscal quarter ending in March 2008

 

1.25:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in June 2008

 

1.25:1.00

 

 

 

 

 

For Borrowers’ fiscal quarter ending in September 2008

 

1.25:1.00

 

 

 

 

 

For Borrowers’ fiscal quarters ending in December 2008 and each fiscal quarter
thereafter

 

1.25:1.00

 

 

(D)           CAPITAL EXPENDITURES. MAKE CAPITAL EXPENDITURES (IN THE AGGREGATE
FOR THE BORROWERS AND THEIR SUBSIDIARIES) IN ANY FISCAL YEAR IN EXCESS OF
$500,000.

 

6.17         NO TRANSACTIONS PROHIBITED UNDER ERISA; UNFUNDED LIABILITY.

 

(A)           DIRECTLY OR INDIRECTLY

 

(I)            ENGAGE IN ANY PROHIBITED TRANSACTION WHICH IS REASONABLY LIKELY
TO RESULT IN A CIVIL PENALTY OR EXCISE TAX DESCRIBED IN SECTIONS 406 OF ERISA OR
4975 OF THE IRC FOR WHICH A STATUTORY OR CLASS EXEMPTION IS NOT AVAILABLE OR A
PRIVATE EXEMPTION HAS NOT BEEN PREVIOUSLY OBTAINED FROM THE DEPARTMENT OF LABOR;

 

(II)           PERMIT TO EXIST WITH RESPECT TO ANY BENEFIT PLAN ANY ACCUMULATED
FUNDING DEFICIENCY (AS DEFINED IN SECTIONS 302 OF ERISA AND 412 OF THE IRC),
WHETHER OR NOT WAIVED;

 

(III)          FAIL TO PAY TIMELY REQUIRED CONTRIBUTIONS OR ANNUAL INSTALLMENTS
DUE WITH RESPECT TO ANY WAIVED FUNDING DEFICIENCY TO ANY BENEFIT PLAN;

 

(IV)          TERMINATE ANY BENEFIT PLAN WHERE SUCH EVENT WOULD RESULT IN ANY
LIABILITY OF BORROWERS, ANY SUBSIDIARY OF A BORROWER OR ANY OF THEIR ERISA
AFFILIATES UNDER TITLE IV OF ERISA WHICH WAS NOT PAID IN CONNECTION WITH SUCH
TERMINATION;

 

(V)           FAIL TO MAKE ANY REQUIRED CONTRIBUTION OR PAYMENT TO ANY
MULTIEMPLOYER PLAN;

 

(VI)          FAIL TO PAY ANY REQUIRED INSTALLMENT OR ANY OTHER PAYMENT REQUIRED
UNDER SECTION 412 OF THE IRC ON OR BEFORE THE DUE DATE FOR SUCH INSTALLMENT OR
OTHER PAYMENT;

 

(VII)         AMEND A PLAN RESULTING IN AN INCREASE IN CURRENT LIABILITY FOR THE
PLAN YEAR SUCH THAT ANY OF BORROWERS, ANY SUBSIDIARY OF A BORROWER OR ANY OF
THEIR ERISA AFFILIATES IS REQUIRED TO PROVIDE SECURITY TO SUCH PLAN UNDER
SECTION 401(A)(29) OF THE IRC; OR

 

40

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(VIII)        WITHDRAW FROM ANY MULTIEMPLOYER PLAN WHERE SUCH WITHDRAWAL IS
REASONABLY LIKELY TO RESULT IN ANY LIABILITY OF SUCH ENTITY UNDER TITLE IV OF
ERISA;

 

which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of any Borrower, any of their
Subsidiaries or any of their ERISA Affiliates in excess of $100,000.

 

6.18         SALARIES. PAY EXCESSIVE OR UNREASONABLE SALARIES, BONUSES,
COMMISSIONS, CONSULTANT FEES OR OTHER COMPENSATION..

 

6.19         OBTAINING OF PERMITS, ETC. EACH BORROWER WILL OBTAIN, MAINTAIN AND
PRESERVE, AND CAUSE EACH OF ITS SUBSIDIARIES TO OBTAIN, MAINTAIN AND PRESERVE,
AND TAKE ALL NECESSARY ACTION TO TIMELY RENEW, ALL PERMITS, LICENSES,
AUTHORIZATIONS, APPROVALS, ENTITLEMENTS AND ACCREDITATIONS, AND FILE ALL REPORTS
REQUIRED TO BE FILED WITH ANY GOVERNMENTAL AUTHORITY, WHICH ARE NECESSARY IN THE
PROPER CONDUCT OF ITS BUSINESS, EXCEPT FOR SUCH PERMITS, LICENSE,
AUTHORIZATIONS, APPROVALS, ENTITLEMENTS AND ACCREDITATIONS, THE LACK OF WHICH
COULD NOT REASONABLY BE EXPECTED TO RESULT IN, EITHER INDIVIDUALLY OR IN THE
AGGREGATE, A MATERIAL ADVERSE CHANGE.

 

6.20         UK SUBSIDIARIES. PERMIT ANY UK SUBSIDIARY, THAT IS NOT A UK
GUARANTOR SUBSIDIARY, TO HAVE ASSETS IN EXCESS OF $5,000.

 

6.21         CHANGES TO ACCOUNTS. MAKE ANY CHANGES OR MODIFICATIONS (INCLUDING,
WITHOUT LIMITATION, TO THE SIGNING AUTHORITY OF THE AGENT OR ITS DESIGNEES) WITH
RESPECT TO ANY DEPOSIT ACCOUNTS OR OTHER ACCOUNTS (MAINTAINED WITH BANKS OR
LENDING INSTITUTIONS) OF THE BORROWERS OR THEIR SUBSIDIARIES LOCATED IN THE
UNITED STATES, THE UNITED KINGDOM OR JAPAN; PROVIDED, HOWEVER, THAT DURING AN
EVENT OF DEFAULT, AGENT MAY MAKE ANY CHANGES OR MODIFICATIONS IT DEEMS NECESSARY
TO SUCH DEPOSIT ACCOUNTS OR ACCOUNTS WITHOUT THE PRIOR CONSENT OF THE BORROWERS
OR THEIR SUBSIDIARIES.

 

7.             EVENTS OF DEFAULT.

 

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

 

7.1           IF BORROWERS FAIL TO PAY WHEN DUE AND PAYABLE, OR WHEN DECLARED
DUE AND PAYABLE, (A) ALL OR ANY PORTION OF THE OBLIGATIONS CONSISTING OF
INTEREST, FEES, OR CHARGES DUE THE LENDER GROUP, REIMBURSEMENT OF LENDER GROUP
EXPENSES, OR OTHER AMOUNTS (OTHER THAN ANY PORTION THEREOF CONSTITUTING
PRINCIPAL) CONSTITUTING OBLIGATIONS (INCLUDING ANY PORTION THEREOF THAT ACCRUES
AFTER THE COMMENCEMENT OF AN INSOLVENCY PROCEEDING, REGARDLESS OF WHETHER
ALLOWED OR ALLOWABLE IN WHOLE OR IN PART AS A CLAIM IN ANY SUCH INSOLVENCY
PROCEEDING), AND SUCH FAILURE CONTINUES FOR A PERIOD OF 3 BUSINESS DAYS, OR (B)
ALL OR ANY PORTION OF THE PRINCIPAL OF THE OBLIGATIONS);

 

7.2           IF BORROWERS OR ANY SUBSIDIARY OF ANY BORROWER

 

(A)           FAIL TO PERFORM OR OBSERVE ANY COVENANT OR OTHER AGREEMENT
CONTAINED IN ANY OF SECTIONS 2.7, 5.5, 5.8, 5.10, 5.12, 5.14, 5.16, 5.20, 6.1
THROUGH 6.17, 6.20 OR 6.21 OF THIS AGREEMENT;

 

41

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(B)           FAIL TO PERFORM OR OBSERVE ANY COVENANT OR OTHER AGREEMENT
CONTAINED IN ANY OF SECTIONS 5.6, 5.7, 5.9, 5.11, OR 5.15 OF THIS AGREEMENT AND
SUCH FAILURE CONTINUES FOR A PERIOD OF 20 DAYS AFTER THE EARLIER OF (I) THE DATE
ON WHICH SUCH FAILURE SHALL FIRST BECOME KNOWN TO ANY OFFICER OF ANY BORROWER OR
(II) WRITTEN NOTICE THEREOF IS GIVEN TO ADMINISTRATIVE BORROWER BY AGENT;

 

(C)           FAIL TO PERFORM ANY COVENANT OR OTHER AGREEMENT CONTAINED IN
SECTIONS 5.2 OR 5.3 AND SUCH FAILURE OR NEGLECT IS NOT CURED WITHIN 15 DAYS
AFTER THE DATE ON WHICH SUCH FAILURE OR NEGLECT FIRST OCCURS;

 

(D)           FAIL TO PERFORM ANY COVENANT OR OTHER AGREEMENT CONTAINED IN
SECTION 5.1 AND SUCH FAILURE OR NEGLECT IS NOT CURED WITHIN 15 DAYS AFTER THE
DATE ON WHICH SUCH FAILURE OR NEGLECT FIRST OCCURS; OR

 

(E)           FAIL TO PERFORM OR OBSERVE ANY COVENANT OR OTHER AGREEMENT
CONTAINED IN THIS AGREEMENT, OR IN ANY OF THE OTHER LOAN DOCUMENTS; IN EACH
CASE, OTHER THAN ANY SUCH COVENANT OR AGREEMENT THAT IS THE SUBJECT OF ANOTHER
PROVISION OF THIS SECTION 7 (IN WHICH EVENT SUCH OTHER PROVISION OF THIS SECTION
7 SHALL GOVERN), AND SUCH FAILURE CONTINUES FOR A PERIOD OF 20 DAYS AFTER THE
EARLIER OF (I) THE DATE ON WHICH SUCH FAILURE SHALL FIRST BECOME KNOWN TO ANY
OFFICER OF ANY BORROWER OR (II) WRITTEN NOTICE THEREOF IS GIVEN TO
ADMINISTRATIVE BORROWER BY AGENT;

 

7.3           IF ANY MATERIAL PORTION OF THE ASSETS OF ANY BORROWER OR ANY
MATERIAL PORTION OF THE ASSETS OF THE BORROWERS AND THEIR SUBSIDIARIES, TAKEN AS
A WHOLE, IS ATTACHED, SEIZED, SUBJECTED TO A WRIT OR DISTRESS WARRANT, OR IS
LEVIED UPON, OR COMES INTO THE POSSESSION OF ANY THIRD PERSON AND THE SAME IS
NOT DISCHARGED BEFORE THE EARLIER OF 30 DAYS AFTER THE DATE IT FIRST ARISES OR 5
DAYS PRIOR TO THE DATE ON WHICH SUCH PROPERTY OR ASSET IS SUBJECT TO FORFEITURE
BY SUCH BORROWER OR THE APPLICABLE SUBSIDIARY;

 

7.4           IF AN INSOLVENCY PROCEEDING IS COMMENCED BY ANY BORROWER;

 

7.5           IF AN INSOLVENCY PROCEEDING IS COMMENCED AGAINST ANY BORROWER OR
ANY SUBSIDIARY OF A BORROWER AND ANY OF THE FOLLOWING EVENTS OCCUR:  (A) THE
APPLICABLE BORROWER OR SUBSIDIARY CONSENTS TO THE INSTITUTION OF SUCH INSOLVENCY
PROCEEDING AGAINST IT, (B) THE PETITION COMMENCING THE INSOLVENCY PROCEEDING IS
NOT TIMELY CONTROVERTED, (C) THE PETITION COMMENCING THE INSOLVENCY PROCEEDING
IS NOT DISMISSED WITHIN 60 CALENDAR DAYS OF THE DATE OF THE FILING THEREOF;
PROVIDED, HOWEVER, THAT, DURING THE PENDENCY OF SUCH PERIOD, AGENT (INCLUDING
ANY SUCCESSOR AGENT) AND EACH OTHER MEMBER OF THE LENDER GROUP SHALL BE RELIEVED
OF THEIR OBLIGATIONS TO EXTEND CREDIT HEREUNDER, (D) AN INTERIM TRUSTEE IS
APPOINTED TO TAKE POSSESSION OF ALL OR ANY SUBSTANTIAL PORTION OF THE PROPERTIES
OR ASSETS OF, OR TO OPERATE ALL OR ANY SUBSTANTIAL PORTION OF THE BUSINESS OF,
ANY BORROWER OR ANY SUBSIDIARY OF A BORROWER, OR (E) AN ORDER FOR RELIEF SHALL
HAVE BEEN ISSUED OR ENTERED THEREIN;

 

7.6           IF ANY BORROWER OR ANY SUBSIDIARY OF A BORROWER IS ENJOINED,
RESTRAINED, OR IN ANY WAY PREVENTED BY COURT ORDER FROM CONTINUING TO CONDUCT
ALL OR ANY MATERIAL PART OF ITS BUSINESS AFFAIRS;

 

7.7           IF ONE OR MORE JUDGMENTS, ORDERS, OR AWARDS INVOLVING AN AGGREGATE
AMOUNT OF $500,000 OR MORE (EXCEPT TO THE EXTENT COVERED BY INSURANCE PURSUANT
TO WHICH THE INSURER HAS

 

42

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

 

ACCEPTED LIABILITY THEREFOR IN WRITING) SHALL BE ENTERED OR FILED AGAINST ANY
BORROWER OR ANY SUBSIDIARY OF A BORROWER OR WITH RESPECT TO ANY OF THEIR
RESPECTIVE ASSETS, AND THE SAME IS NOT RELEASED, DISCHARGED, BONDED AGAINST, OR
STAYED PENDING APPEAL BEFORE THE EARLIER OF 30 DAYS AFTER THE DATE IT FIRST
ARISES OR 5 DAYS PRIOR TO THE DATE ON WHICH SUCH ASSET IS SUBJECT TO BEING
FORFEITED BY THE APPLICABLE BORROWER OR THE APPLICABLE SUBSIDIARY;

 

7.8           IF THERE IS A DEFAULT IN ANY AGREEMENT TO WHICH ANY BORROWER OR
ANY SUBSIDIARY OF A BORROWER IS A PARTY WITH ONE OR MORE THIRD PERSONS RELATIVE
TO INDEBTEDNESS OF ANY BORROWER INVOLVING IN AN AMOUNT OF $500,000 OR MORE, AND
SUCH DEFAULT (I) OCCURS AT THE FINAL MATURITY OF THE OBLIGATIONS THEREUNDER, OR
(II) RESULTS IN A RIGHT BY SUCH THIRD PERSON(S), IRRESPECTIVE OF WHETHER
EXERCISED, TO ACCELERATE THE MATURITY OF THE APPLICABLE BORROWER’S OR
SUBSIDIARY’S OBLIGATIONS THEREUNDER;

 

7.9           IF ANY WARRANTY, REPRESENTATION, STATEMENT, OR RECORD MADE HEREIN
OR IN ANY OTHER LOAN DOCUMENT OR DELIVERED TO LENDER IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT BY ANY BORROWER OR SUBSIDIARY THEREOF OR
ANY OFFICER, EMPLOYEE OR DIRECTOR OF ANY BORROWER OR SUCH SUBSIDIARY, PROVES TO
HAVE BEEN UNTRUE IN ANY MATERIAL RESPECT WHEN MADE;

 

7.10         IF ANY ACQUIRING PARTY SHALL BREACH ITS OBLIGATIONS UNDER ANY OF
THE ACQUISITION DOCUMENTS;

 

7.11         IF THE SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT THAT PURPORTS
TO CREATE A LIEN, SHALL, FOR ANY REASON, FAIL OR CEASE TO CREATE A VALID AND
PERFECTED (TO THE EXTENT THAT PERFECTION CAN BE EFFECTED BY THE MEASURES
REQUIRED TO BE TAKEN UNDER THE LOAN DOCUMENTS FOR SUCH PURPOSE) AND, EXCEPT TO
THE EXTENT PERMITTED BY THE TERMS HEREOF OR THEREOF, FIRST PRIORITY LIEN ON OR
SECURITY INTEREST IN THE COLLATERAL COVERED HEREBY OR THEREBY, EXCEPT AS A
RESULT OF A DISPOSITION OF THE APPLICABLE COLLATERAL IN A TRANSACTION PERMITTED
UNDER THIS AGREEMENT;

 

7.12         A MATERIAL ADVERSE CHANGE SHALL HAVE OCCURRED; OR

 

7.13         ANY MATERIAL PROVISION OF ANY LOAN DOCUMENT SHALL AT ANY TIME FOR
ANY REASON BE DECLARED TO BE NULL AND VOID, OR THE VALIDITY OR ENFORCEABILITY
THEREOF SHALL BE CONTESTED BY ANY BORROWER OR ANY SUBSIDIARY OF A BORROWER, OR A
PROCEEDING SHALL BE COMMENCED BY ANY BORROWER OR ANY SUBSIDIARY OF A BORROWER,
OR BY ANY GOVERNMENTAL AUTHORITY HAVING JURISDICTION OVER ANY BORROWER OR ANY
SUBSIDIARY OF A BORROWER, SEEKING TO ESTABLISH THE INVALIDITY OR
UNENFORCEABILITY THEREOF.

 

8.             THE LENDER GROUP’S RIGHTS AND REMEDIES.

 

8.1           RIGHTS AND REMEDIES. UPON THE OCCURRENCE, AND DURING THE
CONTINUATION, OF AN EVENT OF DEFAULT, THE REQUIRED LENDERS (AT THEIR ELECTION
BUT WITHOUT NOTICE OF THEIR ELECTION AND WITHOUT DEMAND) MAY AUTHORIZE AND
INSTRUCT AGENT TO DO ANY ONE OR MORE OF THE FOLLOWING ON BEHALF OF THE LENDER
GROUP (AND AGENT, ACTING UPON THE INSTRUCTIONS OF THE REQUIRED LENDERS, SHALL DO
THE SAME ON BEHALF OF THE LENDER GROUP), ALL OF WHICH ARE AUTHORIZED BY
BORROWERS:

 

(A)           DECLARE ALL OR ANY PORTION OF THE OBLIGATIONS, WHETHER EVIDENCED
BY THIS AGREEMENT, BY ANY OF THE OTHER LOAN DOCUMENTS, OR OTHERWISE, IMMEDIATELY
DUE AND PAYABLE;

 

43

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(B)           CEASE ADVANCING MONEY OR EXTENDING CREDIT TO OR FOR THE BENEFIT OF
BORROWERS UNDER THIS AGREEMENT, UNDER ANY OF THE LOAN DOCUMENTS, OR UNDER ANY
OTHER AGREEMENT BETWEEN BORROWERS AND THE LENDER GROUP;

 

(C)           TERMINATE THIS AGREEMENT AND ANY OF THE OTHER LOAN DOCUMENTS AS TO
ANY FUTURE LIABILITY OR OBLIGATION OF THE LENDER GROUP, BUT WITHOUT AFFECTING
ANY OF THE AGENT’S LIENS IN THE COLLATERAL AND WITHOUT AFFECTING THE
OBLIGATIONS; AND

 

(D)           THE LENDER GROUP SHALL HAVE ALL OTHER RIGHTS AND REMEDIES
AVAILABLE AT LAW OR IN EQUITY OR PURSUANT TO ANY OTHER LOAN DOCUMENT.

 

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 7.4 or Section 7.5, in addition to the remedies
set forth above, without any notice to Borrowers or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrowers.

 

8.2           REMEDIES CUMULATIVE. THE RIGHTS AND REMEDIES OF THE LENDER GROUP
UNDER THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, AND ALL OTHER AGREEMENTS SHALL
BE CUMULATIVE. THE LENDER GROUP SHALL HAVE ALL OTHER RIGHTS AND REMEDIES NOT
INCONSISTENT HEREWITH AS PROVIDED UNDER THE CODE, BY LAW, OR IN EQUITY. NO
EXERCISE BY THE LENDER GROUP OF ONE RIGHT OR REMEDY SHALL BE DEEMED AN ELECTION,
AND NO WAIVER BY THE LENDER GROUP OF ANY EVENT OF DEFAULT SHALL BE DEEMED A
CONTINUING WAIVER. NO DELAY BY THE LENDER GROUP SHALL CONSTITUTE A WAIVER,
ELECTION, OR ACQUIESCENCE BY IT.

 

9.             TAXES AND EXPENSES.

 

If any Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as and to the extent
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following: 
(a) make payment of the same or any part thereof, (b) set up such reserves
against the Borrowing Base as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 5.8 hereof, obtain and maintain insurance policies of the
type described in Section 5.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.

 

44

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10.          WAIVERS; INDEMNIFICATION; RELEASE.

 

10.1         DEMAND; PROTEST; ETC. EACH BORROWER WAIVES DEMAND, PROTEST, NOTICE
OF PROTEST, NOTICE OF DEFAULT OR DISHONOR (OTHER THAN ANY NOTICE REQUIRED UNDER
THIS AGREEMENT), NOTICE OF PAYMENT AND NONPAYMENT (OTHER THAN ANY NOTICE
REQUIRED UNDER THIS AGREEMENT), NONPAYMENT AT MATURITY, RELEASE, COMPROMISE,
SETTLEMENT, EXTENSION, OR RENEWAL OF DOCUMENTS, INSTRUMENTS, CHATTEL PAPER, AND
GUARANTEES AT ANY TIME HELD BY THE LENDER GROUP ON WHICH ANY SUCH BORROWER MAY
IN ANY WAY BE LIABLE.

 

10.2         THE LENDER GROUP’S LIABILITY FOR COLLATERAL. EACH BORROWER HEREBY
AGREES THAT:  (A) SO LONG AS THE LENDER GROUP COMPLIES WITH ITS OBLIGATIONS, IF
ANY, UNDER THE CODE, THE LENDER GROUP SHALL NOT IN ANY WAY OR MANNER BE LIABLE
OR RESPONSIBLE FOR:  (I) THE SAFEKEEPING OF THE COLLATERAL, (II) ANY LOSS OR
DAMAGE THERETO OCCURRING OR ARISING IN ANY MANNER OR FASHION FROM ANY CAUSE,
(III) ANY DIMINUTION IN THE VALUE THEREOF, OR (IV) ANY ACT OR DEFAULT OF ANY
CARRIER, WAREHOUSEMAN, BAILEE, FORWARDING AGENCY, OR OTHER PERSON, AND (B) ALL
RISK OF LOSS, DAMAGE, OR DESTRUCTION OF THE COLLATERAL SHALL BE BORNE BY
BORROWERS.

 

10.3         COSTS AND EXPENSES. THE BORROWERS SHALL PAY ON DEMAND ALL COSTS AND
EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES, INCURRED BY AGENT AND THE
LENDERS IN CONNECTION WITH THE OBLIGATIONS, THIS AGREEMENT, THE LOAN DOCUMENTS
AND ANY OTHER DOCUMENT OR AGREEMENT RELATED HERETO OR THERETO, AND THE
TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING ALL SUCH COSTS, EXPENSES AND FEES
INCURRED IN CONNECTION WITH THE NEGOTIATION, PREPARATION, EXECUTION, AMENDMENT,
ADMINISTRATION, PERFORMANCE, COLLECTION AND ENFORCEMENT OF THE OBLIGATIONS AND
ALL SUCH DOCUMENTS AND AGREEMENTS (INCLUDING, WITHOUT LIMITATION, UCC AND
JUDGMENT AND TAX LIEN SEARCHES). WITHOUT LIMITING THE FOREGOING, THE BORROWERS
SHALL PAY ALL TAXES (OTHER THAN TAXES BASED UPON OR MEASURED BY EACH LENDER’S
NET INCOME OR ANY PERSONAL PROPERTY TAX), IMPOSTS, CHARGES, DUTIES AND FEES, IF
ANY, IN CONNECTION WITH THE ISSUANCE OF ANY NOTE DESCRIBED IN SECTION 2.14, IF
ANY, AND THE FILING AND/OR RECORDING OF ANY DOCUMENTS AND/OR FINANCING
STATEMENTS.

 

10.4         INDEMNIFICATION. IN ADDITION TO THE PAYMENT OF EXPENSES PURSUANT TO
SECTION 10.3, EACH BORROWER SHALL PAY, INDEMNIFY, DEFEND, AND HOLD THE
AGENT-RELATED PERSONS, THE LENDER-RELATED PERSONS, AND EACH PARTICIPANT (EACH,
AN “INDEMNIFIED PERSON”) HARMLESS (TO THE FULLEST EXTENT PERMITTED BY LAW) FROM
AND AGAINST ANY AND ALL CLAIMS, DEMANDS, SUITS, ACTIONS, INVESTIGATIONS,
PROCEEDINGS, AND DAMAGES, AND ALL REASONABLE ATTORNEYS FEES AND DISBURSEMENTS
AND OTHER COSTS AND EXPENSES ACTUALLY INCURRED IN CONNECTION THEREWITH OR IN
CONNECTION WITH THE ENFORCEMENT OF THIS INDEMNIFICATION (AS AND WHEN THEY ARE
INCURRED AND IRRESPECTIVE OF WHETHER SUIT IS BROUGHT), AT ANY TIME ASSERTED
AGAINST, IMPOSED UPON, OR INCURRED BY ANY OF THEM (A) IN CONNECTION WITH OR AS A
RESULT OF OR RELATED TO THE EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE, OR
ADMINISTRATION (INCLUDING ANY RESTRUCTURING OR WORKOUT WITH RESPECT HERETO) OF
THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR IN CONNECTION WITH THE MONITORING OF
BORROWERS’ OR THEIR SUBSIDIARIES’ COMPLIANCE WITH THE TERMS OF THE LOAN
DOCUMENTS, AND (B) WITH RESPECT TO ANY INVESTIGATION, LITIGATION, OR PROCEEDING
RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE USE OF THE PROCEEDS
OF THE CREDIT PROVIDED HEREUNDER (IRRESPECTIVE OF WHETHER ANY INDEMNIFIED PERSON
IS A PARTY THERETO), OR ANY ACT, OMISSION, EVENT, OR CIRCUMSTANCE IN ANY MANNER
RELATED THERETO (ALL THE FOREGOING, COLLECTIVELY, THE “INDEMNIFIED
LIABILITIES”). THE FOREGOING TO THE CONTRARY NOTWITHSTANDING, BORROWERS SHALL
HAVE NO OBLIGATION TO ANY INDEMNIFIED PERSON UNDER THIS SECTION 10.3 WITH

 

45

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RESPECT TO ANY INDEMNIFIED LIABILITY THAT A COURT OF COMPETENT JURISDICTION
FINALLY DETERMINES TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNIFIED PERSON. THIS PROVISION SHALL SURVIVE THE
TERMINATION OF THIS AGREEMENT AND THE REPAYMENT OF THE OBLIGATIONS. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.

 

11.          NOTICES.

 

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

 

If to Administrative Borrower:

Emrise Corporation

 

9485 Haven Avenue, Suite 100

 

Rancho Cucamonga, CA 91730

 

Attn: D. John Donovan

 

Fax No.: (909) 354-3568

 

 

With a copy to:

Rutan & Tucker, LLP

 

611 Anton Blvd., Suite 1400

 

Costa Mesa, CA 92626

 

Attn: Larry A. Cerutti, Esq.

 

Fax No.: (714) 546-9035

 

 

If to Agent:

GVEC Resource IV Inc.

 

1 Park Plaza, Suite 550

 

Irvine, California 92614

 

Attention: Peter Paul Mendel, Esq., General
Counsel

 

Fax No.: (949) 757-0978

 

 

With a copy to:

Fulbright & Jaworski L.L.P.

 

666 Fifth Avenue

 

New York, New York 10103

 

Attn: Charles D. Schmerler, Esq.

 

Fax No.: (212) 318-3021

 

Agent and Borrowers may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 11, other
than notices by Agent in connection with

 

46

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enforcement rights against the Collateral under the provisions of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3
Business Days after the deposit thereof in the mail. Each Borrower acknowledges
and agrees that notices sent by the Lender Group in connection with the exercise
of enforcement rights against Collateral under the provisions of the Code shall
be deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth
above.

 

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

 

(A)           THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION,
AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL
MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.

 

(B)           EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF CALIFORNIA LOCATED IN LOS ANGELES COUNTY AND OF THE FEDERAL COURTS
LOCATED IN THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH CALIFORNIA STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. EACH BORROWER HEREBY AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND BINDING UPON IT AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY
LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO OR
ARISING OUT OF THIS AGREEMENT OR ANY LOAN DOCUMENT AGAINST ANY BORROWER OR ITS
ASSETS OR PROPERTIES IN THE COURTS OF ANY JURISDICTION WHERE SUCH BORROWER OR
ITS ASSETS OR PROPERTIES MAY BE LOCATED OR IN WHICH IT OTHERWISE MAY BE SUBJECT
TO JURISDICTION.

 

(C)           EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO (I) ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS IN
ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS

 

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SECTION; (II) THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT; AND (III) ANY RIGHT IT MAY HAVE, HOWEVER
ARISING, TO REMOVE OR TRANSFER ANY SUIT, ACTION OR PROCEEDING BROUGHT AGAINST IT
IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY LOAN DOCUMENT IN A
STATE COURT OF THE UNITED STATES OF AMERICA TO ANY FEDERAL COURT OF THE UNITED
STATES OF AMERICA IF SUCH FEDERAL COURT OF THE UNITED STATES OF AMERICA WOULD
NOT HAVE OR ACCEPT JURISDICTION THEREOF.

 

(D)           ALL CLAIMS, CAUSES OF ACTION OR OTHER DISPUTES CONCERNING THIS
AGREEMENT AND THE MATTERS CONTEMPLATED HEREBY (EACH A “CLAIM”), ARISING IN A
PROCEEDING IN CALIFORNIA STATE COURT INCLUDING ANY AND ALL QUESTIONS OF LAW OR
FACT RELATING THERETO, SHALL, AT THE WRITTEN REQUEST OF THE AGENT OR ANY LENDER,
BE DETERMINED BY JUDICIAL REFERENCE PURSUANT TO THE CALIFORNIA CODE OF CIVIL
PROCEDURE (“REFERENCE”). THE PARTIES SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO
SHALL BE A RETIRED STATE OR FEDERAL JUDGE. IN THE EVENT THAT THE PARTIES CANNOT
AGREE UPON A REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. THE REFEREE
SHALL REPORT A STATEMENT OF DECISION TO THE COURT. NOTHING IN THIS PARAGRAPH
SHALL LIMIT THE RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES,
FORECLOSE AGAINST COLLATERAL OR OBTAIN PROVISIONAL REMEDIES. THE PARTIES SHALL
BEAR THE FEES AND EXPENSES OF THE REFEREE EQUALLY UNLESS THE REFEREE ORDERS
OTHERWISE. THE REFEREE SHALL ALSO DETERMINE ALL ISSUES RELATING TO THE
APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS PARAGRAPH. THE PARTIES
ACKNOWLEDGE THAT THE CLAIMS WILL NOT BE ADJUDICATED BY A JURY.

 

(E)           OTHER THAN WITH RESPECT TO ANY PROCEEDING IN THE STATE COURTS OF
CALIFORNIA, EACH BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

 

(F)            EACH BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS THE ADMINISTRATIVE BORROWER, AS ITS DESIGNEE, APPOINTEE AND AGENT TO
RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS
PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES

 

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AND DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING RELATING TO OR
ARISING OUT OF THIS AGREEMENT OR THE LOAN DOCUMENTS. IF FOR ANY REASON SUCH
DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH
BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT ON THE TERMS
AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. EACH BORROWER
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS MAY BE MADE BY HAND DELIVERY TO THE ADMINISTRATIVE
BORROWER AT ITS ADDRESS SET FORTH IN SECTION 11. EACH BORROWER SHALL TAKE SUCH
ACTIONS AS ARE REASONABLE, INCLUDING THE EXECUTION AND FILING OF ANY AND ALL
FURTHER AGREEMENTS, INSTRUMENTS AND OTHER DOCUMENTS AS MAY BE NECESSARY, TO
FULLY IMPLEMENT AND EFFECT SUCH APPOINTMENTS AND TO CONTINUE THEM IN FULL FORCE
AND EFFECT. EACH BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH BORROWER IRREVOCABLY
AGREES AND UNDERTAKES TO ENTER ITS UNCONDITIONAL APPEARANCE WITHIN FORTY-FIVE
(45) DAYS AFTER THE COMPLETION OF SERVICE ON THE AUTHORIZED AGENT AS PROVIDED IN
THIS SECTION.

 

13.          ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

13.1         ASSIGNMENTS AND PARTICIPATIONS.

 

(A)           ANY LENDER MAY ASSIGN AND DELEGATE TO ONE OR MORE ASSIGNEES (EACH
AN “ASSIGNEE”) THAT ARE ELIGIBLE TRANSFEREES ALL, OR ANY RATABLE PART OF ALL, OF
THE OBLIGATIONS, THE COMMITMENTS AND THE OTHER RIGHTS AND OBLIGATIONS OF SUCH
LENDER HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS, IN A MINIMUM AMOUNT OF
$2,000,000 (EXCEPT SUCH MINIMUM AMOUNT SHALL NOT APPLY TO AN ASSIGNMENT AND
DELEGATION BY A LENDER TO (X) ANY OTHER LENDER OR AN AFFILIATE OF SUCH LENDER OR
A RELATED FUND OF SUCH LENDER, (Y) A GROUP OF NEW LENDERS, EACH OF WHICH IS AN
AFFILIATE OR RELATED FUND OF EACH OTHER SO LONG AS THE AGGREGATE AMOUNT TO BE
ASSIGNED TO SUCH GROUP IS AT LEAST $2,000,000 OR (Z) IF AS A RESULT OF SUCH
ASSIGNMENT SUCH LENDER SHALL CEASE TO BE A PARTY HERETO); PROVIDED, HOWEVER,
THAT, EXCEPT AS OTHERWISE PROVIDED IN SECTION 13.1(C) HEREOF, BORROWERS AND
AGENT MAY CONTINUE TO DEAL SOLELY AND DIRECTLY WITH SUCH LENDER IN CONNECTION
WITH THE INTEREST SO ASSIGNED TO AN ASSIGNEE UNTIL (I) WRITTEN NOTICE OF SUCH
ASSIGNMENT, TOGETHER WITH PAYMENT INSTRUCTIONS, ADDRESSES, AND RELATED
INFORMATION WITH RESPECT TO THE ASSIGNEE, HAVE BEEN GIVEN TO AGENT BY SUCH
LENDER AND THE ASSIGNEE, (II) SUCH LENDER AND ITS ASSIGNEE HAVE DELIVERED TO
AGENT AN ASSIGNMENT AND ACCEPTANCE, AND (III) THE ASSIGNING LENDER OR ASSIGNEE
HAS PAID TO AGENT FOR AGENT’S SEPARATE ACCOUNT A PROCESSING FEE IN THE AMOUNT OF
$3,500. ANYTHING CONTAINED HEREIN TO THE CONTRARY NOTWITHSTANDING, THE PAYMENT
OF ANY FEES SHALL NOT BE REQUIRED AND THE ASSIGNEE NEED NOT BE AN ELIGIBLE
TRANSFEREE IF (X) SUCH ASSIGNMENT IS IN CONNECTION WITH ANY MERGER,
CONSOLIDATION, SALE, TRANSFER, OR OTHER DISPOSITION OF ALL OR ANY SUBSTANTIAL
PORTION OF THE BUSINESS OR LOAN PORTFOLIO OF THE ASSIGNING LENDER OR (Y) THE
ASSIGNEE IS A LENDER OR AN AFFILIATE OF A LENDER OR A RELATED FUND OF A LENDER.

 

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(B)           EXCEPT AS OTHERWISE PROVIDED IN SECTION 13.1(C) HEREOF, FROM AND
AFTER THE DATE THAT AGENT NOTIFIES THE ASSIGNING LENDER (WITH A COPY TO
ADMINISTRATIVE BORROWER) THAT IT HAS RECEIVED AN EXECUTED ASSIGNMENT AND
ACCEPTANCE AND PAYMENT OF THE ABOVE REFERENCED PROCESSING FEE (IF REQUIRED), (I)
THE ASSIGNEE THEREUNDER SHALL BE A PARTY HERETO AND, TO THE EXTENT THAT RIGHTS
AND OBLIGATIONS HEREUNDER HAVE BEEN ASSIGNED TO IT PURSUANT TO SUCH ASSIGNMENT
AND ACCEPTANCE, SHALL HAVE THE RIGHTS AND OBLIGATIONS OF A LENDER UNDER THE LOAN
DOCUMENTS, AND (II) THE ASSIGNING LENDER SHALL, TO THE EXTENT THAT RIGHTS AND
OBLIGATIONS HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS HAVE BEEN ASSIGNED BY
IT PURSUANT TO SUCH ASSIGNMENT AND ACCEPTANCE, RELINQUISH ITS RIGHTS (EXCEPT
WITH RESPECT TO SECTION 10.4 AND SECTION 15.11 HEREOF) AND BE RELEASED FROM ANY
FUTURE OBLIGATIONS UNDER THIS AGREEMENT (AND IN THE CASE OF AN ASSIGNMENT AND
ACCEPTANCE COVERING ALL OR THE REMAINING PORTION OF AN ASSIGNING LENDER’S RIGHTS
AND OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, SUCH LENDER
SHALL CEASE TO BE A PARTY HERETO AND THERETO), AND SUCH ASSIGNMENT SHALL EFFECT
A NOVATION BETWEEN BORROWERS AND THE ASSIGNEE; PROVIDED, HOWEVER, THAT NOTHING
CONTAINED HEREIN SHALL RELEASE ANY ASSIGNING LENDER FROM OBLIGATIONS THAT
SURVIVE THE TERMINATION OF THIS AGREEMENT, INCLUDING SUCH ASSIGNING LENDER’S
OBLIGATIONS UNDER ARTICLE 15 AND SECTION 16.7 OF THIS AGREEMENT.

 

(C)           NOTWITHSTANDING ANYTHING CONTAINED IN THIS SECTION 13.1 TO THE
CONTRARY, A LENDER MAY ASSIGN ANY OR ALL OF ITS RIGHTS HEREUNDER TO A QUALIFIED
AFFILIATE OF SUCH LENDER OR A QUALIFIED RELATED FUND OF SUCH LENDER WITHOUT (I)
PROVIDING ANY NOTICE TO AGENT OR ANY OTHER PERSON OR (II) DELIVERING AN EXECUTED
ASSIGNMENT AND ACCEPTANCE TO AGENT; PROVIDED, HOWEVER, THAT (X) BORROWERS AND
AGENT MAY CONTINUE TO DEAL SOLELY AND DIRECTLY WITH THE ASSIGNING LENDER UNTIL
AN ASSIGNMENT AND ACCEPTANCE HAS BEEN DELIVERED TO AGENT, (Y) THE FAILURE OF
SUCH ASSIGNING LENDER TO DELIVER AN ASSIGNMENT AND ACCEPTANCE TO AGENT OR ANY
OTHER PERSON SHALL NOT AFFECT THE LEGALITY, VALIDITY OR BINDING EFFECT OF SUCH
ASSIGNMENT, AND (Z) AN ASSIGNMENT AND ACCEPTANCE BETWEEN AN ASSIGNING LENDER AND
ITS QUALIFIED AFFILIATE OR QUALIFIED RELATED FUND SHALL BE EFFECTIVE AS OF THE
DATE SPECIFIED IN SUCH ASSIGNMENT AND ACCEPTANCE.

 

(D)           BY EXECUTING AND DELIVERING AN ASSIGNMENT AND ACCEPTANCE, THE
ASSIGNING LENDER THEREUNDER AND THE ASSIGNEE THEREUNDER CONFIRM TO AND AGREE
WITH EACH OTHER AND THE OTHER PARTIES HERETO AS FOLLOWS:  (1) OTHER THAN AS
PROVIDED IN SUCH ASSIGNMENT AND ACCEPTANCE, SUCH ASSIGNING LENDER MAKES NO
REPRESENTATION OR WARRANTY AND ASSUMES NO RESPONSIBILITY WITH RESPECT TO ANY
STATEMENTS, WARRANTIES OR REPRESENTATIONS MADE IN OR IN CONNECTION WITH THIS
AGREEMENT OR THE EXECUTION, LEGALITY, VALIDITY, ENFORCEABILITY, GENUINENESS,
SUFFICIENCY OR VALUE OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT FURNISHED
PURSUANT HERETO, (2) SUCH ASSIGNING LENDER MAKES NO REPRESENTATION OR WARRANTY
AND ASSUMES NO RESPONSIBILITY WITH RESPECT TO THE FINANCIAL CONDITION OF
BORROWERS OR THE PERFORMANCE OR OBSERVANCE BY BORROWERS OF ANY OF THEIR
OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT FURNISHED PURSUANT
HERETO, (3) SUCH ASSIGNEE CONFIRMS THAT IT HAS RECEIVED A COPY OF THIS
AGREEMENT, TOGETHER WITH SUCH OTHER DOCUMENTS AND INFORMATION AS IT HAS DEEMED
APPROPRIATE TO MAKE ITS OWN CREDIT ANALYSIS AND DECISION TO ENTER INTO SUCH
ASSIGNMENT AND ACCEPTANCE, (4) SUCH ASSIGNEE WILL, INDEPENDENTLY AND WITHOUT
RELIANCE UPON AGENT, SUCH ASSIGNING LENDER OR ANY OTHER LENDER, AND BASED ON
SUCH DOCUMENTS AND INFORMATION AS IT SHALL DEEM APPROPRIATE AT THE TIME,
CONTINUE TO MAKE ITS OWN CREDIT DECISIONS IN TAKING OR NOT TAKING ACTION UNDER
THIS AGREEMENT, (5) SUCH ASSIGNEE APPOINTS AND AUTHORIZES AGENT TO TAKE SUCH
ACTIONS AND TO EXERCISE SUCH POWERS UNDER THIS AGREEMENT AS ARE DELEGATED TO
AGENT, BY THE TERMS HEREOF, TOGETHER WITH SUCH POWERS AS ARE REASONABLY

 

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INCIDENTAL THERETO, AND (6) SUCH ASSIGNEE AGREES THAT IT WILL PERFORM ALL OF THE
OBLIGATIONS WHICH BY THE TERMS OF THIS AGREEMENT ARE REQUIRED TO BE PERFORMED BY
IT AS A LENDER.

 

(E)           IMMEDIATELY UPON AGENT’S RECEIPT OF ANY PROCESSING FEE PAYMENT (IF
REQUIRED) AND THE FULLY EXECUTED ASSIGNMENT AND ACCEPTANCE (OR, IN THE CASE OF
AN ASSIGNMENT FROM A LENDER TO ONE OR MORE OF ITS QUALIFIED AFFILIATES OR
QUALIFIED RELATED FUNDS PURSUANT TO SECTION 13.1(C), UPON THE EFFECTIVE DATE
SPECIFIED IN SUCH ASSIGNMENT AND ACCEPTANCE), THIS AGREEMENT SHALL BE DEEMED TO
BE AMENDED TO THE EXTENT, BUT ONLY TO THE EXTENT, NECESSARY TO REFLECT THE
ADDITION OF THE ASSIGNEE AND THE RESULTING ADJUSTMENT OF THE COMMITMENTS ARISING
THEREFROM. THE COMMITMENT ALLOCATED TO EACH ASSIGNEE SHALL REDUCE SUCH
COMMITMENTS OF THE ASSIGNING LENDER PRO TANTO.

 

(F)            ANY LENDER MAY AT ANY TIME, WITHOUT THE CONSENT OF THE BORROWERS,
SELL TO ONE OR MORE COMMERCIAL BANKS, FINANCIAL INSTITUTIONS, OR OTHER PERSONS
(A “PARTICIPANT”) PARTICIPATING INTERESTS IN ALL OR ANY PORTION OF ITS
OBLIGATIONS, ITS COMMITMENTS, AND THE OTHER RIGHTS AND INTERESTS OF THAT LENDER
(THE “ORIGINATING LENDER”) HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS;
PROVIDED, HOWEVER, THAT (I) THE PARTICIPANT RECEIVING THE PARTICIPATING INTEREST
IN THE OBLIGATIONS, THE COMMITMENTS, AND THE OTHER RIGHTS AND INTERESTS OF THE
ORIGINATING LENDER HEREUNDER SHALL NOT CONSTITUTE A “LENDER” HEREUNDER OR UNDER
THE OTHER LOAN DOCUMENTS AND SUCH ORIGINATING LENDER’S OBLIGATIONS UNDER THIS
AGREEMENT TO THE OTHER PARTIES TO THIS AGREEMENT SHALL REMAIN UNCHANGED, (II)
THE ORIGINATING LENDER SHALL REMAIN SOLELY RESPONSIBLE FOR THE PERFORMANCE OF
SUCH OBLIGATIONS, (III) BORROWERS, AGENT, AND THE LENDERS SHALL CONTINUE TO DEAL
SOLELY AND DIRECTLY WITH THE ORIGINATING LENDER IN CONNECTION WITH THE
ORIGINATING LENDER’S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS, (IV) NO ORIGINATING LENDER SHALL TRANSFER OR GRANT ANY
PARTICIPATING INTEREST UNDER WHICH THE PARTICIPANT HAS THE RIGHT TO APPROVE ANY
AMENDMENT TO, OR ANY CONSENT OR WAIVER WITH RESPECT TO, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, EXCEPT TO THE EXTENT SUCH AMENDMENT TO, OR CONSENT OR
WAIVER WITH RESPECT TO THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT WOULD (A)
EXTEND THE FINAL MATURITY DATE OF THE OBLIGATIONS HEREUNDER IN WHICH SUCH
PARTICIPANT IS PARTICIPATING, (B) REDUCE THE INTEREST RATE APPLICABLE TO THE
OBLIGATIONS HEREUNDER IN WHICH SUCH PARTICIPANT IS PARTICIPATING, (C) RELEASE
ALL OR SUBSTANTIALLY ALL OF THE COLLATERAL OR GUARANTIES (EXCEPT TO THE EXTENT
EXPRESSLY PROVIDED HEREIN OR IN ANY OF THE LOAN DOCUMENTS) SUPPORTING THE
OBLIGATIONS HEREUNDER IN WHICH SUCH PARTICIPANT IS PARTICIPATING, (D) POSTPONE
THE PAYMENT OF, OR REDUCE THE AMOUNT OF, THE INTEREST OR FEES PAYABLE TO SUCH
PARTICIPANT THROUGH SUCH LENDER, OR (E) CHANGE THE AMOUNT OR DUE DATES OF
SCHEDULED PRINCIPAL REPAYMENTS OR PREPAYMENTS OR PREMIUMS, AND (V) ALL AMOUNTS
PAYABLE BY BORROWERS HEREUNDER SHALL BE DETERMINED AS IF SUCH LENDER HAD NOT
SOLD SUCH PARTICIPATION, EXCEPT THAT, IF AMOUNTS OUTSTANDING UNDER THIS
AGREEMENT ARE DUE AND UNPAID, OR SHALL HAVE BEEN DECLARED OR SHALL HAVE BECOME
DUE AND PAYABLE UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, EACH PARTICIPANT
SHALL BE DEEMED TO HAVE THE RIGHT OF SET OFF IN RESPECT OF ITS PARTICIPATING
INTEREST IN AMOUNTS OWING UNDER THIS AGREEMENT TO THE SAME EXTENT AS IF THE
AMOUNT OF ITS PARTICIPATING INTEREST WERE OWING DIRECTLY TO IT AS A LENDER UNDER
THIS AGREEMENT. THE RIGHTS OF ANY PARTICIPANT ONLY SHALL BE DERIVATIVE THROUGH
THE ORIGINATING LENDER WITH WHOM SUCH PARTICIPANT PARTICIPATES AND NO
PARTICIPANT SHALL HAVE ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY DIRECT RIGHTS AS TO THE OTHER LENDERS, AGENT, BORROWERS, THE
COLLECTIONS OF BORROWERS OR THEIR SUBSIDIARIES, THE COLLATERAL, OR OTHERWISE IN
RESPECT OF THE OBLIGATIONS. NO PARTICIPANT SHALL HAVE THE RIGHT TO PARTICIPATE
DIRECTLY IN THE MAKING OF DECISIONS BY THE LENDERS AMONG THEMSELVES. SUBJECT TO
SECTION 15.11(G), THE BORROWERS AGREE THAT EACH PARTICIPANT SHALL BE ENTITLED TO
BE

 

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BENEFITS OF SECTION 15.11 TO THE SAME EXTENT AS IF IT WERE A LENDER AND HAD
ACQUIRED ITS INTEREST BY ASSIGNMENT PURSUANT TO THIS SECTION 13.1. THE
PROVISIONS OF THIS SECTION 13.1(F) ARE SOLELY FOR THE BENEFIT OF THE LENDER
GROUP, AND BORROWERS SHALL NOT HAVE ANY RIGHTS AS THIRD PARTY BENEFICIARIES OF
ANY SUCH PROVISIONS.

 

(G)           IN CONNECTION WITH ANY SUCH ASSIGNMENT OR PARTICIPATION OR
PROPOSED ASSIGNMENT OR PARTICIPATION, A LENDER MAY, SUBJECT TO THE PROVISIONS OF
SECTION 16.7, DISCLOSE ALL DOCUMENTS AND INFORMATION WHICH IT NOW OR HEREAFTER
MAY HAVE RELATING TO BORROWERS AND THEIR SUBSIDIARIES AND THEIR RESPECTIVE
BUSINESSES.

 

(H)           ANY OTHER PROVISION IN THIS AGREEMENT NOTWITHSTANDING, ANY LENDER
MAY AT ANY TIME CREATE A SECURITY INTEREST IN, OR PLEDGE, ALL OR ANY PORTION OF
ITS RIGHTS UNDER AND INTEREST IN THIS AGREEMENT IN FAVOR OF ANY FEDERAL RESERVE
BANK IN ACCORDANCE WITH REGULATION A OF THE FEDERAL RESERVE BANK OR U.S.
TREASURY REGULATION 31 CFR §203.24 OR ANY OTHER PERSON, INCLUDING, WITHOUT
LIMITATION, AS PROVIDED IN SECTION 2.15, AND SUCH PERSON MAY ENFORCE SUCH PLEDGE
OR SECURITY INTEREST IN ANY MANNER PERMITTED UNDER APPLICABLE LAW; PROVIDED,
THAT NO SUCH PLEDGE OR GRANT OF A SECURITY INTEREST SHALL RELEASE A LENDER FROM
ANY OF ITS OBLIGATIONS HEREUNDER OR SUBSTITUTE ANY SUCH PLEDGEE OR SECURED PARTY
(OR ANY TRANSFEREE THEREOF) FOR SUCH LENDER AS A PARTY HERETO UNLESS SUCH
PLEDGEE OR SECURED PARTY (OR TRANSFEREE) BECOMES A LENDER HEREUNDER.

 

(I)            AGENT SHALL, ACTING SOLELY FOR THIS PURPOSE AS A NON-FIDUCIARY
AGENT OF BORROWERS, MAINTAIN, OR CAUSE TO BE MAINTAINED, A REGISTER (THE
“REGISTER”) ON WHICH IT SHALL ENTER THE NAMES AND ADDRESSES OF THE LENDERS AND
THE COMMITMENTS OF, AND THE PRINCIPAL AMOUNT OF THE ADVANCES AND THE TERM LOANS
(AND STATED INTEREST THEREON) OWING TO, EACH LENDER FROM TIME TO TIME. SUBJECT
TO THE LAST SENTENCE OF THIS SECTION 13.1(I), THE ENTRIES IN THE REGISTER SHALL
BE CONCLUSIVE AND BINDING FOR ALL PURPOSES, ABSENT MANIFEST ERROR, AND
BORROWERS, AGENT AND LENDERS MAY TREAT EACH PERSON WHOSE NAME IS RECORDED IN THE
REGISTER AS A LENDER HEREUNDER FOR ALL PURPOSES OF THIS AGREEMENT. THE REGISTER
SHALL BE AVAILABLE FOR INSPECTION BY ADMINISTRATIVE BORROWER AND ANY LENDER AT
ANY REASONABLE TIME AND FROM TIME TO TIME UPON REASONABLE NOTICE. IN THE CASE OF
AN ASSIGNMENT TO A QUALIFIED AFFILIATE OR QUALIFIED RELATED FUND PURSUANT TO
SECTION 13.1(C) AS TO WHICH AN ASSIGNMENT AND ACCEPTANCE IS NOT DELIVERED TO
AGENT, THE ASSIGNING LENDER SHALL, ACTING SOLELY FOR THIS PURPOSE AS A
NON-FIDUCIARY AGENT OF BORROWERS, MAINTAIN A REGISTER (THE “RELATED PARTY
REGISTER”) COMPARABLE TO THE REGISTER ON BEHALF OF BORROWERS.

 

(J)            A REGISTERED LOAN (AND THE REGISTERED NOTE, IF ANY, EVIDENCING
THE SAME) MAY BE ASSIGNED OR SOLD IN WHOLE OR IN PART ONLY BY REGISTRATION OF
SUCH ASSIGNMENT OR SALE ON THE REGISTER OR THE RELATED PARTY REGISTER (AND EACH
REGISTERED NOTE SHALL EXPRESSLY SO PROVIDE). ANY ASSIGNMENT OR SALE OF ALL OR
PART OF SUCH REGISTERED LOAN (AND THE REGISTERED NOTE, IF ANY, EVIDENCING THE
SAME) MAY BE EFFECTED ONLY BY REGISTRATION OF SUCH ASSIGNMENT OR SALE ON THE
REGISTER OR THE RELATED PARTY REGISTER, TOGETHER WITH THE SURRENDER OF THE
REGISTERED NOTE, IF ANY, EVIDENCING THE SAME DULY ENDORSED BY (OR ACCOMPANIED BY
A WRITTEN INSTRUMENT OF ASSIGNMENT OR SALE DULY EXECUTED BY) THE HOLDER OF SUCH
REGISTERED NOTE, WHEREUPON, AT THE REQUEST OF THE DESIGNATED ASSIGNEE(S) OR
TRANSFEREE(S), ONE OR MORE NEW REGISTERED NOTES IN THE SAME AGGREGATE PRINCIPAL
AMOUNT SHALL BE ISSUED TO THE DESIGNATED ASSIGNEE(S) OR TRANSFEREE(S). PRIOR TO
THE REGISTRATION OF ASSIGNMENT OR SALE OF ANY REGISTERED LOAN (AND THE
REGISTERED NOTE, IF ANY

 

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EVIDENCING THE SAME), AGENT AND BORROWERS SHALL TREAT THE PERSON IN WHOSE NAME
SUCH REGISTERED LOAN (AND THE REGISTERED NOTE, IF ANY, EVIDENCING THE SAME) IS
REGISTERED AS THE OWNER THEREOF FOR THE PURPOSE OF RECEIVING ALL PAYMENTS
THEREON, NOTWITHSTANDING NOTICE TO THE CONTRARY.

 

13.2         SUCCESSORS. THIS AGREEMENT SHALL BIND AND INURE TO THE BENEFIT OF
THE RESPECTIVE SUCCESSORS AND ASSIGNS OF EACH OF THE PARTIES; PROVIDED, HOWEVER,
THAT BORROWERS MAY NOT ASSIGN THIS AGREEMENT OR ANY RIGHTS OR DUTIES HEREUNDER
WITHOUT THE LENDERS’ PRIOR WRITTEN CONSENT AND ANY PROHIBITED ASSIGNMENT SHALL
BE ABSOLUTELY VOID AB INITIO. NO CONSENT TO ASSIGNMENT BY THE LENDERS SHALL
RELEASE ANY BORROWER FROM ITS OBLIGATIONS. A LENDER MAY ASSIGN THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS AND ITS RIGHTS AND DUTIES HEREUNDER AND THEREUNDER
PURSUANT TO SECTION 13.1 HEREOF AND, EXCEPT AS EXPRESSLY REQUIRED PURSUANT TO
SECTION 13.1 HEREOF, NO CONSENT OR APPROVAL BY ANY BORROWER IS REQUIRED IN
CONNECTION WITH ANY SUCH ASSIGNMENT.

 

14.          AMENDMENTS; WAIVERS.

 

14.1         AMENDMENTS AND WAIVERS. NO AMENDMENT OR WAIVER OF ANY PROVISION OF
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND NO CONSENT WITH RESPECT TO ANY
DEPARTURE BY BORROWERS THEREFROM, SHALL BE EFFECTIVE UNLESS THE SAME SHALL BE IN
WRITING AND SIGNED BY THE REQUIRED LENDERS (OR BY AGENT AT THE WRITTEN REQUEST
OF THE REQUIRED LENDERS) AND ADMINISTRATIVE BORROWER (ON BEHALF OF ALL
BORROWERS) AND THEN ANY SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE, BUT ONLY IN
THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN; PROVIDED,
HOWEVER, THAT NO SUCH WAIVER, AMENDMENT, OR CONSENT SHALL, UNLESS IN WRITING AND
SIGNED BY ALL OF THE LENDERS AND ADMINISTRATIVE BORROWER (ON BEHALF OF ALL
BORROWERS), DO ANY OF THE FOLLOWING:

 

(A)           INCREASE OR EXTEND ANY COMMITMENT OF ANY LENDER,

 

(B)           POSTPONE OR DELAY ANY DATE FIXED BY THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT FOR ANY PAYMENT OF PRINCIPAL, INTEREST, FEES, OR OTHER AMOUNTS DUE
HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT,

 

(C)           REDUCE THE PRINCIPAL OF, OR THE RATE OF INTEREST ON, ANY LOAN OR
OTHER EXTENSION OF CREDIT HEREUNDER, OR REDUCE ANY FEES OR OTHER AMOUNTS PAYABLE
HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT,

 

(D)           CHANGE THE PRO RATA SHARE THAT IS REQUIRED TO TAKE ANY ACTION
HEREUNDER,

 

(E)           AMEND OR MODIFY THIS SECTION OR ANY PROVISION OF THIS AGREEMENT
PROVIDING FOR CONSENT OR OTHER ACTION BY ALL LENDERS,

 

(F)            OTHER THAN AS PERMITTED BY SECTION 15.12, RELEASE AGENT’S LIEN IN
AND TO ANY OF THE COLLATERAL,

 

(G)           CHANGE THE DEFINITION OF “REQUIRED LENDERS” OR “PRO RATA SHARE”,

 

(H)           CONTRACTUALLY SUBORDINATE ANY OF THE AGENT’S LIENS,

 

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(I)            RELEASE ANY BORROWER FROM ANY OBLIGATION FOR THE PAYMENT OF
MONEY,

 

(J)            CHANGE THE DEFINITION OF BORROWING BASE, ANY OF THE DEFINITIONS
USED THEREIN, THE DEFINITION OF “MAXIMUM REVOLVER AMOUNT,” THE DEFINITION OF
“TERM LOAN AMOUNT,” OR SECTIONS 2.1, 2.2 OR 2.4(B), OR

 

(K)           AMEND ANY OF THE PROVISIONS OF SECTION 15

 

and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, affect the rights or duties of Agent
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.

 

14.2         NO WAIVERS; CUMULATIVE REMEDIES. NO FAILURE BY AGENT OR ANY LENDER
TO EXERCISE ANY RIGHT, REMEDY, OR OPTION UNDER THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR DELAY BY AGENT OR ANY LENDER IN EXERCISING THE SAME, WILL OPERATE
AS A WAIVER THEREOF. NO WAIVER BY AGENT OR ANY LENDER WILL BE EFFECTIVE UNLESS
IT IS IN WRITING, AND THEN ONLY TO THE EXTENT SPECIFICALLY STATED. NO WAIVER BY
AGENT OR ANY LENDER ON ANY OCCASION SHALL AFFECT OR DIMINISH AGENT’S AND EACH
LENDER’S RIGHTS THEREAFTER TO REQUIRE STRICT PERFORMANCE BY BORROWERS OF ANY
PROVISION OF THIS AGREEMENT. AGENT’S AND EACH LENDER’S RIGHTS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS WILL BE CUMULATIVE AND NOT EXCLUSIVE OF
ANY OTHER RIGHT OR REMEDY THAT AGENT OR ANY LENDER MAY HAVE.

 

15.          AGENT; THE LENDER GROUP.

 

15.1         APPOINTMENT AND AUTHORIZATION OF AGENT. EACH LENDER HEREBY
DESIGNATES AND APPOINTS GVECR AS ITS REPRESENTATIVE UNDER THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS AND EACH LENDER HEREBY IRREVOCABLY AUTHORIZES AGENT TO
EXECUTE AND DELIVER EACH OF THE OTHER LOAN DOCUMENTS ON ITS BEHALF AND TO TAKE
SUCH OTHER ACTION ON ITS BEHALF UNDER THE PROVISIONS OF THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT AND TO EXERCISE SUCH POWERS AND PERFORM SUCH DUTIES AS ARE
EXPRESSLY DELEGATED TO AGENT BY THE TERMS OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, TOGETHER WITH SUCH POWERS AS ARE REASONABLY INCIDENTAL THERETO. AGENT
AGREES TO ACT AS SUCH ON THE EXPRESS CONDITIONS CONTAINED IN THIS SECTION 15.
THE PROVISIONS OF THIS SECTION 15 (OTHER THAN SECTION 15.11) ARE SOLELY FOR THE
BENEFIT OF AGENT, AND THE LENDERS, AND BORROWERS AND THEIR SUBSIDIARIES SHALL
HAVE NO RIGHTS AS A THIRD PARTY BENEFICIARY OF ANY OF THE PROVISIONS CONTAINED
HEREIN. ANY PROVISION TO THE CONTRARY CONTAINED ELSEWHERE IN THIS AGREEMENT OR
IN ANY OTHER LOAN DOCUMENT NOTWITHSTANDING, AGENT SHALL NOT HAVE ANY DUTIES OR
RESPONSIBILITIES, EXCEPT THOSE EXPRESSLY SET FORTH HEREIN, NOR SHALL AGENT HAVE
OR BE DEEMED TO HAVE ANY FIDUCIARY RELATIONSHIP WITH ANY LENDER, AND NO IMPLIED
COVENANTS, FUNCTIONS, RESPONSIBILITIES, DUTIES, OBLIGATIONS OR LIABILITIES SHALL
BE READ INTO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHERWISE EXIST
AGAINST AGENT; IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT THE USE OF THE WORD
“AGENT” IS FOR CONVENIENCE ONLY, THAT GVECR IS MERELY THE REPRESENTATIVE OF THE
LENDERS, AND ONLY HAS THE CONTRACTUAL DUTIES SET FORTH HEREIN. EXCEPT AS
EXPRESSLY OTHERWISE PROVIDED IN THIS AGREEMENT, AGENT SHALL HAVE AND MAY USE ITS
SOLE DISCRETION WITH RESPECT TO EXERCISING OR

 

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REFRAINING FROM EXERCISING ANY DISCRETIONARY RIGHTS OR TAKING OR REFRAINING FROM
TAKING ANY ACTIONS THAT AGENT EXPRESSLY IS ENTITLED TO TAKE OR ASSERT UNDER OR
PURSUANT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, OR OF ANY OTHER PROVISION OF THE LOAN DOCUMENTS
THAT PROVIDES RIGHTS OR POWERS TO AGENT, LENDERS AGREE THAT AGENT SHALL HAVE THE
RIGHT TO EXERCISE THE FOLLOWING POWERS AS LONG AS THIS AGREEMENT REMAINS IN
EFFECT:  (A) MAINTAIN, IN ACCORDANCE WITH ITS CUSTOMARY BUSINESS PRACTICES,
LEDGERS AND RECORDS REFLECTING THE STATUS OF THE OBLIGATIONS, THE COLLATERAL,
THE COLLECTIONS OF BORROWERS AND THEIR SUBSIDIARIES, AND RELATED MATTERS, (B)
EXECUTE OR FILE ANY AND ALL FINANCING OR SIMILAR STATEMENTS OR NOTICES,
AMENDMENTS, RENEWALS, SUPPLEMENTS, DOCUMENTS, INSTRUMENTS, PROOFS OF CLAIM,
NOTICES AND OTHER WRITTEN AGREEMENTS WITH RESPECT TO THE LOAN DOCUMENTS, (C)
MAKE PORTIONS OF THE LOANS, FOR ITSELF OR ON BEHALF OF LENDERS AS PROVIDED IN
THE LOAN DOCUMENTS, (D) EXCLUSIVELY RECEIVE, APPLY, AND DISTRIBUTE THE
COLLECTIONS OF BORROWERS AND THEIR SUBSIDIARIES AS PROVIDED IN THE LOAN
DOCUMENTS, (E) OPEN AND MAINTAIN SUCH BANK ACCOUNTS AND CASH MANAGEMENT ACCOUNTS
AS AGENT DEEMS NECESSARY AND APPROPRIATE IN ACCORDANCE WITH THE LOAN DOCUMENTS
FOR THE FOREGOING PURPOSES WITH RESPECT TO THE COLLATERAL AND THE COLLECTIONS OF
BORROWERS AND THEIR SUBSIDIARIES, (F) PERFORM, EXERCISE, AND ENFORCE ANY AND ALL
OTHER RIGHTS AND REMEDIES OF THE LENDER GROUP WITH RESPECT TO BORROWERS, THE
OBLIGATIONS, THE COLLATERAL, THE COLLECTIONS OF BORROWERS AND THEIR
SUBSIDIARIES, OR OTHERWISE RELATED TO ANY OF SAME AS PROVIDED IN THE LOAN
DOCUMENTS, AND (G) INCUR AND PAY SUCH LENDER GROUP EXPENSES AS AGENT MAY DEEM
NECESSARY OR APPROPRIATE FOR THE PERFORMANCE AND FULFILLMENT OF ITS FUNCTIONS
AND POWERS PURSUANT TO THE LOAN DOCUMENTS.

 

15.2         DELEGATION OF DUTIES. AGENT MAY EXECUTE ANY OF ITS DUTIES UNDER
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY OR THROUGH AGENTS, EMPLOYEES OR
ATTORNEYS IN FACT AND SHALL BE ENTITLED TO ADVICE OF COUNSEL CONCERNING ALL
MATTERS PERTAINING TO SUCH DUTIES. AGENT SHALL NOT BE RESPONSIBLE FOR THE
NEGLIGENCE OR MISCONDUCT OF ANY AGENT OR ATTORNEY IN FACT THAT IT SELECTS AS
LONG AS SUCH SELECTION WAS MADE WITHOUT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

15.3         LIABILITY OF AGENT. NONE OF THE AGENT RELATED PERSONS SHALL (A) BE
LIABLE FOR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY ANY OF THEM UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (EXCEPT FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT),
OR (B) BE RESPONSIBLE IN ANY MANNER TO ANY OF THE LENDERS FOR ANY RECITAL,
STATEMENT, REPRESENTATION OR WARRANTY MADE BY ANY BORROWER OR AFFILIATE OF ANY
BORROWER, OR ANY OFFICER OR DIRECTOR THEREOF, CONTAINED IN THIS AGREEMENT OR IN
ANY OTHER LOAN DOCUMENT, OR IN ANY CERTIFICATE, REPORT, STATEMENT OR OTHER
DOCUMENT REFERRED TO OR PROVIDED FOR IN, OR RECEIVED BY AGENT UNDER OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE VALIDITY,
EFFECTIVENESS, GENUINENESS, ENFORCEABILITY OR SUFFICIENCY OF THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR FOR ANY FAILURE OF ANY BORROWER OR ANY OTHER PARTY
TO ANY LOAN DOCUMENT TO PERFORM ITS OBLIGATIONS HEREUNDER OR THEREUNDER. NO
AGENT RELATED PERSON SHALL BE UNDER ANY OBLIGATION TO ANY LENDER TO ASCERTAIN OR
TO INQUIRE AS TO THE OBSERVANCE OR PERFORMANCE OF ANY OF THE AGREEMENTS
CONTAINED IN, OR CONDITIONS OF, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR TO
INSPECT THE BOOKS AND RECORDS OR PROPERTIES OF BORROWERS OR THE BOOKS OR RECORDS
OR PROPERTIES OF ANY OF BORROWERS’ SUBSIDIARIES OR AFFILIATES.

 

15.4         RELIANCE BY AGENT. AGENT SHALL BE ENTITLED TO RELY, AND SHALL BE
FULLY PROTECTED IN RELYING, UPON ANY WRITING, RESOLUTION, NOTICE, CONSENT,
CERTIFICATE, AFFIDAVIT, LETTER, TELEGRAM, TELEFACSIMILE OR OTHER ELECTRONIC
METHOD OF TRANSMISSION, TELEX OR TELEPHONE MESSAGE, STATEMENT

 

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OR OTHER DOCUMENT OR CONVERSATION BELIEVED BY IT TO BE GENUINE AND CORRECT AND
TO HAVE BEEN SIGNED, SENT, OR MADE BY THE PROPER PERSON OR PERSONS, AND UPON
ADVICE AND STATEMENTS OF LEGAL COUNSEL (INCLUDING COUNSEL TO BORROWERS OR
COUNSEL TO ANY LENDER), INDEPENDENT ACCOUNTANTS AND OTHER EXPERTS SELECTED BY
AGENT. AGENT SHALL BE FULLY JUSTIFIED IN FAILING OR REFUSING TO TAKE ANY ACTION
UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT UNLESS AGENT SHALL FIRST RECEIVE
SUCH ADVICE OR CONCURRENCE OF THE REQUISITE LENDERS AS IT DEEMS APPROPRIATE AND
UNTIL SUCH INSTRUCTIONS ARE RECEIVED, AGENT SHALL REFRAIN FROM ACTING AS IT
DEEMS ADVISABLE. IF AGENT SO REQUESTS, IT SHALL FIRST BE INDEMNIFIED TO ITS
REASONABLE SATISFACTION BY THE LENDERS AGAINST ANY AND ALL LIABILITY AND EXPENSE
THAT MAY BE INCURRED BY IT BY REASON OF TAKING OR CONTINUING TO TAKE ANY SUCH
ACTION. AGENT SHALL IN ALL CASES BE FULLY PROTECTED IN ACTING, OR IN REFRAINING
FROM ACTING, UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ACCORDANCE WITH
A REQUEST OR CONSENT OF THE REQUISITE LENDERS AND SUCH REQUEST AND ANY ACTION
TAKEN OR FAILURE TO ACT PURSUANT THERETO SHALL BE BINDING UPON ALL OF THE
LENDERS.

 

15.5         NOTICE OF DEFAULT OR EVENT OF DEFAULT. AGENT SHALL NOT BE DEEMED TO
HAVE KNOWLEDGE OR NOTICE OF THE OCCURRENCE OF ANY DEFAULT OR EVENT OF DEFAULT,
EXCEPT WITH RESPECT TO DEFAULTS IN THE PAYMENT OF PRINCIPAL, INTEREST, FEES, AND
EXPENSES REQUIRED TO BE PAID TO AGENT FOR THE ACCOUNT OF THE LENDERS AND EXCEPT
WITH RESPECT TO EVENTS OF DEFAULT OF WHICH AGENT HAS ACTUAL KNOWLEDGE, UNLESS
AGENT SHALL HAVE RECEIVED WRITTEN NOTICE FROM A LENDER OR ADMINISTRATIVE
BORROWER REFERRING TO THIS AGREEMENT, DESCRIBING SUCH DEFAULT OR EVENT OF
DEFAULT, AND STATING THAT SUCH NOTICE IS A “NOTICE OF DEFAULT.”  AGENT PROMPTLY
WILL NOTIFY THE LENDERS OF ITS RECEIPT OF ANY SUCH NOTICE OR OF ANY EVENT OF
DEFAULT OF WHICH AGENT HAS ACTUAL KNOWLEDGE. IF ANY LENDER OBTAINS ACTUAL
KNOWLEDGE OF ANY EVENT OF DEFAULT, SUCH LENDER PROMPTLY SHALL NOTIFY THE OTHER
LENDERS AND AGENT OF SUCH EVENT OF DEFAULT. EACH LENDER SHALL BE SOLELY
RESPONSIBLE FOR GIVING ANY NOTICES TO ITS PARTICIPANTS, IF ANY. SUBJECT TO
SECTION 15.4, AGENT SHALL TAKE SUCH ACTION WITH RESPECT TO SUCH DEFAULT OR EVENT
OF DEFAULT AS MAY BE REQUESTED BY THE REQUIRED LENDERS IN ACCORDANCE WITH
SECTION 8; PROVIDED, HOWEVER, THAT UNLESS AND UNTIL AGENT HAS RECEIVED ANY SUCH
REQUEST, AGENT MAY REFRAIN FROM TAKING SUCH ACTION WITH RESPECT TO SUCH DEFAULT
OR EVENT OF DEFAULT AS IT SHALL DEEM ADVISABLE.

 

15.6         CREDIT DECISION. EACH LENDER ACKNOWLEDGES THAT NONE OF THE
AGENT-RELATED PERSONS HAS MADE ANY REPRESENTATION OR WARRANTY TO IT, AND THAT NO
ACT BY AGENT HEREINAFTER TAKEN, INCLUDING ANY REVIEW OF THE AFFAIRS OF BORROWERS
AND THEIR SUBSIDIARIES OR AFFILIATES, SHALL BE DEEMED TO CONSTITUTE ANY
REPRESENTATION OR WARRANTY BY ANY AGENT-RELATED PERSON TO ANY LENDER. EACH
LENDER REPRESENTS TO AGENT THAT IT HAS, INDEPENDENTLY AND WITHOUT RELIANCE UPON
ANY AGENT-RELATED PERSON AND BASED ON SUCH DOCUMENTS AND INFORMATION AS IT HAS
DEEMED APPROPRIATE, MADE ITS OWN APPRAISAL OF AND INVESTIGATION INTO THE
BUSINESS, PROSPECTS, OPERATIONS, PROPERTY, FINANCIAL AND OTHER CONDITION AND
CREDITWORTHINESS OF BORROWERS AND ANY OTHER PERSON PARTY TO A LOAN DOCUMENT, AND
ALL APPLICABLE BANK REGULATORY LAWS RELATING TO THE TRANSACTIONS CONTEMPLATED
HEREBY, AND MADE ITS OWN DECISION TO ENTER INTO THIS AGREEMENT AND TO EXTEND
CREDIT TO BORROWERS. EACH LENDER ALSO REPRESENTS THAT IT WILL, INDEPENDENTLY AND
WITHOUT RELIANCE UPON ANY AGENT-RELATED PERSON AND BASED ON SUCH DOCUMENTS AND
INFORMATION AS IT SHALL DEEM APPROPRIATE AT THE TIME, CONTINUE TO MAKE ITS OWN
CREDIT ANALYSIS, APPRAISALS AND DECISIONS IN TAKING OR NOT TAKING ACTION UNDER
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND TO MAKE SUCH INVESTIGATIONS AS
IT DEEMS NECESSARY TO INFORM ITSELF AS TO THE BUSINESS, PROSPECTS, OPERATIONS,
PROPERTY, FINANCIAL AND OTHER CONDITION AND CREDITWORTHINESS OF BORROWERS AND
ANY OTHER PERSON PARTY TO A LOAN DOCUMENT. EXCEPT FOR NOTICES, REPORTS, AND
OTHER DOCUMENTS

 

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EXPRESSLY HEREIN REQUIRED TO BE FURNISHED TO THE LENDERS BY AGENT, AGENT SHALL
NOT HAVE ANY DUTY OR RESPONSIBILITY TO PROVIDE ANY LENDER WITH ANY CREDIT OR
OTHER INFORMATION CONCERNING THE BUSINESS, PROSPECTS, OPERATIONS, PROPERTY,
FINANCIAL AND OTHER CONDITION OR CREDITWORTHINESS OF BORROWERS AND ANY OTHER
PERSON PARTY TO A LOAN DOCUMENT THAT MAY COME INTO THE POSSESSION OF ANY OF THE
AGENT-RELATED PERSONS.

 

15.7         COSTS AND EXPENSES; INDEMNIFICATION. AGENT MAY INCUR AND PAY LENDER
GROUP EXPENSES TO THE EXTENT AGENT REASONABLY DEEMS NECESSARY OR APPROPRIATE FOR
THE PERFORMANCE AND FULFILLMENT OF ITS FUNCTIONS, POWERS, AND OBLIGATIONS
PURSUANT TO THE LOAN DOCUMENTS, INCLUDING COURT COSTS, REASONABLE ATTORNEYS FEES
AND EXPENSES, FEES AND EXPENSES OF FINANCIAL ACCOUNTANTS, ADVISORS, CONSULTANTS,
AND APPRAISERS, COSTS OF COLLECTION BY OUTSIDE COLLECTION AGENCIES, AUCTIONEER
FEES AND EXPENSES, AND COSTS OF SECURITY GUARDS OR INSURANCE PREMIUMS PAID TO
MAINTAIN THE COLLATERAL, WHETHER OR NOT BORROWERS ARE OBLIGATED TO REIMBURSE
AGENT OR LENDERS FOR SUCH EXPENSES PURSUANT TO THIS AGREEMENT OR OTHERWISE.
AGENT IS AUTHORIZED AND DIRECTED TO DEDUCT AND RETAIN SUFFICIENT AMOUNTS FROM
THE COLLECTIONS OF BORROWERS AND THEIR SUBSIDIARIES RECEIVED BY AGENT TO
REIMBURSE AGENT FOR SUCH OUT-OF-POCKET COSTS AND EXPENSES PRIOR TO THE
DISTRIBUTION OF ANY AMOUNTS TO LENDERS. IN THE EVENT AGENT IS NOT REIMBURSED FOR
SUCH COSTS AND EXPENSES FROM THE COLLECTIONS OF BORROWERS AND THEIR SUBSIDIARIES
RECEIVED BY AGENT, EACH LENDER HEREBY AGREES THAT IT IS AND SHALL BE OBLIGATED
TO PAY TO OR REIMBURSE AGENT FOR THE AMOUNT OF SUCH LENDER’S PRO RATA SHARE
THEREOF. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED,
THE LENDERS SHALL INDEMNIFY UPON DEMAND THE AGENT RELATED PERSONS (TO THE EXTENT
NOT REIMBURSED BY OR ON BEHALF OF BORROWERS AND WITHOUT LIMITING THE OBLIGATION
OF BORROWERS TO DO SO), ACCORDING TO THEIR PRO RATA SHARES, FROM AND AGAINST ANY
AND ALL INDEMNIFIED LIABILITIES; PROVIDED, HOWEVER, THAT NO LENDER SHALL BE
LIABLE FOR THE PAYMENT TO ANY AGENT RELATED PERSON OF ANY PORTION OF SUCH
INDEMNIFIED LIABILITIES RESULTING SOLELY FROM SUCH PERSON’S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT NOR SHALL ANY LENDER BE LIABLE FOR THE OBLIGATIONS OF ANY
DEFAULTING LENDER IN FAILING TO MAKE ANY PORTION OF A LOAN OR ANY OTHER
EXTENSION OF CREDIT HEREUNDER. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER
SHALL REIMBURSE AGENT UPON DEMAND FOR SUCH LENDER’S PRO RATA SHARE OF ANY COSTS
OR OUT OF POCKET EXPENSES (INCLUDING REASONABLE FEES AND EXPENSES OF ATTORNEYS,
ACCOUNTANTS, ADVISORS, AND CONSULTANTS FEES AND EXPENSES) INCURRED BY AGENT IN
CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT, OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY DOCUMENT
CONTEMPLATED BY OR REFERRED TO HEREIN, TO THE EXTENT THAT AGENT IS NOT
REIMBURSED FOR SUCH EXPENSES BY OR ON BEHALF OF BORROWERS. THE UNDERTAKING IN
THIS SECTION SHALL SURVIVE THE PAYMENT OF ALL OBLIGATIONS HEREUNDER AND THE
RESIGNATION OR REPLACEMENT OF AGENT.

 

15.8         AGENT IN INDIVIDUAL CAPACITY. GVECR AND ITS AFFILIATES MAY MAKE
LOANS TO, ISSUE LETTERS OF CREDIT FOR THE ACCOUNT OF, ACCEPT DEPOSITS FROM,
ACQUIRE EQUITY INTERESTS IN, AND GENERALLY ENGAGE IN ANY KIND OF BANKING, TRUST,
FINANCIAL ADVISORY, UNDERWRITING, OR OTHER BUSINESS WITH BORROWERS AND THEIR
SUBSIDIARIES AND AFFILIATES AND ANY OTHER PERSON PARTY TO ANY LOAN DOCUMENTS AS
THOUGH GVECR WERE NOT AGENT HEREUNDER, AND, IN EACH CASE, WITHOUT NOTICE TO OR
CONSENT OF THE OTHER MEMBERS OF THE LENDER GROUP. THE OTHER MEMBERS OF THE
LENDER GROUP ACKNOWLEDGE THAT, PURSUANT TO SUCH ACTIVITIES, GVECR OR ITS
AFFILIATES MAY RECEIVE INFORMATION REGARDING BORROWERS OR THEIR AFFILIATES AND
ANY OTHER PERSON PARTY TO ANY LOAN DOCUMENTS THAT IS SUBJECT TO CONFIDENTIALITY
OBLIGATIONS IN FAVOR OF BORROWERS OR SUCH OTHER

 

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PERSON AND THAT PROHIBIT THE DISCLOSURE OF SUCH INFORMATION TO THE LENDERS, AND
THE LENDERS ACKNOWLEDGE THAT, IN SUCH CIRCUMSTANCES (AND IN THE ABSENCE OF A
WAIVER OF SUCH CONFIDENTIALITY OBLIGATIONS, WHICH WAIVER AGENT WILL USE ITS
REASONABLE BEST EFFORTS TO OBTAIN), AGENT SHALL NOT BE UNDER ANY OBLIGATION TO
PROVIDE SUCH INFORMATION TO THEM. THE TERMS “LENDER” AND “LENDERS” INCLUDE GVECR
IN ITS INDIVIDUAL CAPACITY.

 

15.9         SUCCESSOR AGENT. AGENT MAY RESIGN AS AGENT UPON 45 DAYS NOTICE TO
THE LENDERS (OR SUCH SHORTER PERIOD AGREED TO BY THE AGENT AND THE REQUIRED
LENDERS). IF AGENT RESIGNS UNDER THIS AGREEMENT, THE REQUIRED LENDERS SHALL
APPOINT A SUCCESSOR AGENT FOR THE LENDERS. IF NO SUCCESSOR AGENT IS APPOINTED
PRIOR TO THE EFFECTIVE DATE OF THE RESIGNATION OF AGENT, AGENT MAY APPOINT,
AFTER CONSULTING WITH THE LENDERS, A SUCCESSOR AGENT. IF AGENT HAS MATERIALLY
BREACHED OR FAILED TO PERFORM ANY MATERIAL PROVISION OF THIS AGREEMENT OR OF
APPLICABLE LAW, THE REQUIRED LENDERS MAY AGREE IN WRITING TO REMOVE AND REPLACE
AGENT WITH A SUCCESSOR AGENT FROM AMONG THE LENDERS. IN ANY SUCH EVENT, UPON THE
ACCEPTANCE OF ITS APPOINTMENT AS SUCCESSOR AGENT HEREUNDER, SUCH SUCCESSOR AGENT
SHALL SUCCEED TO ALL THE RIGHTS, POWERS, AND DUTIES OF THE RETIRING AGENT AND
THE TERM “AGENT” SHALL MEAN SUCH SUCCESSOR AGENT AND THE RETIRING AGENT’S
APPOINTMENT, POWERS, AND DUTIES AS AGENT SHALL BE TERMINATED. AFTER ANY RETIRING
AGENT’S RESIGNATION HEREUNDER AS AGENT, THE PROVISIONS OF THIS SECTION 15 SHALL
INURE TO ITS BENEFIT AS TO ANY ACTIONS TAKEN OR OMITTED TO BE TAKEN BY IT WHILE
IT WAS AGENT UNDER THIS AGREEMENT. IF NO SUCCESSOR AGENT HAS ACCEPTED
APPOINTMENT AS AGENT BY THE EFFECTIVE DATE OF A RETIRING AGENT’S NOTICE OF
RESIGNATION, THE RETIRING AGENT’S RESIGNATION SHALL NEVERTHELESS THEREUPON
BECOME EFFECTIVE AND THE LENDERS SHALL PERFORM ALL OF THE DUTIES OF AGENT
HEREUNDER UNTIL SUCH TIME, IF ANY, AS THE LENDERS APPOINT A SUCCESSOR AGENT AS
PROVIDED FOR ABOVE.

 

15.10       LENDER IN INDIVIDUAL CAPACITY. ANY LENDER AND ITS RESPECTIVE
AFFILIATES MAY MAKE LOANS TO, ISSUE LETTERS OF CREDIT FOR THE ACCOUNT OF, ACCEPT
DEPOSITS FROM, ACQUIRE EQUITY INTERESTS IN AND GENERALLY ENGAGE IN ANY KIND OF
BANKING, TRUST, FINANCIAL ADVISORY, UNDERWRITING OR OTHER BUSINESS WITH
BORROWERS AND THEIR SUBSIDIARIES AND AFFILIATES AND ANY OTHER PERSON PARTY TO
ANY LOAN DOCUMENTS AS THOUGH SUCH LENDER WERE NOT A LENDER HEREUNDER WITHOUT
NOTICE TO OR CONSENT OF THE OTHER MEMBERS OF THE LENDER GROUP. THE OTHER MEMBERS
OF THE LENDER GROUP ACKNOWLEDGE THAT, PURSUANT TO SUCH ACTIVITIES, SUCH LENDER
AND ITS RESPECTIVE AFFILIATES MAY RECEIVE INFORMATION REGARDING BORROWERS OR
THEIR AFFILIATES AND ANY OTHER PERSON PARTY TO ANY LOAN DOCUMENTS THAT IS
SUBJECT TO CONFIDENTIALITY OBLIGATIONS IN FAVOR OF BORROWERS OR SUCH OTHER
PERSON AND THAT PROHIBIT THE DISCLOSURE OF SUCH INFORMATION TO THE LENDERS, AND
THE LENDERS ACKNOWLEDGE THAT, IN SUCH CIRCUMSTANCES (AND IN THE ABSENCE OF A
WAIVER OF SUCH CONFIDENTIALITY OBLIGATIONS, WHICH WAIVER SUCH LENDER WILL USE
ITS REASONABLE BEST EFFORTS TO OBTAIN), SUCH LENDER SHALL NOT BE UNDER ANY
OBLIGATION TO PROVIDE SUCH INFORMATION TO THEM.

 

15.11       WITHHOLDING TAXES.

 

(A)           SUBJECT TO CLAUSE (H) BELOW, ANY AND ALL PAYMENTS TO A LENDER OR
AGENT MADE BY OR ON ACCOUNT OF ANY OBLIGATION SHALL BE MADE FREE AND CLEAR OF,
AND WITHOUT DEDUCTION OR WITHHOLDING FOR, ANY AND ALL PRESENT OR FUTURE TAXES,
LEVIES, IMPOSTS, DEDUCTIONS, CHARGES, FEES, WITHHOLDINGS, RESTRICTIONS OR
CONDITIONS OF ANY NATURE, AND ALL LIABILITIES WITH RESPECT THERETO (INCLUDING
PENALTIES, INTEREST AND ADDITIONS TO TAX), EXCLUDING, IN THE CASE OF EACH LENDER
AND AGENT, SUCH TAXES (INCLUDING INCOME TAXES OR FRANCHISE TAXES) AS ARE IMPOSED
ON OR MEASURED BY THE NET INCOME OF SUCH LENDER OR AGENT, RESPECTIVELY, BY THE
JURISDICTION IN WHICH SUCH LENDER OR

 

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AGENT, AS THE CASE MAY BE, IS ORGANIZED OR MAINTAINS A LENDING OFFICE OR ANY
POLITICAL SUBDIVISION THEREOF (ALL SUCH NONEXCLUDED TAXES, LEVIES, IMPOSTS,
DEDUCTIONS, CHARGES, FEES, WITHHOLDINGS, RESTRICTIONS, CONDITIONS AND
LIABILITIES BEING HEREINAFTER COLLECTIVELY REFERRED TO AS “TAXES”).

 

(B)           IN ADDITION, EACH BORROWER AGREES TO PAY ANY PRESENT OR FUTURE
STAMP, DOCUMENTARY, SALES, TRANSFER, EXCISE, MORTGAGE RECORDING, OR PROPERTY
TAXES, CHARGES OR SIMILAR LEVIES WHICH ARISE FROM ANY PAYMENT MADE HEREUNDER OR
FROM THE EXECUTION, DELIVERY, PERFORMANCE, RECORDATION, REGISTRATION OR FILING
OF, OR OTHERWISE WITH RESPECT TO, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
(HEREINAFTER REFERRED TO AS “OTHER TAXES”).

 

(C)           IF ANY BORROWER SHALL BE REQUIRED TO DEDUCT OR WITHHOLD ANY TAXES
OR OTHER TAXES FROM OR IN RESPECT OF ANY AMOUNT PAYABLE HEREUNDER OR UNDER ANY
OTHER LOAN DOCUMENT TO ANY LENDER OR AGENT, THEN, SUBJECT TO CLAUSE (H) BELOW:

 

(I)            THE AMOUNT SO PAYABLE SHALL BE INCREASED SO THAT AFTER MAKING ALL
REQUIRED DEDUCTIONS AND WITHHOLDINGS (INCLUDING DEDUCTIONS AND WITHHOLDINGS
APPLICABLE TO ADDITIONAL AMOUNTS PAYABLE PURSUANT TO THIS SECTION 15.11), SUCH
LENDER OR AGENT, AS THE CASE MAY BE, RECEIVES AN AMOUNT EQUAL TO THE SUM IT
WOULD HAVE RECEIVED HAD NO SUCH DEDUCTIONS OR WITHHOLDINGS BEEN MADE,

 

(II)           SUCH BORROWER SHALL MAKE SUCH DEDUCTIONS OR WITHHOLDINGS,

 

(III)          SUCH BORROWER SHALL PAY THE FULL AMOUNT DEDUCTED OR WITHHELD TO
THE RELEVANT GOVERNMENTAL AUTHORITY IN ACCORDANCE WITH APPLICABLE LAW, AND

 

(IV)          WITHIN TEN (10) DAYS THEREAFTER, SUCH BORROWER SHALL SEND AGENT
(AND THE APPLICABLE LENDER) THE ORIGINAL OR A CERTIFIED COPY OF A RECEIPT (OR,
IF THE ORIGINAL OR A CERTIFIED COPY IS NOT AVAILABLE, SUCH OTHER DOCUMENTATION
AS SHALL BE SATISFACTORY TO AGENT AND THE APPLICABLE LENDER) EVIDENCING PAYMENT
OF THE AMOUNT OR AMOUNTS SO DEDUCTED OR WITHHELD.

 

(D)           SUBJECT TO CLAUSE (H) BELOW, THE BORROWERS HEREBY JOINTLY AND
SEVERALLY INDEMNIFY AND AGREE TO HOLD EACH LENDER AND AGENT HARMLESS ON AN
AFTER-TAX BASIS FROM AND AGAINST THE FULL AMOUNT OF ANY AND ALL TAXES OR OTHER
TAXES (INCLUDING, WITHOUT LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED BY ANY
JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 15.11) PAID BY SUCH LENDER OR
AGENT AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES FOR
NONPAYMENT, LATE PAYMENT OR OTHERWISE) ARISING THEREFROM OR WITH RESPECT
THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY
ASSERTED. PAYMENTS UNDER THIS INDEMNIFICATION SHALL BE MADE WITHIN TEN (10) DAYS
FROM THE DATE ON WHICH ANY LENDER OR AGENT MAKES WRITTEN DEMAND THEREFOR.

 

(E)           SUBJECT TO CLAUSE (H) BELOW, IN THE EVENT THAT BY REASON OF ANY
LAW, REGULATION OR REQUIREMENT OR IN THE INTERPRETATION OR ADMINISTRATION
THEREOF BY ANY GOVERNMENTAL AUTHORITY, WHETHER OR NOT HAVING THE FORCE OF LAW,
ANY LENDER (OR ITS APPLICABLE LENDING OFFICE) SHALL, WITH RESPECT TO ANY LOAN OR
LOAN DOCUMENT, BE SUBJECTED TO ANY TAX, LEVY, IMPOST, CHARGE, FEE, DUTY,
DEDUCTION OR WITHHOLDING OF ANY KIND WHATSOEVER (EXCEPT FOR CHANGES IN THE TAX
ON THE NET INCOME OF SUCH LENDER OR ITS APPLICABLE LENDING OFFICE IMPOSED BY THE
JURISDICTION IN WHICH SUCH LENDER IS ORGANIZED OR MAINTAINS A LENDING OFFICE),
AND IF ANY SUCH MEASURES OR ANY OTHER SIMILAR MEASURE SHALL RESULT IN AN
INCREASE IN THE COST TO SUCH LENDER OF MAKING OR MAINTAINING

 

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ANY LOAN OR IN A REDUCTION IN THE AMOUNT OF ANY SUM RECEIVABLE BY SUCH LENDER IN
RESPECT THEREOF, THEN SUCH LENDER SHALL PROMPTLY NOTIFY THE BORROWERS STATING
THE REASONS THEREFOR. THE BORROWERS SHALL THEREAFTER PAY TO SUCH LENDER, UPON
DEMAND AND AS ADDITIONAL CONSIDERATION HEREUNDER, SUCH ADDITIONAL AMOUNT OR
AMOUNTS AS SHALL FULLY COMPENSATE SUCH LENDER ON AN AFTER-TAX BASIS FOR SUCH
INCREASED COST OR REDUCED AMOUNT. A CERTIFICATE AS TO ANY SUCH INCREASED COST OR
REDUCED AMOUNT, SETTING FORTH THE CALCULATIONS THEREFOR, SHALL BE SUBMITTED BY
SUCH LENDER TO THE BORROWERS AND SHALL, IN THE ABSENCE OF MANIFEST ERROR, BE
CONCLUSIVE AND BINDING AS TO THE AMOUNT THEREOF.

 

(F)            EACH LENDER THAT IS NOT A CITIZEN OR RESIDENT OF THE UNITED
STATES, A CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED OR ORGANIZED IN OR
UNDER THE LAWS OF THE UNITED STATES (OR ANY JURISDICTION THEREOF), OR ANY ESTATE
OR TRUST THAT IS SUBJECT TO FEDERAL INCOME TAXATION REGARDLESS OF THE SOURCE OF
ITS INCOME OR IS OTHERWISE A “FOREIGN PERSON” WITHIN THE MEANING OF TREASURY
REGULATION SECTION 1.1441-1(C) (A “NON-U.S. LENDER”) SHALL DELIVER TO THE
BORROWERS AND AGENT (OR, IN THE CASE OF AN ASSIGNMENT THAT IS NOT DISCLOSED TO
AGENT OR THE BORROWERS IN ACCORDANCE WITH SECTION 13.1(C), SOLELY TO THE
ASSIGNING LENDER AND NOT TO AGENT OR THE BORROWERS) TWO (2) COPIES OF EACH
APPLICABLE IRS FORM W-8BEN, FORM W-8IMY OR FORM W-8ECI, OR ANY SUBSEQUENT
VERSIONS THEREOF OR SUCCESSORS THERETO, PROPERLY COMPLETED AND DULY EXECUTED BY
SUCH NON-U.S. LENDER CLAIMING COMPLETE EXEMPTION FROM, OR A REDUCED RATE OF,
UNITED STATES FEDERAL WITHHOLDING TAX ON ALL PAYMENTS BY THE BORROWERS UNDER
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. SUCH FORMS SHALL BE DELIVERED BY
EACH NON-U.S. LENDER ON OR BEFORE THE DATE IT BECOMES A PARTY TO THIS AGREEMENT.
IN ADDITION, EACH NON-U.S. LENDER SHALL DELIVER SUCH FORMS UPON THE OBSOLESCENCE
OR INVALIDITY OF ANY FORM PREVIOUSLY DELIVERED BY SUCH NON-U.S. LENDER. IN
ADDITION TO PROPERLY COMPLETING AND DULY EXECUTING FORMS W-8BEN OR W-8IMY (OR
ANY SUBSEQUENT VERSIONS THEREOF OR SUCCESSOR THERETO), IF SUCH NON-U.S. LENDER
IS CLAIMING AN EXEMPTION FROM WITHHOLDING OF UNITED STATES FEDERAL INCOME TAX
UNDER SECTION 871(H) OR SECTION 881(C) OF THE IRC, SUCH NON-U.S. LENDER HEREBY
REPRESENTS AND WARRANTS THAT SUCH NON-U.S. LENDER IS (A) NOT A “BANK” WITHIN THE
MEANING OF SECTION 881(C)(3)(A) OF THE IRC, (B) NOT A “10 PERCENT SHAREHOLDER”
WITHIN THE MEANING OF SECTION 871(H)(3)(B) OF THE IRC AND (C) NOT A CONTROLLED
FOREIGN CORPORATION RECEIVING INTEREST FROM A RELATED PERSON WITHIN THE MEANING
OF SECTION 864(D)(4) OF THE IRC, AND SUCH NON-U.S. LENDER AGREES THAT IT SHALL
PROVIDE AGENT, AND AGENT SHALL PROVIDE TO THE BORROWERS (OR, IN THE CASE OF AN
ASSIGNMENT THAT IS NOT DISCLOSED TO AGENT IN ACCORDANCE WITH SECTION 13.1(C),
SOLELY TO THE ASSIGNING LENDER AND NOT TO AGENT OR THE BORROWERS), WITH NOTICE
AT ANY TIME AFTER BECOMING A LENDER HEREUNDER THAT IT CAN NO LONGER MAKE THE
FOREGOING REPRESENTATIONS AND WARRANTIES. EACH NON-U.S. LENDER SHALL NOTIFY THE
BORROWERS (OR, IN THE CASE OF AN ASSIGNMENT THAT IS NOT DISCLOSED TO AGENT OR
THE BORROWERS IN ACCORDANCE WITH SECTION 13.1(C), SOLELY TO THE ASSIGNING LENDER
AND NOT TO AGENT OR THE BORROWERS) AT ANY TIME IT DETERMINES THAT IT IS NO
LONGER IN A POSITION TO PROVIDE ANY PREVIOUSLY DELIVERED FORM (OR ANY OTHER FORM
OF CERTIFICATION ADOPTED BY THE U.S. TAXING AUTHORITIES FOR SUCH PURPOSE).
NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION 15.11, A NON-U.S. LENDER
SHALL NOT BE REQUIRED TO DELIVER ANY FORM PURSUANT TO THIS SECTION 15.11(F) THAT
SUCH NON-U.S. LENDER IS NOT LEGALLY ABLE TO DELIVER.

 

(G)           EACH PERSON THAT SHALL BECOME A PARTICIPANT PURSUANT TO SECTION
13.1(F) ABOVE SHALL, ON OR BEFORE THE DATE OF THE EFFECTIVENESS OF THE RELATED
TRANSFER, BE REQUIRED TO PROVIDE ALL OF THE APPLICABLE FORMS REQUIRED PURSUANT
TO CLAUSE (F) ABOVE, AND SHALL BE DEEMED TO MAKE THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN SUBCLAUSES (A) - (C) OF CLAUSE (F) ABOVE,

 

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PROVIDED THAT THE OBLIGATIONS OF SUCH PARTICIPANT, PURSUANT TO THIS CLAUSE (G),
SHALL BE DETERMINED AS IF SUCH PARTICIPANT WERE A LENDER EXCEPT THAT SUCH
PARTICIPANT SHALL FURNISH ALL SUCH REQUIRED FORMS AND MAKE SUCH REPRESENTATIONS
AND WARRANTIES TO THE LENDER FROM WHICH THE RELATED PARTICIPATION SHALL HAVE
BEEN PURCHASED.

 

(H)           NOTWITHSTANDING ANYTHING IN THIS SECTION 15.11 TO THE CONTRARY,
THE BORROWERS SHALL NOT BE REQUIRED TO PAY ADDITIONAL AMOUNTS PURSUANT TO CLAUSE
(C)(I) ABOVE TO ANY LENDER OR AGENT ON ACCOUNT OF ANY TAXES COLLECTED BY MEANS
OF WITHHOLDING AT THE SOURCE (“WITHHOLDING TAXES”) OR TO INDEMNIFY ANY LENDER OR
AGENT PURSUANT TO CLAUSE (D) ABOVE ON ACCOUNT OF ANY WITHHOLDING TAXES, UNLESS
SUCH WITHHOLDING TAXES WOULD NOT HAVE ARISEN BUT FOR (I) ANY FAILURE BY A
BORROWER OR ITS REPRESENTATIVE TO QUALIFY AS A “UNITED STATES PERSON” AS DEFINED
IN SECTION 7701(A)(30) OF THE IRC, (II) ANY PAYMENT TO A LENDER OR AGENT MADE BY
OR ON ACCOUNT OF ANY OBLIGATION HAVING BEEN MADE THROUGH AN ACCOUNT OR BRANCH
OUTSIDE THE UNITED STATES, (III) ANY OTHER ACT OR OMISSION TO ACT OF A BORROWER
OR ITS REPRESENTATIVE OR (IV) A BREACH OF ANY REPRESENTATION, WARRANTY OR
COVENANT MADE BY A BORROWER IN THIS AGREEMENT.

 

(I)            IF A BORROWER IS REQUIRED TO PAY ADDITIONAL AMOUNTS TO OR FOR THE
ACCOUNT OF ANY LENDER OR AGENT PURSUANT TO THIS SECTION 15.11, THEN SUCH LENDER
OR AGENT SHALL USE ITS REASONABLE EFFORTS (CONSISTENT WITH ITS INTERNAL POLICIES
AND LEGAL AND REGULATORY RESTRICTIONS) TO DESIGNATE A LENDING OFFICE FROM A
DIFFERENT JURISDICTION (IF SUCH A LENDING OFFICE EXISTS) SO AS TO ELIMINATE OR
REDUCE ANY SUCH ADDITIONAL PAYMENTS BY SUCH BORROWER WHICH MAY ACCRUE IN THE
FUTURE IF SUCH DESIGNATION IN THE REASONABLE JUDGMENT OF SUCH LENDER OR AGENT,
WOULD NOT REQUIRE SUCH LENDER TO DISCLOSE INFORMATION SUCH LENDER DEEMS
CONFIDENTIAL AND IS NOT, IN THE SOLE DETERMINATION OF SUCH LENDER OR AGENT, AS
THE CASE MAY BE, OTHERWISE DISADVANTAGEOUS TO SUCH LENDER OR AGENT.

 

(J)            IF AGENT OR A LENDER RECEIVES A REFUND OF ANY TAXES OR OTHER
TAXES AS TO WHICH IT HAS BEEN INDEMNIFIED BY THE BORROWERS OR WITH RESPECT TO
WHICH A BORROWER HAS PAID ADDITIONAL AMOUNTS PURSUANT TO THIS SECTION 15.11, IT
SHALL PAY TO THE BORROWERS, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE NET
AMOUNT OF ANY SUCH REFUND (INCLUDING ANY INTEREST PAID THEREON BY SUCH
GOVERNMENTAL AUTHORITY) AFTER DEDUCTING TAXES AND OTHER EXPENSES ATTRIBUTABLE
THERETO AND ANY TAXES WHICH AGENT OR SUCH LENDER IS REQUIRED TO WITHHOLD FROM
THE PAYMENT TO THE BORROWERS; PROVIDED, THAT NO DEFAULT WHICH IF NOT CURED WOULD
BECOME AN EVENT OF DEFAULT OR EVENT OF DEFAULT IS CONTINUING, AND PROVIDED
FURTHER, THAT THE BORROWERS, UPON THE REQUEST OF AGENT OR SUCH LENDER, SHALL
PROMPTLY REPAY THE AMOUNT PAID OVER TO THE BORROWERS (PLUS ANY PENALTIES,
INTEREST OR OTHER CHARGES IMPOSED BY THE RELEVANT GOVERNMENTAL AUTHORITY) TO
AGENT OR SUCH LENDER IN THE EVENT AGENT OR SUCH LENDER IS REQUIRED TO REPAY THE
APPLICABLE REFUND TO SUCH GOVERNMENTAL AUTHORITY.

 

(K)           IF ANY BORROWER FAILS TO PERFORM ANY OF ITS OBLIGATIONS UNDER THIS
SECTION 15.11, THE BORROWERS SHALL INDEMNIFY AGENT, LENDERS AND/OR EACH
PARTICIPANT FOR ANY TAXES, INTEREST OR PENALTIES THAT MAY BECOME PAYABLE AS A
RESULT OF ANY SUCH FAILURE. THE AGREEMENTS AND OBLIGATIONS OF THE BORROWERS
UNDER THIS SECTION 15.11 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE
PAYMENT OF THE LOANS AND ALL OTHER OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE
HEREUNDER.

 

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15.12       COLLATERAL MATTERS.

 

(A)           THE LENDERS HEREBY IRREVOCABLY AUTHORIZE AGENT, AT ITS OPTION AND
IN ITS SOLE DISCRETION, TO RELEASE ANY LIEN ON ANY COLLATERAL (I) UPON THE
TERMINATION OF THE COMMITMENTS AND PAYMENT AND SATISFACTION IN FULL BY BORROWERS
OF ALL OBLIGATIONS, (II) CONSTITUTING PROPERTY BEING SOLD OR DISPOSED OF IF A
RELEASE IS REQUIRED OR DESIRABLE IN CONNECTION THEREWITH AND IF ADMINISTRATIVE
BORROWER CERTIFIES TO AGENT THAT THE SALE OR DISPOSITION IS PERMITTED UNDER
SECTION 6.4 OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS (AND AGENT MAY RELY
CONCLUSIVELY ON ANY SUCH CERTIFICATE, WITHOUT FURTHER INQUIRY), (III)
CONSTITUTING PROPERTY IN WHICH NO BORROWER OR ITS SUBSIDIARIES OWNED ANY
INTEREST AT THE TIME THE AGENT’S LIEN WAS GRANTED NOR AT ANY TIME THEREAFTER, OR
(IV) CONSTITUTING PROPERTY LEASED TO A BORROWER OR ITS SUBSIDIARIES UNDER A
LEASE THAT HAS EXPIRED OR IS TERMINATED IN A TRANSACTION PERMITTED UNDER THIS
AGREEMENT. EXCEPT AS PROVIDED ABOVE, AGENT WILL NOT EXECUTE AND DELIVER A
RELEASE OF ANY LIEN ON ANY COLLATERAL WITHOUT THE PRIOR WRITTEN AUTHORIZATION OF
(Y) IF THE RELEASE IS OF ALL OR SUBSTANTIALLY ALL OF THE COLLATERAL, ALL OF THE
LENDERS, OR (Z) OTHERWISE, THE REQUIRED LENDERS. UPON REQUEST BY AGENT OR
ADMINISTRATIVE BORROWER AT ANY TIME, THE LENDERS WILL CONFIRM IN WRITING AGENT’S
AUTHORITY TO RELEASE ANY SUCH LIENS ON PARTICULAR TYPES OR ITEMS OF COLLATERAL
PURSUANT TO THIS SECTION 15.12; PROVIDED, HOWEVER, THAT (1) AGENT SHALL NOT BE
REQUIRED TO EXECUTE ANY DOCUMENT NECESSARY TO EVIDENCE SUCH RELEASE ON TERMS
THAT, IN AGENT’S OPINION, WOULD EXPOSE AGENT TO LIABILITY OR CREATE ANY
OBLIGATION OR ENTAIL ANY CONSEQUENCE OTHER THAN THE RELEASE OF SUCH LIEN WITHOUT
RECOURSE, REPRESENTATION, OR WARRANTY, AND (2) SUCH RELEASE SHALL NOT IN ANY
MANNER DISCHARGE, AFFECT, OR IMPAIR THE OBLIGATIONS OR ANY LIENS (OTHER THAN
THOSE EXPRESSLY BEING RELEASED) UPON (OR OBLIGATIONS OF BORROWERS IN RESPECT OF)
ALL INTERESTS RETAINED BY BORROWERS, INCLUDING, THE PROCEEDS OF ANY SALE, ALL OF
WHICH SHALL CONTINUE TO CONSTITUTE PART OF THE COLLATERAL.

 

(B)           AGENT SHALL HAVE NO OBLIGATION WHATSOEVER TO ANY OF THE LENDERS TO
ASSURE THAT THE COLLATERAL EXISTS OR IS OWNED BY BORROWERS OR IS CARED FOR,
PROTECTED, OR INSURED OR HAS BEEN ENCUMBERED, OR THAT THE AGENT’S LIENS HAVE
BEEN PROPERLY OR SUFFICIENTLY OR LAWFULLY CREATED, PERFECTED, PROTECTED, OR
ENFORCED OR ARE ENTITLED TO ANY PARTICULAR PRIORITY, OR TO EXERCISE AT ALL OR IN
ANY PARTICULAR MANNER OR UNDER ANY DUTY OF CARE, DISCLOSURE OR FIDELITY, OR TO
CONTINUE EXERCISING, ANY OF THE RIGHTS, AUTHORITIES AND POWERS GRANTED OR
AVAILABLE TO AGENT PURSUANT TO ANY OF THE LOAN DOCUMENTS, IT BEING UNDERSTOOD
AND AGREED THAT IN RESPECT OF THE COLLATERAL, OR ANY ACT, OMISSION, OR EVENT
RELATED THERETO, SUBJECT TO THE TERMS AND CONDITIONS CONTAINED HEREIN, AGENT MAY
ACT IN ANY MANNER IT MAY DEEM APPROPRIATE, IN ITS SOLE DISCRETION GIVEN AGENT’S
OWN INTEREST IN THE COLLATERAL IN ITS CAPACITY AS ONE OF THE LENDERS AND THAT
AGENT SHALL HAVE NO OTHER DUTY OR LIABILITY WHATSOEVER TO ANY LENDER AS TO ANY
OF THE FOREGOING, EXCEPT AS OTHERWISE PROVIDED HEREIN.

 

15.13       RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.

 

(A)           EACH OF THE LENDERS AGREES THAT IT SHALL NOT, WITHOUT THE EXPRESS
WRITTEN CONSENT OF AGENT, AND THAT IT SHALL, TO THE EXTENT IT IS LAWFULLY
ENTITLED TO DO SO, UPON THE WRITTEN REQUEST OF AGENT, SET OFF AGAINST THE
OBLIGATIONS, ANY AMOUNTS OWING BY SUCH LENDER TO BORROWERS OR ANY DEPOSIT
ACCOUNTS OF BORROWERS NOW OR HEREAFTER MAINTAINED WITH SUCH LENDER. EACH OF THE
LENDERS FURTHER AGREES THAT IT SHALL NOT, UNLESS SPECIFICALLY REQUESTED TO DO SO
IN WRITING BY AGENT, TAKE OR CAUSE TO BE TAKEN ANY ACTION, INCLUDING, THE
COMMENCEMENT OF ANY LEGAL OR EQUITABLE PROCEEDINGS, TO FORECLOSE ANY LIEN ON, OR
OTHERWISE ENFORCE ANY SECURITY INTEREST IN, ANY OF THE COLLATERAL.

 

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(B)           IF, AT ANY TIME OR TIMES ANY LENDER SHALL RECEIVE (I) BY PAYMENT,
FORECLOSURE, SETOFF, OR OTHERWISE, ANY PROCEEDS OF COLLATERAL OR ANY PAYMENTS
WITH RESPECT TO THE OBLIGATIONS, EXCEPT FOR ANY SUCH PROCEEDS OR PAYMENTS
RECEIVED BY SUCH LENDER FROM AGENT PURSUANT TO THE TERMS OF THIS AGREEMENT, OR
(II) PAYMENTS FROM AGENT IN EXCESS OF SUCH LENDER’S RATABLE PORTION OF ALL SUCH
DISTRIBUTIONS BY AGENT, SUCH LENDER PROMPTLY SHALL (1) TURN THE SAME OVER TO
AGENT, IN KIND, AND WITH SUCH ENDORSEMENTS AS MAY BE REQUIRED TO NEGOTIATE THE
SAME TO AGENT, OR IN IMMEDIATELY AVAILABLE FUNDS, AS APPLICABLE, FOR THE ACCOUNT
OF ALL OF THE LENDERS AND FOR APPLICATION TO THE OBLIGATIONS IN ACCORDANCE WITH
THE APPLICABLE PROVISIONS OF THIS AGREEMENT, OR (2) PURCHASE, WITHOUT RECOURSE
OR WARRANTY, AN UNDIVIDED INTEREST AND PARTICIPATION IN THE OBLIGATIONS OWED TO
THE OTHER LENDERS SO THAT SUCH EXCESS PAYMENT RECEIVED SHALL BE APPLIED RATABLY
AS AMONG THE LENDERS IN ACCORDANCE WITH THEIR PRO RATA SHARES; PROVIDED,
HOWEVER, THAT TO THE EXTENT THAT SUCH EXCESS PAYMENT RECEIVED BY THE PURCHASING
PARTY IS THEREAFTER RECOVERED FROM IT, THOSE PURCHASES OF PARTICIPATIONS SHALL
BE RESCINDED IN WHOLE OR IN PART, AS APPLICABLE, AND THE APPLICABLE PORTION OF
THE PURCHASE PRICE PAID THEREFOR SHALL BE RETURNED TO SUCH PURCHASING PARTY, BUT
WITHOUT INTEREST EXCEPT TO THE EXTENT THAT SUCH PURCHASING PARTY IS REQUIRED TO
PAY INTEREST IN CONNECTION WITH THE RECOVERY OF THE EXCESS PAYMENT.

 

15.14       AGENCY FOR PERFECTION. AGENT HEREBY APPOINTS EACH OTHER LENDER AS
ITS AGENT (AND EACH LENDER HEREBY ACCEPTS SUCH APPOINTMENT) FOR THE PURPOSE OF
PERFECTING THE AGENT’S LIENS IN ASSETS WHICH, IN ACCORDANCE WITH DIVISION 8 OR
DIVISION 9, AS APPLICABLE, OF THE CODE CAN BE PERFECTED ONLY BY POSSESSION OR
CONTROL. SHOULD ANY LENDER OBTAIN POSSESSION OR CONTROL OF ANY SUCH COLLATERAL,
SUCH LENDER SHALL NOTIFY AGENT THEREOF, AND, PROMPTLY UPON AGENT’S REQUEST
THEREFOR SHALL DELIVER POSSESSION OR CONTROL OF SUCH COLLATERAL TO AGENT OR IN
ACCORDANCE WITH AGENT’S INSTRUCTIONS.

 

15.15       PAYMENTS BY AGENT TO THE LENDERS. ALL PAYMENTS TO BE MADE BY AGENT
TO THE LENDERS SHALL BE MADE BY BANK WIRE TRANSFER OF IMMEDIATELY AVAILABLE
FUNDS PURSUANT TO SUCH WIRE TRANSFER INSTRUCTIONS AS EACH PARTY MAY DESIGNATE
FOR ITSELF BY WRITTEN NOTICE TO AGENT. CONCURRENTLY WITH EACH SUCH PAYMENT,
AGENT SHALL IDENTIFY WHETHER SUCH PAYMENT (OR ANY PORTION THEREOF) REPRESENTS
PRINCIPAL, PREMIUM, FEES, OR INTEREST OF THE OBLIGATIONS.

 

15.16       CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. EACH MEMBER OF
THE LENDER GROUP AUTHORIZES AND DIRECTS AGENT TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS. EACH MEMBER OF THE LENDER GROUP AGREES THAT ANY ACTION
TAKEN BY AGENT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS RELATING TO THE COLLATERAL AND THE EXERCISE BY AGENT OF ITS POWERS SET
FORTH THEREIN OR HEREIN, TOGETHER WITH SUCH OTHER POWERS THAT ARE REASONABLY
INCIDENTAL THERETO, SHALL BE BINDING UPON ALL OF THE LENDERS.

 

15.17       FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY LENDERS; OTHER REPORTS AND INFORMATION. BY BECOMING A PARTY TO THIS
AGREEMENT, EACH LENDER:

 

(A)           IS DEEMED TO HAVE REQUESTED THAT AGENT FURNISH SUCH LENDER,
PROMPTLY AFTER IT BECOMES AVAILABLE, A COPY OF EACH FIELD AUDIT OR EXAMINATION
REPORT (EACH A “REPORT” AND COLLECTIVELY, “REPORTS”) PREPARED BY OR AT THE
REQUEST OF AGENT, AND AGENT SHALL SO FURNISH EACH LENDER WITH SUCH REPORTS,

 

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(B)           EXPRESSLY AGREES AND ACKNOWLEDGES THAT AGENT DOES NOT (I) MAKE ANY
REPRESENTATION OR WARRANTY AS TO THE ACCURACY OF ANY REPORT, AND (II) SHALL NOT
BE LIABLE FOR ANY INFORMATION CONTAINED IN ANY REPORT,

 

(C)           EXPRESSLY AGREES AND ACKNOWLEDGES THAT THE REPORTS ARE NOT
COMPREHENSIVE AUDITS OR EXAMINATIONS, THAT AGENT OR OTHER PARTY PERFORMING ANY
AUDIT OR EXAMINATION WILL INSPECT ONLY SPECIFIC INFORMATION REGARDING BORROWERS
AND WILL RELY SIGNIFICANTLY UPON THE BOOKS AND RECORDS OF BORROWERS AND THEIR
SUBSIDIARIES, AS WELL AS ON REPRESENTATIONS OF BORROWERS’ PERSONNEL,

 

(D)           AGREES TO KEEP ALL REPORTS AND OTHER MATERIAL, NON-PUBLIC
INFORMATION REGARDING BORROWERS AND THEIR SUBSIDIARIES AND THEIR OPERATIONS,
ASSETS, AND EXISTING AND CONTEMPLATED BUSINESS PLANS IN A CONFIDENTIAL MANNER IN
ACCORDANCE WITH SECTION 16.7, AND

 

(E)           WITHOUT LIMITING THE GENERALITY OF ANY OTHER INDEMNIFICATION
PROVISION CONTAINED IN THIS AGREEMENT, AGREES:  (I) TO HOLD AGENT AND ANY SUCH
OTHER LENDER PREPARING A REPORT HARMLESS FROM ANY ACTION THE INDEMNIFYING LENDER
MAY TAKE OR FAIL TO TAKE OR ANY CONCLUSION THE INDEMNIFYING LENDER MAY REACH OR
DRAW FROM ANY REPORT IN CONNECTION WITH ANY LOANS OR OTHER CREDIT ACCOMMODATIONS
THAT THE INDEMNIFYING LENDER HAS MADE OR MAY MAKE TO BORROWERS, OR THE
INDEMNIFYING LENDER’S PARTICIPATION IN, OR THE INDEMNIFYING LENDER’S PURCHASE
OF, A LOAN OR LOANS OF BORROWERS; AND (II) TO PAY AND PROTECT, AND INDEMNIFY,
DEFEND AND HOLD AGENT, AND ANY SUCH OTHER LENDER PREPARING A REPORT HARMLESS
FROM AND AGAINST, THE CLAIMS, ACTIONS, PROCEEDINGS, DAMAGES, COSTS, EXPENSES,
AND OTHER AMOUNTS (INCLUDING, ATTORNEYS FEES AND COSTS) INCURRED BY AGENT AND
ANY SUCH OTHER LENDER PREPARING A REPORT AS THE DIRECT OR INDIRECT RESULT OF ANY
THIRD PARTIES WHO MIGHT OBTAIN ALL OR PART OF ANY REPORT THROUGH THE
INDEMNIFYING LENDER.

 

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

 

15.18       SEVERAL OBLIGATIONS; NO LIABILITY. NOTWITHSTANDING THAT CERTAIN OF
THE LOAN DOCUMENTS NOW OR HEREAFTER MAY HAVE BEEN OR WILL BE EXECUTED ONLY BY OR
IN FAVOR OF AGENT IN ITS CAPACITY AS SUCH, AND NOT BY OR IN FAVOR OF THE
LENDERS, ANY AND ALL OBLIGATIONS ON THE PART OF AGENT (IF ANY) TO MAKE ANY
CREDIT AVAILABLE HEREUNDER SHALL CONSTITUTE THE SEVERAL (AND NOT JOINT)
OBLIGATIONS OF THE RESPECTIVE LENDERS ON A RATABLE BASIS, ACCORDING TO THEIR
RESPECTIVE COMMITMENTS, TO MAKE AN AMOUNT OF SUCH CREDIT NOT TO EXCEED, IN
PRINCIPAL AMOUNT, AT ANY ONE TIME OUTSTANDING, THE AMOUNT OF THEIR RESPECTIVE
COMMITMENTS. NOTHING CONTAINED HEREIN SHALL

 

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CONFER UPON ANY LENDER ANY INTEREST IN, OR SUBJECT ANY LENDER TO ANY LIABILITY
FOR, OR IN RESPECT OF, THE BUSINESS, ASSETS, PROFITS, LOSSES, OR LIABILITIES OF
ANY OTHER LENDER. EACH LENDER SHALL BE SOLELY RESPONSIBLE FOR NOTIFYING ITS
PARTICIPANTS OF ANY MATTERS RELATING TO THE LOAN DOCUMENTS TO THE EXTENT ANY
SUCH NOTICE MAY BE REQUIRED, AND NO LENDER SHALL HAVE ANY OBLIGATION, DUTY, OR
LIABILITY TO ANY PARTICIPANT OF ANY OTHER LENDER. EXCEPT AS PROVIDED IN SECTION
16.7, NO MEMBER OF THE LENDER GROUP SHALL HAVE ANY LIABILITY FOR THE ACTS OF ANY
OTHER MEMBER OF THE LENDER GROUP. NO LENDER SHALL BE RESPONSIBLE TO ANY BORROWER
OR ANY OTHER PERSON FOR ANY FAILURE BY ANY OTHER LENDER TO FULFILL ITS
OBLIGATIONS TO MAKE CREDIT AVAILABLE HEREUNDER, NOR TO ADVANCE FOR IT OR ON ITS
BEHALF IN CONNECTION WITH ITS COMMITMENT, NOR TO TAKE ANY OTHER ACTION ON ITS
BEHALF HEREUNDER OR IN CONNECTION WITH THE FINANCING CONTEMPLATED HEREIN.

 

15.19       NO CONSEQUENTIAL DAMAGES. NEITHER AGENT NOR ANY LENDER, NOR ANY
AGENT OR ATTORNEY OF AGENT OR ANY LENDER, SHALL BE LIABLE TO A BORROWER OR ANY
OTHER PERSON ON ANY THEORY OF LIABILITY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL
OR PUNITIVE DAMAGES.

 

16.          GENERAL PROVISIONS.

 

16.1         EFFECTIVENESS. THIS AGREEMENT SHALL BE BINDING AND DEEMED EFFECTIVE
WHEN EXECUTED BY BORROWERS, AGENT, AND EACH LENDER WHOSE SIGNATURE IS PROVIDED
FOR ON THE SIGNATURE PAGES HEREOF.

 

16.2         SECTION HEADINGS. HEADINGS AND NUMBERS HAVE BEEN SET FORTH HEREIN
FOR CONVENIENCE ONLY. UNLESS THE CONTRARY IS COMPELLED BY THE CONTEXT,
EVERYTHING CONTAINED IN EACH SECTION APPLIES EQUALLY TO THIS ENTIRE AGREEMENT.

 

16.3         INTERPRETATION. NEITHER THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS NOR ANY UNCERTAINTY OR AMBIGUITY HEREIN OR THEREIN SHALL BE CONSTRUED
OR RESOLVED AGAINST THE LENDER GROUP OR BORROWERS, WHETHER UNDER ANY RULE OF
CONSTRUCTION OR OTHERWISE. ON THE CONTRARY, THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS HAVE BEEN REVIEWED BY ALL PARTIES AND SHALL BE CONSTRUED AND
INTERPRETED ACCORDING TO THE ORDINARY MEANING OF THE WORDS USED SO AS TO
ACCOMPLISH FAIRLY THE PURPOSES AND INTENTIONS OF ALL PARTIES HERETO AND THERETO.
TIME IS OF THE ESSENCE IN BORROWERS’ PAYMENT AND PERFORMANCE OF THE OBLIGATIONS.

 

16.4         SEVERABILITY OF PROVISIONS. EACH PROVISION OF THIS AGREEMENT SHALL
BE SEVERABLE FROM EVERY OTHER PROVISION OF THIS AGREEMENT FOR THE PURPOSE OF
DETERMINING THE LEGAL ENFORCEABILITY OF ANY SPECIFIC PROVISION.

 

16.5         COUNTERPARTS; ELECTRONIC EXECUTION. THIS AGREEMENT MAY BE EXECUTED
IN ANY NUMBER OF COUNTERPARTS AND BY DIFFERENT PARTIES ON SEPARATE COUNTERPARTS,
EACH OF WHICH, WHEN EXECUTED AND DELIVERED, SHALL BE DEEMED TO BE AN ORIGINAL,
AND ALL OF WHICH, WHEN TAKEN TOGETHER, SHALL CONSTITUTE BUT ONE AND THE SAME
AGREEMENT. DELIVERY OF AN EXECUTED COUNTERPART OF THIS AGREEMENT BY
TELEFACSIMILE OR OTHER ELECTRONIC METHOD OF TRANSMISSION SHALL BE EQUALLY AS
EFFECTIVE AS DELIVERY OF AN ORIGINAL EXECUTED COUNTERPART OF THIS AGREEMENT. ANY
PARTY DELIVERING AN EXECUTED COUNTERPART OF THIS AGREEMENT BY TELEFACSIMILE OR
OTHER ELECTRONIC METHOD OF TRANSMISSION ALSO SHALL DELIVER AN ORIGINAL EXECUTED
COUNTERPART OF THIS AGREEMENT BUT THE FAILURE TO DELIVER AN ORIGINAL EXECUTED
COUNTERPART SHALL NOT AFFECT THE VALIDITY, ENFORCEABILITY, AND

 

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BINDING EFFECT OF THIS AGREEMENT. THE FOREGOING SHALL APPLY TO EACH OTHER LOAN
DOCUMENT MUTATIS MUTANDIS.

 

16.6         REVIVAL AND REINSTATEMENT OF OBLIGATIONS. IF THE INCURRENCE OR
PAYMENT OF THE OBLIGATIONS BY ANY BORROWER OR THE TRANSFER TO THE LENDER GROUP
OF ANY PROPERTY SHOULD FOR ANY REASON SUBSEQUENTLY BE DECLARED TO BE VOID OR
VOIDABLE UNDER ANY STATE OR FEDERAL LAW RELATING TO CREDITORS’ RIGHTS, INCLUDING
PROVISIONS OF THE BANKRUPTCY CODE RELATING TO FRAUDULENT CONVEYANCES,
PREFERENCES, OR OTHER VOIDABLE OR RECOVERABLE PAYMENTS OF MONEY OR TRANSFERS OF
PROPERTY (COLLECTIVELY, A “VOIDABLE TRANSFER”), AND IF THE LENDER GROUP IS
REQUIRED TO REPAY OR RESTORE, IN WHOLE OR IN PART, ANY SUCH VOIDABLE TRANSFER,
OR ELECTS TO DO SO UPON THE REASONABLE ADVICE OF ITS COUNSEL, THEN, AS TO ANY
SUCH VOIDABLE TRANSFER, OR THE AMOUNT THEREOF THAT THE LENDER GROUP IS REQUIRED
OR ELECTS TO REPAY OR RESTORE, AND AS TO ALL REASONABLE COSTS, EXPENSES, AND
ATTORNEYS FEES OF THE LENDER GROUP RELATED THERETO, THE LIABILITY OF BORROWERS
AUTOMATICALLY SHALL BE REVIVED, REINSTATED, AND RESTORED AND SHALL EXIST AS
THOUGH SUCH VOIDABLE TRANSFER HAD NEVER BEEN MADE.

 

16.7         CONFIDENTIALITY. AGENT AND LENDERS EACH INDIVIDUALLY (AND NOT
JOINTLY OR JOINTLY AND SEVERALLY) AGREE THAT MATERIAL, NON-PUBLIC INFORMATION
REGARDING BORROWERS AND THEIR SUBSIDIARIES, THEIR OPERATIONS, ASSETS, AND
EXISTING AND CONTEMPLATED BUSINESS PLANS SHALL BE TREATED BY AGENT AND THE
LENDERS IN A CONFIDENTIAL MANNER, AND SHALL NOT BE DISCLOSED BY AGENT AND THE
LENDERS TO PERSONS WHO ARE NOT PARTIES TO THIS AGREEMENT, EXCEPT:  (A) TO
ATTORNEYS FOR AND OTHER ADVISORS, ACCOUNTANTS, AUDITORS, AND CONSULTANTS TO ANY
MEMBER OF THE LENDER GROUP, (B) TO SUBSIDIARIES AND AFFILIATES OF ANY MEMBER OF
THE LENDER GROUP, PROVIDED THAT ANY SUCH SUBSIDIARY OR AFFILIATE SHALL HAVE
AGREED TO RECEIVE SUCH INFORMATION HEREUNDER SUBJECT TO THE TERMS OF THIS
SECTION 16.7, (C) AS MAY BE REQUIRED BY STATUTE, DECISION, OR JUDICIAL OR
ADMINISTRATIVE ORDER, RULE, OR REGULATION, (D) AS MAY BE AGREED TO IN ADVANCE BY
ADMINISTRATIVE BORROWER OR ITS SUBSIDIARIES OR AS REQUESTED OR REQUIRED BY ANY
GOVERNMENTAL AUTHORITY PURSUANT TO ANY SUBPOENA OR OTHER LEGAL PROCESS, (E) AS
TO ANY SUCH INFORMATION THAT IS OR BECOMES GENERALLY AVAILABLE TO THE PUBLIC
(OTHER THAN AS A RESULT OF PROHIBITED DISCLOSURE BY AGENT OR THE LENDERS), (F)
IN CONNECTION WITH ANY ASSIGNMENT, PROSPECTIVE ASSIGNMENT, SALE, PROSPECTIVE
SALE, PARTICIPATION OR PROSPECTIVE PARTICIPATIONS, OR PLEDGE OR PROSPECTIVE
PLEDGE OF ANY LENDER’S INTEREST UNDER THIS AGREEMENT, PROVIDED THAT ANY SUCH
ASSIGNEE, PROSPECTIVE ASSIGNEE, PURCHASER, PROSPECTIVE PURCHASER, PARTICIPANT,
PROSPECTIVE PARTICIPANT, PLEDGEE, OR PROSPECTIVE PLEDGEE SHALL HAVE AGREED IN
WRITING TO RECEIVE SUCH INFORMATION HEREUNDER SUBJECT TO THE TERMS OF THIS
SECTION 16.7, AND (G) IN CONNECTION WITH ANY LITIGATION OR OTHER ADVERSARY
PROCEEDING INVOLVING PARTIES HERETO WHICH SUCH LITIGATION OR ADVERSARY
PROCEEDING INVOLVES CLAIMS RELATED TO THE RIGHTS OR DUTIES OF SUCH PARTIES UNDER
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS; PROVIDED, HOWEVER, THAT, UNLESS
PROHIBITED BY APPLICABLE LAW, STATUTE, REGULATION, OR COURT ORDER, SUCH LENDER
OR AGENT SHALL:  (Y) NOTIFY ADMINISTRATIVE BORROWER OF ANY REQUEST BY ANY COURT,
GOVERNMENTAL OR ADMINISTRATIVE AGENCY, OR PURSUANT TO ANY SUBPOENA OR OTHER
LEGAL PROCESS FOR DISCLOSURE OF ANY SUCH NON-PUBLIC MATERIAL INFORMATION
CONCURRENT WITH, OR WHERE PRACTICABLE, PRIOR TO THE DISCLOSURE THEREOF, AND (Z)
NOTIFY ALL OTHER PERSONS DESCRIBED IN CLAUSE (A) ABOVE THAT THEY ARE BOUND BY,
THE PROVISIONS OF THIS SECTION 16.7. THE PROVISIONS OF THIS SECTION 16.7 SHALL
SURVIVE THE PAYMENT IN FULL OF THE OBLIGATIONS.

 

16.8         INTEGRATION. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REFLECTS THE ENTIRE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY AND

 

66

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

 

SHALL NOT BE CONTRADICTED OR QUALIFIED BY ANY OTHER AGREEMENT, ORAL OR WRITTEN,
BEFORE THE DATE HEREOF.

 

16.9         PARENT AS AGENT FOR BORROWERS. EACH BORROWER HEREBY IRREVOCABLY
APPOINTS PARENT AS THE BORROWING AGENT AND ATTORNEY-IN-FACT FOR ALL BORROWERS
(THE “ADMINISTRATIVE BORROWER”) WHICH APPOINTMENT SHALL REMAIN IN FULL FORCE AND
EFFECT UNLESS AND UNTIL AGENT SHALL HAVE RECEIVED PRIOR WRITTEN NOTICE SIGNED BY
EACH BORROWER THAT SUCH APPOINTMENT HAS BEEN REVOKED AND THAT ANOTHER BORROWER
HAS BEEN APPOINTED ADMINISTRATIVE BORROWER. EACH BORROWER HEREBY IRREVOCABLY
APPOINTS AND AUTHORIZES THE ADMINISTRATIVE BORROWER (I) TO PROVIDE AGENT WITH
ALL NOTICES WITH RESPECT TO PORTIONS OF THE LOANS OBTAINED FOR THE BENEFIT OF
ANY BORROWER AND ALL OTHER NOTICES AND INSTRUCTIONS UNDER THIS AGREEMENT AND
(II) TO TAKE SUCH ACTION AS THE ADMINISTRATIVE BORROWER DEEMS APPROPRIATE ON ITS
BEHALF TO OBTAIN PORTIONS OF THE LOANS AND TO EXERCISE SUCH OTHER POWERS AS ARE
REASONABLY INCIDENTAL THERETO TO CARRY OUT THE PURPOSES OF THIS AGREEMENT. IT IS
UNDERSTOOD THAT THE HANDLING OF THE LOAN ACCOUNT AND COLLATERAL OF BORROWERS IN
A COMBINED FASHION, AS MORE FULLY SET FORTH HEREIN, IS DONE SOLELY AS AN
ACCOMMODATION TO BORROWERS IN ORDER TO UTILIZE THE COLLECTIVE BORROWING POWERS
OF BORROWERS IN THE MOST EFFICIENT AND ECONOMICAL MANNER AND AT THEIR REQUEST,
AND THAT LENDER GROUP SHALL NOT INCUR LIABILITY TO ANY BORROWER AS A RESULT
HEREOF. EACH BORROWER EXPECTS TO DERIVE BENEFIT, DIRECTLY OR INDIRECTLY, FROM
THE HANDLING OF THE LOAN ACCOUNT AND THE COLLATERAL IN A COMBINED FASHION SINCE
THE SUCCESSFUL OPERATION OF EACH BORROWER IS DEPENDENT ON THE CONTINUED
SUCCESSFUL PERFORMANCE OF THE INTEGRATED GROUP. TO INDUCE THE LENDER GROUP TO DO
SO, AND IN CONSIDERATION THEREOF, EACH BORROWER HEREBY JOINTLY AND SEVERALLY
AGREES TO INDEMNIFY EACH MEMBER OF THE LENDER GROUP AND HOLD EACH MEMBER OF THE
LENDER GROUP HARMLESS AGAINST ANY AND ALL LIABILITY, EXPENSE, LOSS OR CLAIM OF
DAMAGE OR INJURY, MADE AGAINST THE LENDER GROUP BY ANY BORROWER OR BY ANY THIRD
PARTY WHOSOEVER, ARISING FROM OR INCURRED BY REASON OF (A) THE HANDLING OF THE
LOAN ACCOUNT AND COLLATERAL OF BORROWERS AS HEREIN PROVIDED, (B) THE LENDER
GROUP’S RELYING ON ANY INSTRUCTIONS OF THE ADMINISTRATIVE BORROWER, OR (C) ANY
OTHER ACTION TAKEN BY THE LENDER GROUP HEREUNDER OR UNDER THE OTHER LOAN
DOCUMENTS, EXCEPT THAT BORROWERS WILL HAVE NO LIABILITY TO THE RELEVANT
AGENT-RELATED PERSON OR LENDER-RELATED PERSON UNDER THIS SECTION 16.9 WITH
RESPECT TO ANY LIABILITY THAT HAS BEEN FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION TO HAVE RESULTED SOLELY FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH AGENT-RELATED PERSON OR LENDER-RELATED PERSON, AS THE
CASE MAY BE.

 

16.10       COMPLIANCE WITH USA PATRIOT ACT. AGENT IS SUBJECT TO THE USA PATRIOT
ACT AND HEREBY NOTIFIES BORROWER THAT PURSUANT TO THE REQUIREMENTS OF THE USA
PATRIOT ACT AGENT IS REQUIRED TO OBTAIN, VERIFY AND RECORD INFORMATION THAT
IDENTIFIES BORROWER AND CERTAIN OF ITS AFFILIATES, WHICH INFORMATION INCLUDES
THE NAME AND ADDRESS OF BORROWER AND THESE AFFILIATES AND OTHER INFORMATION THAT
WILL ALLOW AGENT TO IDENTIFY BORROWER AND THESE AFFILIATES IN ACCORDANCE WITH
THE USA PATRIOT ACT.

 

67

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 

 

EMRISE CORPORATION

 

 

 

 

By:

     /S/ D. JOHN DONOVAN

 

 

Name:

    D. JOHN DONOVAN

 

 

Title:

 V.P. of Finance & Administration

 

 

 

 

 

 

 

 

EMRISE ELECTRONICS
CORPORATION

 

 

 

 

By:

     /S/ D. JOHN DONOVAN

 

 

Name:

    D. JOHN DONOVAN

 

 

Title:

 Secretary & Treasurer

 

 

 

 

 

 

 

 

CXR LARUS CORPORATION

 

 

 

 

By:

     /S/ D. JOHN DONOVAN

 

 

Name:

    D. JOHN DONOVAN

 

 

Title:

     Secretary & Treasurer

 

 

 

 

 

 

 

 

RO ASSOCIATES INCORPORATED

 

 

 

 

By:

     /S/ D. JOHN DONOVAN

 

 

Name:

    D. JOHN DONOVAN

 

 

Title:

 Secretary & Treasurer

 

 

68

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

 

 

GVEC RESOURCE IV INC., as Agent

 

 

 

 

By:

     /S/ ROBERT J. ANDERSON

 

 

Name:

    Robert J. Anderson

 

 

Title:

 Authorized Signatory

 

 

 

 

 

 

 

 

By:

     /S/ PETER PAUL MENDEL

 

 

Name:

    Peter Paul Mendel

 

 

Title:

 Authorized Signatory

 

 

 

 

 

 

 

 

GVEC RESOURCE IV INC., as a Lender

 

 

 

 

By:

     /S/ ROBERT J. ANDERSON

 

 

Name:

    Robert J. Anderson

 

 

Title:

 Authorized Signatory

 

 

 

 

 

 

 

 

By:

     /S/ PETER PAUL MENDEL

 

 

Name:

    Peter Paul Mendel

 

 

Title:

 Authorized Signatory

 

 

69

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

EXHIBIT A-1

 

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered
into as of                between                                 “Assignor”)
and                         (“Assignee”). Reference is made to the agreement
described in Item 2 of Annex I annexed hereto (the “Credit Agreement”).
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Credit Agreement.

 

1.             In accordance with the terms and conditions of Section 13 of the
Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
the Assignor’s rights and obligations under the Loan Documents as of the date
hereof with respect to the Obligations owing to the Assignor, and Assignor’s
portion of the Revolver Commitment, the Term Loan A Commitment, and the Term
Loan B Commitment, all as specified on Annex I.

 

2.             The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim and (ii) it has full power
and authority, and has taken all action necessary, to execute and deliver this
Assignment Agreement and to consummate the transactions contemplated hereby; (b)
makes no representation or warranty and assumes no responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with the Loan Documents, or (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant thereto; (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower or the performance or observance by any
Borrower of any of its obligations under the Loan Documents or any other
instrument or document furnished pursuant thereto, and (d) represents and
warrants that the amount set forth as the Purchase Price on Annex I represents
the amount owed by Borrowers to Assignor with respect to Assignor’s share of the
Advances and Term Loans assigned hereunder, as reflected by the Register.

 

3.             The Assignee (a) confirms that it has received copies of the
Credit Agreement and the other Loan Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement; (b) agrees that it will,
independently and without reliance upon Agent, Assignor, or any other Lender,
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents; (c) confirms that it is an Eligible Transferee; (d)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Loan Documents as are delegated to Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (e) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender; [and (f) attaches the forms required under Section
15.11 of the Credit Agreement as prescribed by the IRS certifying as to

 

EXHIBIT A-1 - 1

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

 

the Assignee’s status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement.]

 

4.             Following the execution of this Assignment Agreement by the
Assignor and Assignee, it will be delivered by the Assignor (if required by the
Credit Agreement) to the Agent for recording by the Agent. The effective date of
this Assignment (the “Settlement Date”) shall be the latest to occur of (a) the
date of the execution hereof by the Assignor and the Assignee, the payment by
Assignor or Assignee to Agent for Agent’s sole and separate account of a
processing fee in the amount of $5,000 (if required by the Credit Agreement),
and the receipt of any required consent of the Agent, (b) the Settlement Date
specified on Annex I, and (c) the receipt by Assignor of the Purchase Price
specified in Annex I.

 

5.             Upon recording by the Agent, as of the Settlement Date (a) the
Assignee shall be a party to the Credit Agreement and, to the extent of the
interest assigned pursuant to this Assignment Agreement, have the rights and
obligations of a Lender thereunder and under the other Loan Documents, and (b)
the Assignor shall, to the extent of the interest assigned pursuant to this
Assignment Agreement, relinquish its rights and be released from its obligations
under the Credit Agreement and the other Loan Documents, provided, however, that
nothing contained herein shall release any assigning Lender from obligations
that survive the termination of this Agreement, including such assigning
Lender’s obligations under Article 15 and Section 16.7 of the Credit Agreement.

 

6.             Upon recording by the Agent, from and after the Settlement Date,
the Agent shall make all payments under the Credit Agreement and the other Loan
Documents in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees (if
applicable) with respect thereto) to the Assignee. Upon the Settlement Date, the
Assignee shall pay to the Assignor the Purchase Price (as set forth on Annex I)
of the principal amount of any outstanding loans under the Credit Agreement and
the other Loan Documents. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the other Loan Documents
for periods prior to the Settlement Date directly between themselves on the
Settlement Date.

 

7.             This Assignment Agreement may be executed in counterparts and by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument. This Assignment Agreement may be executed and delivered
by telecopier or other facsimile transmission all with the same force and effect
as if the same were a fully executed and delivered original manual counterpart.

 

8.             THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO ITS CONFLICTS OF LAW RULES.

 

EXHIBIT A-1 - 2

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and
Annex I hereto to be executed by their respective officers, as of the first date
written above.

 

 

[NAME OF ASSIGNOR]

 

 

 

 

 

as Assignor

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

[NAME OF ASSIGNEE]

 

 

 

 

 

as Assignee

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

ACCEPTED THIS     DAY OF

 

 

 

 

 

 

 

 

 

GVEC RESOURCE IV INC.

 

 

as Agent

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

EXHIBIT A-1 - 3

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

 

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

 

ANNEX I

 

1.

Borrowers: EMRISE CORPORATION and each of its Subsidiaries party to the Credit
Agreement described below.

 

 

2.

Name and Date of Credit Agreement:

 

 

 

 

 

Credit Agreement, dated as of November 30, 2007, by and among Borrowers, the
lenders from time to time a party thereto (the “Lenders”), and GVEC Resource IV
Inc., a company organized under the laws of the British Virgin Islands, as the
arranger and administrative agent for the Lenders

 

 

3.

Date of Assignment Agreement:

                         

 

 

 

4.

Amounts:

 

 

 

 

 

a.

Assigned Amount of Revolver Commitment

$                         

 

b.

Assigned Amount of Term Loan A

$                         

 

c.

Assigned Amount of Term Loan B

$                         

 

d.

Assigned Amount of Term Loan B Commitment

$                         

 

 

 

5.

Settlement Date:

                         

 

 

 

6.

Purchase Price

$                         

 

 

 

7.

Notice and Payment Instructions, etc.

 

 

 

Assignee:

Assignor:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A-1

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

 

EXHIBIT B-1

 

FORM OF BORROWING BASE CERTIFICATE

 

GVEC Resource IV Inc., as Agent
under the below referenced Credit Agreement
1 Park Plaza, Suite 550
Irvine, California 92614
Attention:  Peter Paul Mendel, Esq., General Counsel

 

Reference is made to that certain CREDIT AGREEMENT (the “Credit Agreement”)
dated as of November 30, 2007, by and among the lenders identified on the
signature pages thereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), GVEC Resource IV Inc., a company
organized under the laws of the British Virgin Islands, as the arranger and
administrative agent for the Lenders (“Agent”), EMRISE CORPORATION, a Delaware
corporation (“Parent”), and each of its Subsidiaries party thereto.

 

The undersigned, Emrise Corporation (“Administrative Borrower”), pursuant to
Schedule 5.2 of the Credit Agreement, hereby certifies to Agent that the items
set forth on Annex I hereto, calculated in accordance with the terms and
definitions set forth in the Credit Agreement for such items are true and
correct, and that Borrower is in compliance with and, after giving effect to any
currently requested Advances, will be in compliance with, the terms, conditions,
and provisions of the Credit Agreement.

 

All initially capitalized terms used in this Borrowing Base Certificate have the
meanings set forth in the Credit Agreement unless specifically defined herein.

 

[Includes form attached]

 

EXHIBIT B-1

 

1

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

 

IN WITNESS WHEREOF, this Borrowing Base Certificate is executed by the
undersigned this           day
of                                      ,                     .

 

 

EMRISE CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

EXHIBIT B-1

 

2

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

 

EXHIBIT C-1

 

FORM OF COMPLIANCE CERTIFICATE

 

[on Parent’s letterhead]

 

To:          GVEC Resource IV Inc., as Agent
under the below referenced Credit Agreement
1 Park Plaza, Suite 550
Irvine, California 92614
Attention:  Peter Paul Mendel, Esq., General Counsel

 

Re:          Compliance Certificate dated

 

Ladies and Gentlemen:

 

Reference is made to that certain CREDIT AGREEMENT (the “Credit Agreement”)
dated as of November 30, 2007, by and among the lenders identified on the
signature pages thereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), GVEC Resource IV Inc., a company
organized under the laws of the British Virgin Islands, as the arranger and
administrative agent for the Lenders (“Agent”), EMRISE CORPORATION, a Delaware
corporation (“Parent”), and each of its Subsidiaries party thereto. Capitalized
terms used in this Compliance Certificate have the meanings set forth in the
Credit Agreement unless specifically defined herein.

 

Pursuant to Schedule 5.3 of the Credit Agreement, the undersigned officer of
Parent hereby certifies that:

 

1.             The consolidated financial information of Parent and its
Subsidiaries furnished in Schedule 1 attached hereto has been prepared in
accordance with GAAP (except for year-end adjustments and the lack of footnotes
or as set forth on Schedule 1), and fairly presents in all material respects the
financial condition of Parent and its Subsidiaries.

 

2.             Such officer has reviewed the terms of the Credit Agreement and
has made, or caused to be made under his/her supervision, a review in reasonable
detail of the transactions and condition of Parent and its Subsidiaries during
the accounting period covered by the financial statements delivered pursuant to
Schedule 5.3 of the Credit Agreement.

 

3.             Such review has not disclosed the existence on and as of the date
hereof, and the undersigned does not have knowledge of the existence as of the
date hereof, of any event or condition that constitutes a Default or Event of
Default, except for such conditions or events listed on Schedule 2 attached
hereto, specifying the nature and period of existence thereof and what action
Borrowers have taken, are taking, or propose to take with respect thereto.

 

4.             The representations and warranties of Borrowers set forth in the
Credit Agreement and the other Loan Documents are true and correct on and as of
the date hereof

 

EXHIBIT C-1 - 1

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

 

(except to the extent they relate to a specified date), except as set forth on
Schedule 3 attached hereto.

 

5.             Parent and its Subsidiaries are in compliance with the applicable
covenants contained in Section 6.16 of the Credit Agreement as demonstrated on
Schedule 4 hereof and as calculated on Schedule 5 hereof.

 

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this             day of                            ,                  .

 

 

EMRISE CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

EXHIBIT C-1 - 2

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

 

SCHEDULE 4

 

Financial Covenants

 

1.             Minimum EBITDA.

 

Parent’s and its Subsidiaries’ EBITDA, measured on a quarter-end basis, for the
period of                    consecutive fiscal quarters
ending                 ,                    is $                  , which amount
[is/is not] greater than or equal to the amount set forth in Section 6.16(a) of
the Credit Agreement on the date of measurement.

 

2.             Debt Service Coverage Ratio.

 

Borrower’s and its Subsidiaries’ Debt Service Coverage Ratio, measured for the
fiscal quarter ending                  , is          1:00, which ratio [is/is
not] greater than or equal to the ratio set forth in Section 6.16(b) of the
Credit Agreement on the date of measurement.

 

3.             Maximum Leverage Ratio.

 

Borrower’s and its Subsidiaries’ Leverage Ratio, measured for the fiscal quarter
ending                  , is            :1.00, which ratio [is/is not] less than
or equal to the ratio set forth in Section 6.16(c) of the Credit Agreement on
the date of measurement.

 

4.             Capital Expenditures.

 

Parent’s consolidated Capital Expenditures during Parent’s fiscal year most
recently ended is                   , which [is/is not] less than or equal to
the amount set forth in Section 6.16(d) of the Credit Agreement for the
corresponding period.

 

SCHEDULE 4

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

 

Schedule B-1

 

Commitments

 

Lender

 

Loan Commitment

 

Total Commitment

 

Revolver Lenders:

 

 

 

 

 

GVEC Resource IV Inc.

 

$

7,000,000

 

$

7,000,000

 

Term Loan A Lenders:

 

 

 

 

 

GVEC Resource IV Inc.

 

$

6,000,000

 

$

6,000,000

 

Term Loan B Lenders:

 

 

 

 

 

GVEC Resource IV Inc.

 

$

10,000,000

 

$

10,000,000

 

All Lenders:

 

$

23,000,000

 

$

23,000,000

 

 

SCHEDULE B-1 - 1

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

 

Schedule 1.1

 

As used in the Agreement, the following terms shall have the following
definitions:

 

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

 

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

 

“Acquiring Party” means the Borrower that consummates the acquisition
constituting a Permitted Acquisition.

 

“Acquisition Documents” means, collectively, all documents evidencing, securing
or otherwise pertaining to a Permitted Acquisition.

 

“Administrative Borrower” has the meaning specified therefor in Section 16.9.

 

“Advances” has the meaning specified therefor in Section 2.1(a).

 

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of the definition of Eligible Accounts and
Section 6.13 hereof: (a) any Person which owns directly or indirectly 10% or
more of the Stock having ordinary voting power for the election of directors or
other members of the governing body of a Person or 10% or more of the
partnership or other ownership interests of a Person (other than as a limited
partner of such Person) shall be deemed to be an Affiliate of such Person, (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person, and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed an Affiliate of such
Person.

 

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

 

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

 

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1.

 

“Agent’s Liens” means the Liens granted by Borrowers or their Subsidiaries to
Agent under the Loan Documents.

 

“Aggregate Term Loan Exposure” means, as of any date of determination, the sum
of (a) the aggregate outstanding principal amount of the Term Loans and (b) any
remaining Term Loan B Commitments for which Borrowings under Section 2.2(b) have
not been made.

 

“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.

 

SCHEDULE 1.1 - 1

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

 

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

 

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

 

“Authorized Person” means any officer or employee of Administrative Borrower.

 

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

 

“Base Rate” means at any time the rate of interest most recently published in
the “Money Rates” column of the Wall Street Journal as the “prime rate,” or if
at any time such rate is for any reason unavailable, the rate of interest most
recently announced by Bank of America, N.A., or such other major U.S. bank as
selected by the Agent, as its “prime rate.”

 

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

 

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

 

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

 

“Borrowing” means a borrowing hereunder consisting of: (a) Advances made on the
same day by one or more Lenders with a Revolver Commitment (or Agent on behalf
thereof), or (b) a Term Loan made on the same day by the one or more Lenders
with a Term Loan Commitment (or Agent on behalf thereof).

 

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

 

(a)           85% of the amount of Eligible Accounts, plus

 

(b)           50% of the value of Eligible Finished Goods Inventory not to
exceed
$1,500,000, plus

 

(c)           10% of the value of Eligible Raw Materials Inventory not to exceed
$600,000, minus

 

(d)           the aggregate amount of reserves, if any, established by Agent
under Section 2.1(b).

 

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

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the state of California.

 

SCHEDULE 1.1 - 2

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“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP.

 

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

 

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

 

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Moody’s,
(c) commercial paper or other money market instruments maturing no more than 1
year from the date of acquisition thereof and, at the time of acquisition,
having a short term debt rating of A-1 or P-1, or better, or a long term debt
rating of BBB or better, from S&P or Moody’s, and (d) certificates of deposit or
bankers’ acceptances maturing within 1 year from the date of acquisition thereof
either (i) issued by any bank which has a rating of A or A2, or better, from S&P
or Moody’s, or (ii) constituting certificates of deposit less than or equal to
$100,000 in the aggregate issued by any other bank insured by the Federal
Deposit Insurance Corporation.

 

“Cash Management Account” has the meaning specified therefor in Section 2.7(a).

 

“Cash Management Agreements” means those certain cash management agreements, in
form and substance satisfactory to Agent, each of which is among the
Administrative Borrower or one of its Subsidiaries, Agent and one of the Cash
Management Banks.

 

“Cash Management Bank” has the meaning specified therefor in Section 2.7(a).

 

“Change of Control” means that (a) any “person” or “group” (within the meaning
of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
40%, or more, of the Stock of Parent having the right to vote for the election
of members of the Board of Directors, or (b) a majority of the members of the
Board of Directors do not constitute Continuing Directors.

 

“Closing Date” means the date on which Agent sends Administrative Borrower a
written notice that each of the conditions precedent set forth in Section 3.1
with respect to the initial Loan either has been satisfied or has been waived.

 

“Closing Date Projections” means the set of Projections of Parent and the
Borrowers in form and substance (including as to scope and underlying
assumptions) reasonably satisfactory to Agent.

 

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

 

SCHEDULE 1.1 - 3

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

 

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

 

“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, proceeds of cash sales, rental proceeds,
and tax refunds) of or to Borrowers or any of their Subsidiaries.

 

“Combined” shall mean, as the context requires, financial information of
Borrowers combined in accordance with GAAP.

 

“Combined Capital Base” shall mean (x) the sum of (i) Stockholders’ Equity and
(ii) Subordinated Debt, less any receivables from Affiliates that are not
Borrowers appearing on the Borrowers’ balance sheet as of the date such
calculation is made (other than receivables from Affiliates arising in the
ordinary course of business).

 

“Commitment” means, with respect to each Lender, its Revolver Commitment, its
Term Loan A Commitment, its Term Loan B Commitment, or its Total Commitment, as
the context requires, and, with respect to all Lenders, their Revolver
Commitments, their Term Loan A Commitments, their Term Loan B Commitments, or
their Total Commitments, as the context requires, in each case as such Dollar
amounts are set forth beside such Lender’s name under the applicable heading on
Schedule B-1 or in the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder, as such amounts shall be reduced by any portion of
the applicable Loan made by such Lender or Lenders, as applicable, and as such
amounts may be: (x) reduced or increased from time to time pursuant to
assignments made in accordance with the provisions of Section 13.1 and (y)
reduced from time to time as required by Section 2.4(e).

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Parent to Agent.

 

“Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Parent on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent and whose initial assumption of office resulted from such contest or the
settlement thereof.

 

“Control Agreement” means a control agreement or other arrangement, in form and
substance reasonably satisfactory to Agent, executed and delivered by the
Administrative

 

SCHEDULE 1.1 - 4

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Borrower or one of its Subsidiaries, Agent, and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a
Deposit Account).

 

“Copyright” has the meaning specified therefor in the Security Agreement.

 

“Copyright Security Agreement” has the meaning specified therefor in the
Security Agreement.

 

“Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.

 

“Debt Service Coverage Ratio” means, for any period, the ratio of (i) EBITDA
less cash taxes to (ii) cash Interest Expense, plus payments of principal
actually made or scheduled to be made with respect to Indebtedness (including
principal payments on the Term Loans under the Agreement), plus dividends and
distributions.

 

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

 

“Defaulting Lender” means any Lender that fails to make any Advance (or other
extension of credit) that it is required to make hereunder on the date that it
is required to do so hereunder.

 

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date
the relevant payment is due, the Base Rate, and (b) thereafter, the interest
rate then applicable to Advances (or the Term Loan, if applicable) that are Base
Rate Loans (inclusive of the margin applicable thereto described in Section
2.6(a)).

 

“Department of Labor” means the United States Department of Labor.

 

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

 

“Designated Account” means the Deposit Account of Administrative Borrower
identified on Schedule C-1.

 

“Designated Account Bank” has the meaning specified therefor in Schedule C-1.

 

“Designated Payments” has the meaning specified therefor in Schedule 3.1(r).

 

“Designated Payments List” has the meaning specified therefor in Schedule
3.1(r).

 

“Disposition” means any transaction, or series of related transactions, pursuant
to which any Person or any of its Subsidiaries sells, assigns, transfers or
otherwise disposes of any property or assets (whether now owned or hereafter
acquired) to any other Person, in each case, whether or not the consideration
therefor consists of cash, securities or other assets owned by the acquiring
Person.

 

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

 

SCHEDULE 1.1 - 5

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“Domestic Subsidiary” means any Subsidiary of a Borrower which is not a Foreign
Subsidiary.

 

“EBITDA” means, with respect to any fiscal period, Parent’s and its
Subsidiaries’ consolidated net earnings (or loss), minus interest income and
extraordinary gains (including gains on sale of assets) plus interest expense,
Income Tax Expense, depreciation and amortization, in each case, as determined
in accordance with GAAP.

 

“Eligible Accounts” means those Accounts created by an Eligible Credit Party in
the ordinary course of its business, that arise out of its sale of goods, that
comply with each of the representations and warranties respecting Eligible
Accounts made in the Loan Documents, and that are not excluded as ineligible by
virtue of one or more of the excluding criteria set forth below; provided,
however, that such criteria may be revised from time to time by Agent in Agent’s
Permitted Discretion to address the results of any audit performed by Agent from
time to time after the Closing Date. In determining the amount to be included,
Eligible Accounts shall be calculated net of customer deposits and unapplied
cash. Eligible Accounts shall not include the following:

 

(a)           Accounts that an Account Debtor located in the United States has
failed to pay within 90 days of the original invoice date or accounts than an
Account Debtor located in the United Kingdom has failed to pay within 90 days
after the end of the month during which the Account was created,

 

(b)           Accounts owed by an Account Debtor (or any Affiliate of such
Account Debtor) where 37.5% or more of all Accounts owed by that Account Debtor
(or any such Affiliate) are deemed ineligible under clause (a) above,

 

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

 

(d)           Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,

 

(e)           Accounts that are not payable in Dollars, Euros or Pounds
Sterling, unless (y) the Account is supported by an irrevocable letter of credit
satisfactory to Agent (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Agent and is directly drawable by Agent, or (z)
the Account is covered by credit insurance in form, substance, and amount, and
by an insurer, satisfactory to Agent,

 

(f)            Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States or the United
Kingdom, or (ii) is not organized under the laws of the United States or any
state thereof or under the laws of the United Kingdom, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Agent (as to form,
substance, and issuer or domestic confirming bank) that has been delivered to
Agent and is directly drawable by Agent, or (z) the Account is covered by credit
insurance in form, substance, and amount, and by an insurer, satisfactory to
Agent,

 

SCHEDULE 1.1 - 6

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(g)           Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which Borrower has
complied, to the reasonable satisfaction of Lender, with the Assignment of
Claims Act, 31 USC § 3727), or (ii) any state of the United States,

 

(h)           Accounts that arise out of the rendering of services by any
Person, other than services provided by an Eligible Credit Party to customers of
the Eligible Credit Party (i) with of value of less than $10,000, or (ii) with a
value in excess of $10,000 if the customer has acknowledged in writing that such
services have been completed prior to invoicing by the Eligible Credit Party and
provided that the Eligible Credit Party confirms to Agent on a monthly basis
that evidence of such acknowledgements exist and makes available such
acknowledgements to Agent upon request of Agent,

 

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

 

(j)            Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceeds 25% (such percentage, as applied to a
particular Account Debtor, being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates) of all
Eligible Accounts in the aggregate, to the extent of the obligations owing by
such Account Debtor in excess of such percentage,

 

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

 

(l)            Accounts not paid by the applicable Account Debtor and for which
a credit memo has been issued no earlier than 60 days following the original due
date of the applicable invoice,

 

(m)          Accounts, the collection of which, Agent, in its Permitted
Discretion, has notified Borrower that Agent believes to be doubtful by reason
of the Account Debtor’s financial condition,

 

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

 

(o)           Accounts with respect to which the goods giving rise to such
Account have not been shipped and billed to the Account Debtor,

 

(p)           Accounts that represent the right to receive progress payments or
other advance billings that are due prior to the completion of performance by
the applicable Eligible Credit Party of the subject contract for goods, or

 

(q)           Accounts for which the applicable Eligible Credit Party has
executory performance obligations or which have acceptance criteria, until such
time as such performance obligations or acceptance criteria have been completed,
accepted or waived, as applicable.

 

SCHEDULE 1.1 - 7

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“Eligible Credit Party” means the Borrowers and each UK Guarantor Subsidiary.

 

“Eligible Inventory” means Eligible Finished Goods Inventory and Eligible Raw
Materials Inventory.

 

“Eligible Finished Goods Inventory” means Inventory of an Eligible Credit Party
consisting of first quality finished goods held for sale in the ordinary course
of Borrower’s business, that complies with each of the representations and
warranties respecting Eligible Inventory made in the Loan Documents, and that is
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, however, that such criteria may be revised from time
to time by Agent in Agent’s Permitted Discretion to address the results of any
audit or appraisal performed by Agent from time to time after the Closing Date.
In determining the amount to be so included, Inventory shall be valued at the
lower of cost or market on a basis consistent with Borrower’s historical
accounting practices. An item of Inventory shall not be included in Eligible
Inventory if:

 

(a)           Borrower does not have good, valid, and marketable title thereto,

 

(b)           it is not located at one of the locations in the continental
United States or the United Kingdom set forth on Schedule E-1 (or in-transit to
any such location),

 

(c)           it is located on real property leased by Borrower or in a contract
warehouse, in each case, unless (subject to Section 3.6(b)) it is subject to a
Collateral Access Agreement executed by the lessor, or warehouseman, as the case
may be, and unless it is segregated or otherwise separately identifiable from
goods of others, if any, stored on the premises,

 

(d)           it is not subject to a valid and perfected first priority Agent’s
Lien,

 

(e)           it consists of goods returned or rejected by Borrower’s customers
until such time as product is deemed to be saleable through a reasonable quality
inspection process,

 

(f)            it consists of goods that are encumbered by a purchase money
Lien,

 

(g)           it consists of goods that have been characterized as obsolete or
slow moving consistent with each Borrower’s policy of recording obsolete or slow
moving inventory, which policy is in accordance with GAAP,

 

(h)           it is not covered by insurance acceptable to the Agent for full
replacement value,

 

(i)            Borrower fails to cause Agent to receive timely an appraisal of
Borrower’s Inventory in accordance with the provisions of this Agreement, the
results of which shall be satisfactory to Agent in its sole discretion, or

 

(j)            Borrower fails to provide to Agent, in form and substance
acceptable to the Agent in its sole discretion, detailed reporting on Eligible
Inventory such that it can be distinguished from other Inventory that does not
meet the criteria set forth above; provided, however, if Borrower fails to
provide to Agent, in form and substance acceptable to the Agent in its sole
discretion, detailed reporting on Eligible Inventory such that Eligible
Inventory can be

 

SCHEDULE 1.1 - 8

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distinguished from other Inventory as required by Section 5.2, then on the date
that such report is due and thereafter, the amount of the Eligible Inventory
shall be zero.

 

“Eligible Raw Materials Inventory” means Inventory as to which the following is
applicable:  (i) such Inventory does not qualify as Eligible Finished Goods
Inventory solely because the Inventory does not consist of finished goods held
for sale in the ordinary course of Borrower’s business, and (ii) such Inventory
consists of first quality raw materials held for use in producing goods in the
ordinary course of Borrower’s business.

 

“Eligible Transferee” means any Affiliate (other than individuals) of a Lender
and any Lender’s Related Funds, and during the continuation of an Event of
Default, any other Person approved by Agent.

 

“Environmental Actions” means any existing, pending or threatened action, suit,
complaint, summons, citation, notice, directive, order, claim, litigation,
investigation, inquiry, judicial or administrative proceeding, judgment, letter,
or other communication from any Governmental Authority, or any third party
involving violations of Environmental Laws or releases of Hazardous Materials
(a) from any assets, properties, or businesses of any Borrower or any of their
predecessors in interest, (b) from any assets, properties, or businesses of any
Subsidiary of a Borrower (or any predecessor in interest of such Subsidiary) 
material to the business of Borrowers and their Subsidiaries, taken as a whole,
(c) from adjoining properties or businesses, or (d) from or onto any facilities
which received Hazardous Materials generated by any Borrower, any Subsidiary of
a Borrower or any of their predecessors in interest, including any claim for
personal injury, property damage, damage to natural resources, remediations, or
similar costs or expenses incurred or asserted by any Person pursuant to
Environmental Law.

 

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on any
Borrower or any Subsidiary of a Borrower, relating to the environment, the
effect of the environment on employee health, or Hazardous Materials, in each
case as amended from time to time. The term “Environmental Laws” shall include,
but not be limited to the following statutes and the regulations promulgated
thereunder: the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act, 33
U.S.C. § 1251 et seq., the Resource Conservation and Recovery Act (“RCRA”), 42
U.S.C. § 6901 et seq., the Superfund Amendments and Reauthorization Act, 42
U.S.C. § 11011 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et
seq., the Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Safe
Drinking Water Act, 42 U.S.C. § 300f et seq., the Comprehensive Environmental
Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq.,
the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. § 1801 et seq., and any state, county,
or local regulations similar thereto.

 

“Environmental Liabilities” means all liabilities, responsibilities, claims,
suits, monetary obligations, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or

 

SCHEDULE 1.1 - 9

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consultants, and costs of remediation, removal, response, abatement, clean-up,
monitoring, investigation and feasibility studies), fines, penalties, sanctions,
and interest incurred as a result of any claim or demand, or Remedial Action
required, by any Governmental Authority or any third party, and which relate to
any Environmental Action.

 

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

 

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

 

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

 

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

 

“ERISA Event” means (a) a Reportable Event with respect to any Benefit Plan or
Multiemployer Plan, (b) the withdrawal of Borrower or ERISA Affiliates from a
Benefit Plan during a Plan year in which it was a “substantial employer” (as
defined in Section 4001(a)(2) of ERISA), (c) the providing of notice of intent
to terminate a Benefit Plan in a distress termination (as described in Section
4041(c) of ERISA), (d) the institution by the PBGC of proceedings to terminate a
Benefit Plan or Multiemployer Plan, (e) any event or condition (i) that provides
a basis under Section 4042(a)(1), (2), or (3) of ERISA for the termination of,
or the appointment of a trustee to administer, any Benefit Plan or Multiemployer
Plan, or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of Borrower or its Subsidiaries or
any of their ERISA Affiliates from a Multiemployer Plan, (g) providing any
security to any plan under Section 401(a)(29) of the IRC by Borrower or its
Subsidiaries or any of their ERISA Affiliates, or (h) the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA.

 

“Euro and €” means the single, unified, lawful currency of those member states
of the European Union participating in the Economic and Monetary Union.

 

“Event of Default” has the meaning specified therefor in Section 7.

 

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

 

SCHEDULE 1.1 - 10

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“Extraordinary Receipts” means any Collections received by any Borrower or any
of their Subsidiaries not in the ordinary course of business (and not consisting
of proceeds described in Section 2.4(c)(ii) hereof), including (a) pension plan
reversions, (b) proceeds of insurance (including proceeds of the key man life
insurance policies), (c) judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action, (d)
condemnation awards (and payments in lieu thereof), (e) indemnity payments and
(f) any purchase price adjustment received in connection with any purchase
agreement.

 

“Existing Credit Facilities” means those certain credit facilities entered into
by the Borrowers and each of Wells Fargo Bank, National Association (acting
through its Wells Fargo Business Credit operating division) and Lloyds TSB Bank
plc.

 

“Fee Letter” means that certain fee letter among Borrowers and Agent, in form
and substance satisfactory to Agent.

 

“Foreign Subsidiary” means any Subsidiary of a Borrower which is organized under
the laws of a jurisdiction other than the United States of America or any state
or Governmental Authority thereof.

 

“French Bank Account Pledge Agreement” means a bank account pledge agreement, in
form and substance satisfactory to Agent, executed by the French Subsidiary, the
applicable French account bank and Agent and delivered to Agent.

 

“French Guaranty” means a guaranty agreement, in form and substance satisfactory
to Agent, executed by each French Subsidiary and delivered to Agent.

 

“French Pledge Over Going Concerns” means a pledge agreement, in form and
substance satisfactory to Agent, executed by the French Subsidiary and delivered
to Agent.

 

“French Security Documents” means the French Share Pledge, the French Pledge
Over Going Concerns, the French Bank Account Pledge Agreement and the French
Guaranty.

 

“French Share Pledge” means a share pledge agreement, in form and substance
satisfactory to Agent, executed by each owner of a French Subsidiary and
delivered to Agent.

 

“French Subsidiary” means any Subsidiary of Borrower incorporated in France.

 

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

 

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

 

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

 

“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal,

 

SCHEDULE 1.1 - 11

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administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.

 

“Guarantors” means French Subsidiary, UK Subsidiary and XCEL Japan, Ltd.

 

“GVECR” means GVEC Resource IV Inc., a company organized under the laws of the
British Virgin Islands.

 

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

 

“IFN Credit Facility” means that certain credit facility entered into by the
French Subsidiary and IFN Finance S.A.

 

“Income Tax Expense” means, with respect to any Person for any period of
determination, all provisions for federal, state, local and foreign taxes based
on the net income or profits of such Person (including, without limitation,
franchise taxes, any additions to such taxes, and any penalties and interest
with respect thereto), all as determined for such Person in accordance with
GAAP.

 

“Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations as a lessee under Capital Leases, (d) all obligations or liabilities
of others secured by a Lien on any asset of such Person, irrespective of whether
such obligation or liability is assumed, (e) all obligations to pay the deferred
purchase price of assets (other than trade debt incurred in the ordinary course
of business and repayable in accordance with customary trade practices), and (f)
any obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any
obligation of any other Person that constitutes Indebtedness under any of
clauses (a) through (e) above.

 

“Indemnified Liabilities” has the meaning specified therefor in Section 10.4.

 

“Indemnified Person” has the meaning specified therefor in Section 10.4.

 

“Individual Lender Term Loan Exposure” means, for a particular Term Loan Lender,
as of any date of determination, the sum of (a) the aggregate outstanding
principal amount of such Term Loan Lender’s portions of the Term Loans and (b)
if a Term Loan B lender, such Lender’s remaining Term Loan B Commitment for
which Borrowings under Section 2.2(b) have not been made.

 

SCHEDULE 1.1 - 12

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

 

“Intellectual Property Collateral” has the meaning specified therefor in the
Security Agreement.

 

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

 

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

 

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, or capital contributions (excluding (a) commission, travel, relocation
and similar advances to officers and employees of such Person made in the
ordinary course of business, and (b) bona fide Accounts arising in the ordinary
course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any division or business line of such other Person),
and any other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.

 

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time
(or any successor statute thereof).

 

“IRS” means the United States Internal Revenue Service.

 

“Japanese Guaranty” means a guaranty agreement, in form and substance
satisfactory to Agent, executed by XCEL Japan Ltd. and delivered to Agent.

 

“Lender” and “Lenders” have the respective meanings set forth in the preamble to
the Agreement, and shall include any other Person made a party to the Agreement
in accordance with the provisions of Section 13.1.

 

“Lender Group” means, individually and collectively, each of the Lenders
(including the Issuing Lender) and Agent.

 

“Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by a Borrower under any of the Loan
Documents that are paid, advanced, or incurred by the Lender Group, (b) fees or
charges reasonably paid or incurred by Agent in connection with the Lender
Group’s transactions with Borrowers, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax Lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication and appraisal
(including periodic collateral appraisals or business valuations), including the
cost of real estate surveys, real estate title policies and endorsements,

 

SCHEDULE 1.1 - 13

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and environmental audits, in each case to the extent of the fees and charges
(and up to the amount of any limitation) authorized in the Agreement,  (c) costs
and expenses incurred by Agent in the disbursement of funds to or for the
account of Borrowers or other members of the Lender Group (by wire transfer or
otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of
checks, (e) reasonable costs and expenses paid or incurred by the Lender Group
to correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of Agent related to any inspections or audits to the extent of the
fees and charges (and up to the amount of any limitation) authorized in the
Agreement, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group’s relationship with any Borrower arising under the
Loan Documents, (h) Agent’s and each Lender’s reasonable costs and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, syndicating, or amending the Loan Documents, and (i)
Agent’s and each Lender’s reasonable costs and expenses (including reasonable
attorneys, accountants, consultants, and other advisors fees and expenses)
incurred in terminating, enforcing (including reasonable fees and expenses of
attorneys, accountants, consultants, and other advisors incurred in connection
with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning any
Borrower or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.

 

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

 

“Leverage Ratio” means, with respect to Borrowers for any date of calculation,
(i) all of the Obligations of Borrowers under the Agreement to (ii) the Combined
Capital Base.

 

“Lien” means any interest in an asset securing an obligation owed to, or a claim
by, any Person other than the owner of the asset, irrespective of whether (a)
such interest is based on the common law, statute, or contract, (b) such
interest is recorded or perfected, and (c) such interest is contingent upon the
occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term “Lien” includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.

 

“Lloyds Credit Facility” means that certain credit facility entered into by
certain of the UK Subsidiaries and Lloyds TSB Bank plc (or its affiliates).

 

“Loan” means an Advance or either of the Term Loans, as the context reasonably
requires.

 

SCHEDULE 1.1 - 14

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“Loan Account” has the meaning specified therefor in Section 2.10.

 

“Loan Documents” means the Agreement, the Cash Management Agreements, the
Control Agreements, the Copyright Security Agreement, the Fee Letter, any
Mortgages, the Patent Security Agreement, the Security Agreement, the Trademark
Security Agreement, the Intellectual Property Security Agreement, the Warrant
Agreement, the UK Security Agreements, the French Security Agreements, the
Japanese Guaranty, the McDermott Subordination Agreement, the Yost Subordination
Agreement, any note or notes executed by a Borrower in connection with the
Agreement and payable to a member of the Lender Group, and any other agreement
entered into, now or in the future, by any Borrower and the Lender Group in
connection with the Agreement.

 

“Loans” mean one or more of the following, as the context reasonably requires:
the Advances, the Term Loan A and the Term Loan B.

 

“Material Adverse Change” means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrowers or any of its Subsidiaries, (b) a material
impairment of a Borrower’s or a Subsidiary’s ability to perform its obligations
under the Loan Documents to which it is a party or of the Lender Group’s ability
to enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Agent’s Liens with respect
to the Collateral as a result of an action or failure to act on the part of a
Borrower or a Subsidiary of a Borrower.

 

“Material Contracts” means collectively (x) each of the contracts listed on
Schedule 4.28 and (y) any other contract entered into by a Borrower, the
termination or non-renewal of which could reasonably be expected to result in a
Material Adverse Change.

 

“Maturity Date” has the meaning specified therefor in Section 3.3(a).

 

“Maximum Revolver Amount” means $7,000,000.

 

“McDermott Subordination Agreement” means a subordination agreement, in form and
substance satisfactory to Agent, executed by the Borrowers and Noel McDermott
and delivered to Agent.

 

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

 

“Multiemployer Plan” means a “multiemployer plan” (as defined in Section 3(37)
of ERISA) to which Borrower or any ERISA Affiliate is making, is obligated to
make, has made or has been obligated to make, contributions on behalf of
participants who are or were employed by any of them, other than a plan
described in Section 4(b)(4) of ERISA, or with respect to which Borrower or any
ERISA Affiliate has any liability, contingent or otherwise.

 

“Net Cash Proceeds” means, with respect to any sale or disposition by any Person
or any Subsidiary thereof of property or assets, the amount of Collections
received (directly or

 

SCHEDULE 1.1 - 15

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indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of such Person or such
Subsidiary, in connection therewith after deducting therefrom only (i) the
amount of any Indebtedness secured by any Permitted Lien on any asset (other
than (A) Indebtedness owing to Agent or any Lender under this Agreement or the
other Loan Documents and (B) Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such
disposition, (ii) reasonable expenses related thereto incurred by such Person or
such Subsidiary in connection therewith, and (iii) taxes paid or payable to any
taxing authorities by such Person or such Subsidiary in connection therewith, in
each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or payable to a Person
that is not an Affiliate and are properly attributable to such transaction.

 

“Non-U.S. Lender” has the meaning specified therefor in Section 15.11(f).

 

“Obligations” means all loans (including the Term Loans), Advances, debts,
principal, interest (including any interest that accrues after the commencement
of an Insolvency Proceeding regardless of whether allowed or allowable in whole
or in part as a claim in any such Insolvency Proceeding), premiums, liabilities
(including all amounts charged to Borrowers’ Loan Account pursuant hereto),
obligations (including indemnification obligations), fees (including the fees
provided for in the Fee Letter), charges, costs, Lender Group Expenses
(including any fees or expenses that accrue after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), lease payments, guaranties,
covenants, and duties of any kind and description owing by Borrowers to the
Lender Group pursuant to or evidenced by the Loan Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all Lender Group Expenses that
Borrowers are required to pay or reimburse by the Loan Documents, by law, or
otherwise. Any reference in the Agreement or in the other Loan Documents to the
Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

 

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

 

“Other Taxes” has the meaning specified therefor in Section 15.11(b).

 

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

 

“Participant” has the meaning specified therefor in Section 13.1(f).

 

“Patent” has the meaning specified therefor in the Security Agreement.

 

“Patent Security Agreement” has the meaning specified therefor in the Security
Agreement.

 

“PBGC” means Pension Benefit Guaranty Corporation as defined in Title IV of
ERISA, or any successor entity.

 

SCHEDULE 1.1 - 16

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“Permitted Acquisition” means an acquisition by a Borrower which satisfies the
conditions of Section 3.2(b), unless one or more of such conditions have been
waived by Agent in Agent’s sole discretion, and in such case, only to the extent
of such waiver.

 

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

 

“Permitted Dispositions” means (a) sales or other dispositions of Equipment,
Inventory and other fixed assets (other than Real Property) that are
substantially worn, damaged, or obsolete in the ordinary course of business, (b)
sales of Inventory to buyers in the ordinary course of business, (c) the use or
transfer of money or Cash Equivalents in a manner that is not prohibited by the
terms of the Agreement or the other Loan Documents, and (d) the licensing, on a
non-exclusive basis, of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business.

 

“Permitted Investments” means (a) Investments in cash and Cash Equivalents, (b)
Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Investments received in settlement of amounts due to a Borrower or
its Subsidiaries effected in the ordinary course of business or owing to a
Borrower or its Subsidiaries as a result of Insolvency Proceedings involving an
Account Debtor or upon the foreclosure or enforcement of any Lien in favor of a
Borrower or its Subsidiaries, (e) Investments by any Foreign Subsidiary in a
Parent or Domestic Subsidiary, (f) Investments by any Foreign Subsidiary in
another Foreign Subsidiary, (g) Investments by any Borrower in another Borrower,
and (h) Permitted Acquisitions.

 

“Permitted Liens” means (a) Liens held by Agent to secure the Obligations, (b)
Liens for unpaid taxes, assessments, or other governmental charges or levies
that either (i) are not yet delinquent, or (ii) do not constitute an Event of
Default hereunder and are the subject of Permitted Protests, (c) judgment Liens
that do not constitute an Event of Default under Section 7.7 of the Agreement,
(d) Liens set forth on Schedule D-1, (e) the interests of lessors under
operating leases, (f) purchase money Liens or the interests of lessors under
Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, (g) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of Borrowers’ business
and not in connection with the borrowing of money, and which Liens either (i)
are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,
(h) Liens on amounts deposited in connection with obtaining worker’s
compensation or other unemployment insurance, (i) Liens on amounts deposited in
connection with the making or entering into of bids, tenders, or leases in the
ordinary course of business and not in connection with the borrowing of money,
(j) Liens on amounts deposited as security for surety or appeal bonds in
connection with obtaining such bonds in the ordinary course of business, and (k)
with respect to any Real Property, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof.

 

“Permitted Protest” means the right of Administrative Borrower or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll

 

SCHEDULE 1.1 - 17

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taxes or taxes that are the subject of a United States federal tax lien), or
rental payment, provided that (a) a reserve with respect to such obligation is
established on a Borrower’s or any of its Subsidiaries’ books and records in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Administrative Borrower or any of its
Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent’s Liens.

 

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date in an aggregate
principal amount outstanding at any one time not in excess of $1,000,000.

 

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

 

“Plan” means any employee benefit plan, program, or arrangement maintained or
contributed to by Borrower or with respect to which it may incur liability.

 

“Projections” means Parent’s forecasted (a) balance sheets, (b) profit and loss
statements and (c) cash flow statements, all prepared on a basis consistent with
Parent’s historical financial statements, in reasonable detail and accompanied
by a statement of underlying assumptions.

 

“Pro Rata Share” means:

 

(A)           WITH RESPECT TO A LENDER’S OBLIGATION TO MAKE ADVANCES AND RIGHT
TO RECEIVE PAYMENTS OF PRINCIPAL, INTEREST, FEES, COSTS AND EXPENSES WITH
RESPECT THERETO, (X) PRIOR TO THE REVOLVER COMMITMENT BEING REDUCED TO ZERO, THE
PERCENTAGE OBTAINED BY DIVIDING (I) SUCH LENDER’S REVOLVER COMMITMENT BY (II)
THE AGGREGATE REVOLVER COMMITMENTS OF ALL LENDERS, AND (Y) FROM AND AFTER THE
TIME THAT THE REVOLVER COMMITMENT HAS BEEN TERMINATED OR REDUCED TO ZERO, THE
PERCENTAGE OBTAINED BY DIVIDING (I) THE AGGREGATE PRINCIPAL AMOUNT OF SUCH
LENDER’S ADVANCES BY (II) THE AGGREGATE PRINCIPAL AMOUNT OF ALL ADVANCES,

 

(B)           WITH RESPECT TO A TERM LOAN LENDER’S OBLIGATION TO MAKE A TERM
LOAN AND RIGHT TO RECEIVE PAYMENTS OF INTEREST, FEES, AND PRINCIPAL WITH RESPECT
THERETO, THE PERCENTAGE OBTAINED BY DIVIDING (X) SUCH LENDER’S INDIVIDUAL LENDER
TERM LOAN EXPOSURE BY (Y) THE AGGREGATE TERM LOAN EXPOSURE, AND

 

(C)           WITH RESPECT TO ALL OTHER MATTERS AS TO A PARTICULAR LENDER
(INCLUDING THE INDEMNIFICATION OBLIGATIONS ARISING UNDER SECTION 15.7), THE
PERCENTAGE OBTAINED BY DIVIDING (I) SUCH LENDER’S REVOLVER COMMITMENT, PLUS SUCH
LENDER’S INDIVIDUAL LENDER TERM LOAN EXPOSURE BY (II) THE AGGREGATE AMOUNT OF
REVOLVER COMMITMENTS OF ALL LENDERS PLUS THE AGGREGATE TERM LOAN EXPOSURE;
PROVIDED, HOWEVER, THAT IN THE EVENT THE REVOLVER COMMITMENTS HAVE BEEN
TERMINATED OR REDUCED TO ZERO, PRO RATA SHARE SHALL BE THE PERCENTAGE OBTAINED
BY DIVIDING (A) THE OUTSTANDING PRINCIPAL AMOUNT OF SUCH LENDER’S ADVANCES PLUS
SUCH LENDER’S INDIVIDUAL LENDER TERM LOAN EXPOSURE BY (B) THE PRINCIPAL AMOUNT
OF ALL OUTSTANDING ADVANCES PLUS THE AGGREGATE TERM LOAN EXPOSURE.

 

SCHEDULE 1.1 - 18

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

 

“Qualified Affiliate” is an Affiliate that is exempt from United States
withholding taxes in respect of interest paid or accrued on the Obligations.

 

“Qualified Related Fund” is a Related Fund that is exempt from United States
withholding taxes in respect of interest paid or accrued on the Obligations.

 

“Rating Agencies” has the meaning specified therefor in Section 2.15.

 

“Real Property” means any real property hereafter acquired by any Borrower and
the improvements thereto.

 

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

 

“Register” has the meaning specified therefor in Section 13.1(i).

 

“Registered Loan” means a loan recorded on the Register (or Related Party
Register) pursuant to Section 13.1(i).

 

“Registered Note” has the meaning specified therefor in Section 2.14.

 

“Related Fund” means a fund or account managed by a Lender or an Affiliate of a
Lender or its investment manager.

 

“Related Party Register” has the meaning specified therefor in Section 13.1(i).

 

“Release” means any depositing, spilling, leaking, pumping, pouring, placing,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting,
escaping, leaching, dumping, or disposing.

 

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

 

“Replacement Lender” has the meaning specified therefor in Section 14.2(a).

 

“Report” has the meaning specified therefor in Section 15.17.

 

SCHEDULE 1.1 - 19

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“Reportable Event” means any of the events described in Section 4043(c) of ERISA
or the regulations thereunder other than a Reportable Event as to which the
provision of 30 days notice to the PBGC is waived under applicable regulations.

 

“Required Lenders” means, at any time, Lenders whose Pro Rata Share aggregate
50.1% or more, as determined pursuant to clause (c) of the definition of “Pro
Rata Share.”

 

“Retiree Health Plan” means an “employee welfare benefit plan” within the
meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.

 

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

 

“Revolver Lenders” means those Lenders designated as having a Revolver
Commitment on Schedule B-1.

 

“Revolver Maturity Date” has the meaning specified therefor in Section 3.3(b).

 

“Revolver Renewal Fee” has the meaning specified therefor in Section 3.3(b).

 

“Revolver Renewal Notice” has the meaning specified therefor in Section 3.3(b).

 

“Revolver Usage” means, as of any date of determination, the amount of
outstanding Advances.

 

“Scheduled Intellectual Property Collateral” has the meaning set forth in
Section 4.15.

 

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

 

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

 

“Security Agreement” means a security agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrowers and its Subsidiaries
to Agent.

 

“Solvent” means, with respect to any Person on a particular date, that, at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s
debts.

 

“Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

 

SCHEDULE 1.1 - 20

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“Stock Pledge Agreement” means a pledge agreement by and among Agent, on the one
hand, and the owners of 100% of the outstanding Stock of Borrower, on the other,
in form and substance satisfactory to Agent.

 

“Stockholders’ Equity” shall mean the Combined capital surplus and retained
earnings of Borrowers, subject to intercompany eliminations and reduced by the
outstanding amount of any note received by Borrowers in payment for Stock, all
as determined in accordance with GAAP.

 

“Subordinated Debt” shall mean any Indebtedness of Borrowers as to which the
subordinated creditor has agreed in writing on terms acceptable to the Required
Lenders in their sole discretion to be subordinate and junior in right of
payment to the rights of the Lender Group with respect to the Obligations under
this Agreement.

 

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.

 

“Taxes” has the meaning specified therefor in Section 15.11(a).

 

“Term Loans” means, collectively, the Term Loan A and the Term Loan B.

 

“Term Loan A” has the meaning specified therefor in Section 2.2(a).

 

“Term Loan A Amount” means, as of any date of determination, the outstanding
principal amount of Term Loan A.

 

“Term Loan A Commitment” means, with respect to each Lender, its Term Loan A
Commitment, and, with respect to all Lenders, their Term Loan A Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule B-1.

 

“Term Loan A Lenders” means those Lenders designated as having a Term Loan A
Commitment on Schedule B-1.

 

“Term Loan B” has the meaning specified therefor in Section 2.2(b).

 

“Term Loan B Amount” means, as of any date of determination, the outstanding
principal amount of Term Loan B.

 

“Term Loan B Commitment” means, with respect to each Lender, its Term Loan B
Commitment, and, with respect to all Lenders, their Term Loan B Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule B-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts shall
be reduced by any portion of the Term Loan B made by such Lender or Lenders, as
applicable, and as such amounts: (x) may be reduced or increased

 

SCHEDULE 1.1 - 21

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from time to time pursuant to assignments made in accordance with the provisions
of Section 13.1; and (y) reduced from time to time as required by Section
2.4(e).

 

“Term Loan B Commitment Expiry Date” means May 30, 2009.

 

“Term Loan B Commitment Period” means the period of time commencing on the
Closing Date and ending on the Term Loan B Commitment Expiry Date.

 

“Term Loan B Lenders” means those Lenders designated as having a Term Loan B
Commitment on Schedule B-1.

 

“Term Loan Commitment” means a Term Loan A Commitment or a Term Loan B
Commitment.

 

“Term Loan Lender” means a Term Loan A Lender or a Term Loan B Lender.

 

“Total Commitment” means, with respect to each Lender, its Total Commitment,
and, with respect to all Lenders, their Total Commitments, in each case as such
Dollar amounts are set forth beside such Lender’s name under the applicable
heading on Schedule B-1 attached hereto or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be: (x) reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 13.1;
and (y) reduced from time to time as required by Section 2.4(e).

 

“Trademark” has the meaning specified therefor in the Security Agreement.

 

“Trademark Security Agreement” has the meaning specified therefor in the
Security Agreement.

 

“Treasury Regulations” means the final, temporary and proposed United States
Treasury regulations promulgated under the IRC, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).

 

“UK Debenture” means a debenture agreement, in form and substance satisfactory
to Agent, executed by each UK Subsidiary and delivered to Agent.

 

“UK Guaranty” means a guaranty agreement, in form and substance satisfactory to
Agent, executed by each UK Guarantor Subsidiary and delivered to Agent.

 

“UK Security Documents” means the UK Debenture, the UK Share Pledge and the UK
Guaranty.

 

“UK Share Pledge” means a share pledge agreement, in form and substance
satisfactory to Agent, executed by each owner of a UK Subsidiary and delivered
to Agent.

 

“UK Guarantor Subsidiary” means the UK Subsidiaries that are parties to the UK
Guaranty.

 

SCHEDULE 1.1 - 22

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“UK Subsidiary” means any Subsidiary of Borrower incorporated in the United
Kingdom.

 

“USA Patriot Act” means the USA Patriot Act, Title III of Pub.L. 107-56, signed
into law October 26, 2001.

 

“United States” means the United States of America.

 

“Voidable Transfer” has the meaning specified therefor in Section 16.6.

 

“Warrant Agreement” means a warrant agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrowers to Agent.

 

“Wells Fargo Credit Facility” means that certain credit facility entered into by
the Borrowers and Wells Fargo Bank, National Association (acting through its
Wells Fargo Business Credit operating division).

 

“Withholding Taxes” has the meaning specified therefor in Section 15.11(h).

 

“Yost Subordination Agreement” means a subordination agreement, in form and
substance satisfactory to Agent, executed by the Borrowers and Warren and Gail
Yost and delivered to Agent.

 

SCHEDULE 1.1 - 23

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Schedule 3.1

 

I.              CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT.

 

The obligation of each Lender to make its initial portion of a Loan (whether as
an Advance, Term Loan A or Term Loan B) provided for in the Agreement is subject
to the fulfillment, to the satisfaction of Agent and each Lender (the making of
such portion of a Loan by any Lender being conclusively deemed to be its
satisfaction or waiver of the following), of each of the following conditions
precedent:

 

(a)           the Closing Date shall occur on or before December 7, 2007;

 

(b)           Agent shall have received a letter duly executed by each Borrower
authorizing Agent to file appropriate financing statements in such office or
offices as may be necessary or, in the opinion of Agent, desirable to perfect
the security interests to be created by the Loan Documents;

 

(c)           Agent shall have received evidence that appropriate financing
statements have been duly filed in such office or offices as may be necessary
or, in the opinion of Agent, desirable to perfect the Agent’s Liens in and to
the Collateral;

 

(d)           Agent shall have received each of the following documents, in form
and substance satisfactory to Agent, duly executed, and each such document shall
be in full force and effect:,

 

(i)            the Cash Management Agreements,

 

(ii)           the Control Agreements,

 

(iii)          [intentionally omitted],

 

(iv)          a disbursement letter executed and delivered by Borrowers to Agent
regarding the extensions of credit to be made on the Closing Date, the form and
substance of which is satisfactory to Agent,

 

(v)           the Fee Letter,

 

(vi)          the Patent Security Agreement,

 

(vii)         the Security Agreement,

 

(viii)        [intentionally omitted],

 

(ix)           the Trademark Security Agreement,

 

(x)            the Warrant Agreement,

 

(xi)           the Japanese Guaranty,

 

SCHEDULE 3.1 - 1

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(xii)          the UK Security Documents,

 

(xiii)         the French Security Documents,

 

(xiv)        the McDermott Subordination Agreement, and

 

(xv)         the Yost Subordination Agreement.

 

(e)           Agent shall have received a certificate from the Secretary of each
Borrower (i) attesting to the resolutions of such Borrower’s Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party, (ii) authorizing
specific officers of such Borrower to execute the same, and (iii) attesting to
the incumbency and signatures of such specific officers of such Borrower;

 

(f)            Agent shall have received copies of each Borrower’s Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;

 

(g)           Agent shall have received a certificate of status with respect to
each Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;

 

(h)           Agent shall have received certificates of status with respect to
each Borrower, each dated within 30 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;

 

(i)            Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 5.8, the form and
substance of which shall be reasonably satisfactory to Agent;

 

(j)            [intentionally omitted];

 

(k)           Agent shall have received opinions of Borrowers’ counsel
(including Borrowers’ French and United Kingdom counsel) in form and substance
satisfactory to Agent;

 

(l)            Agent shall have received the valuation report on each Borrower
and Guarantor, in form and substance satisfactory to Agent;

 

(m)          Agent shall have received the due diligence report on each Borrower
and Guarantor, in form and substance satisfactory to Agent;

 

(n)           Agent shall have received the Closing Date Projections;

 

(o)           Borrowers shall have paid all Lender Group Expenses incurred in

 

SCHEDULE 3.1 - 2

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connection with the transactions evidenced by this Agreement;

 

(p)           Borrowers shall have received all licenses, approvals or evidence
of other actions required by any Governmental Authority in connection with the
execution and delivery by Borrowers of the Loan Documents or with the
consummation of the transactions contemplated thereby;

 

(q)           The Agent shall have received “key man life insurance” insurance
policies for each of Carmine Oliva and Graham Jefferies, each of which shall be
in an amount, for a term and issued by insurers acceptable to Agent;

 

(r)            With respect to $1,800,000 of the Loan proceeds to be disbursed
on the Closing Date which shall be used to pay off certain accounts payable and
unsecured creditors of the Borrowers (the “Designated Payments”), Borrowers
shall provide Agent with a detailed list (duly executed by the Borrowers) of all
recipients of a Designated Payment and the amounts to be paid to such recipients
(the “Designated Payments List”);

 

(s)           Agent shall have received evidence satisfactory to it that the
prepayment penalty applicable to Borrowers’ Existing Credit Facility with Wells
Fargo Bank, National Association (acting through its Wells Fargo Business Credit
operating division) has been reduced from 3% to 2%; and

 

(t)            all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance reasonably satisfactory to Agent.

 

SCHEDULE 3.1 - 3

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