Exhibit 10.1

 

 

CREDIT AGREEMENT

 

among

 

DTS, INC.,
as Borrower

 

the Lenders hereunder from time to time

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent, Swingline Lender and Fronting Bank

 

September 29, 2014

 

 

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

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

DEFINITIONS AND ACCOUNTING TERMS

1

 

 

 

 

 

1.1

Defined Terms

1

 

 

 

 

 

1.2

Accounting Terms

21

 

 

 

 

 

1.3

UCC

22

 

 

 

 

 

1.4

Construction

22

 

 

 

 

 

1.5

Rounding

22

 

 

 

 

 

1.6

Covenant Compliance Generally

23

 

 

 

 

 

1.7

USA Patriot Act Notice

23

 

 

 

 

2.

LOANS AND LETTERS OF CREDIT

23

 

 

 

 

 

2.1

Loans-General

23

 

 

 

 

 

2.2

Choice of Interest Rate

23

 

 

 

 

 

2.3

Request for Base Rate Loan

23

 

 

 

 

 

2.4

LIBOR Loans

24

 

 

 

 

 

2.5

Interest

25

 

 

 

 

 

2.6

Request and Disbursement

25

 

 

 

 

 

2.7

Payment of Interest

25

 

 

 

 

 

2.8

Letters of Credit

25

 

 

 

 

 

2.9

Swingline Loans

30

 

 

 

 

 

2.10

Use of Proceeds

32

 

 

 

 

3.

PAYMENT AND FEES

32

 

 

 

 

 

3.1

Principal and Interest

32

 

 

 

 

 

3.2

Unused Revolving Loan Fee

34

 

 

 

 

 

3.3

Fees to Agent

34

 

 

 

 

 

3.4

Late Payments

35

 

 

 

 

 

3.5

[Reserved]

35

 

 

 

 

 

3.6

Term of Revolving Commitment

35

 

 

 

 

 

3.7

Note and Accounting

35

 

 

 

 

 

3.8

Manner of Payment

35

 

 

 

 

 

3.9

Application of Payments

36

 

 

 

 

 

3.10

Use of Proceeds

36

 

 

 

 

 

3.11

All Obligations to Constitute One Obligation

36

 

 

 

 

 

3.12

Authorization to Make Loans

36

 

i

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

 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

 

3.13

Authorization to Debit Accounts

37

 

 

 

 

 

3.14

Agent’s Right to Assume Funds Available for Loans

37

 

 

 

 

 

3.15

Defaulting Lenders

37

 

 

 

 

4.

CONDITIONS PRECEDENT

39

 

 

 

 

 

4.1

Conditions Precedent to Closing

39

 

 

 

 

 

4.2

Conditions to All Loans

41

 

 

 

 

5.

REPRESENTATIONS AND WARRANTIES

42

 

 

 

 

 

5.1

Corporate Existence; Compliance with Law

42

 

 

 

 

 

5.2

Executive Offices; Corporate or Other Names; Conduct of Business

42

 

 

 

 

 

5.3

Authority; Compliance with Other Agreements and Instruments and Government
Regulations

42

 

 

 

 

 

5.4

No Governmental Approvals Required

43

 

 

 

 

 

5.5

Subsidiaries

43

 

 

 

 

 

5.6

Financial Statements

43

 

 

 

 

 

5.7

No Other Liabilities; No Material Adverse Effect

43

 

 

 

 

 

5.8

Title To and Location of Property

44

 

 

 

 

 

5.9

Intellectual Property

44

 

 

 

 

 

5.10

Litigation

44

 

 

 

 

 

5.11

Binding Obligations

44

 

 

 

 

 

5.12

No Default

44

 

 

 

 

 

5.13

ERISA

45

 

 

 

 

 

5.14

Regulation U; Investment Company Act

45

 

 

 

 

 

5.15

Disclosure

45

 

 

 

 

 

5.16

Tax Liability

45

 

 

 

 

 

5.17

Environmental Matters

45

 

 

 

 

 

5.18

Security Interests

46

 

 

 

 

 

5.19

Insurance

46

 

 

 

 

 

5.20

Solvency

46

 

 

 

 

6.

AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING REQUIREMENTS)

46

 

 

 

 

 

6.1

Payment of Taxes and Other Potential Liens

46

 

 

 

 

 

6.2

Preservation of Existence

46

 

 

 

 

 

6.3

Maintenance of Insurance

46

 

ii

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

 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

 

6.4

Compliance with Applicable Law

47

 

 

 

 

 

6.5

Inspection Rights

47

 

 

 

 

 

6.6

Keeping of Records and Books of Account

47

 

 

 

 

 

6.7

Compliance with Agreements

47

 

 

 

 

 

6.8

Use of Proceeds

47

 

 

 

 

 

6.9

Environmental Laws

48

 

 

 

 

 

6.10

Future Subsidiaries

48

 

 

 

 

 

6.11

Further Assurances; Schedule Supplements

49

 

 

 

 

 

6.12

Financial Covenants

49

 

 

 

 

 

6.13

Maintenance of Property

49

 

 

 

 

 

6.14

Notification of Reportable Event

49

 

 

 

 

 

6.15

[Reserved]

49

 

 

 

 

 

6.16

Post-Closing

50

 

 

 

 

7.

NEGATIVE COVENANTS

50

 

 

 

 

 

7.1

Disposition of Property

50

 

 

 

 

 

7.2

Fundamental Changes

50

 

 

 

 

 

7.3

Acquisitions

51

 

 

 

 

 

7.4

Distributions

51

 

 

 

 

 

7.5

ERISA

51

 

 

 

 

 

7.6

Change in Control

51

 

 

 

 

 

7.7

Liens and Negative Pledges

51

 

 

 

 

 

7.8

Indebtedness and Guaranty Obligations

53

 

 

 

 

 

7.9

Transactions with Affiliates

54

 

 

 

 

 

7.10

Investments

54

 

 

 

 

 

7.11

Change in Nature of Business

55

 

 

 

 

 

7.12

Change in Fiscal Year or Accounting Method

55

 

 

 

 

8.

INFORMATION AND REPORTING REQUIREMENTS

55

 

 

 

 

 

8.1

Reports and Notices

55

 

 

 

 

 

8.2

Budgets

56

 

 

 

 

 

8.3

[Reserved]

56

 

 

 

 

 

8.4

Other Reports

57

 

 

 

 

9.

EVENTS OF DEFAULT; RIGHTS AND REMEDIES

57

 

iii

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

 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

 

9.1

Events of Default

57

 

 

 

 

 

9.2

Remedies

59

 

 

 

 

 

9.3

Waivers by Borrower

59

 

 

 

 

 

9.4

Proceeds

60

 

 

 

 

10.

SUCCESSORS AND ASSIGNS

60

 

 

 

 

11.

[RESERVED]

60

 

 

 

 

12.

MISCELLANEOUS

60

 

 

 

 

 

12.1

Complete Agreement; Modification of Agreement

60

 

 

 

 

 

12.2

Reimbursement and Expenses

60

 

 

 

 

 

12.3

Indemnity

61

 

 

 

 

 

12.4

No Waiver

62

 

 

 

 

 

12.5

Severability; Drafting

62

 

 

 

 

 

12.6

Conflict of Terms

62

 

 

 

 

 

12.7

Notices

62

 

 

 

 

 

12.8

Binding Effect; Assignment

64

 

 

 

 

 

12.9

Right of Setoff

66

 

 

 

 

 

12.10

Sharing of Setoffs

66

 

 

 

 

 

12.11

Section Titles

67

 

 

 

 

 

12.12

Counterparts

67

 

 

 

 

 

12.13

Time of the Essence

67

 

 

 

 

 

12.14

Governing Law; Jurisdiction, Etc.

67

 

 

 

 

 

12.15

WAIVER OF JURY TRIAL

68

 

 

 

 

 

12.16

Amendments; Consents

68

 

 

 

 

 

12.17

Foreign Lenders and Participants

69

 

 

 

 

 

12.18

Confidentiality

71

 

 

 

 

 

12.19

Keepwell

72

 

 

 

 

13.

AGENT

72

 

 

 

 

 

13.1

Appointment and Authorization

72

 

 

 

 

 

13.2

Rights as a Lender

73

 

 

 

 

 

13.3

Exculpatory Provisions

73

 

 

 

 

 

13.4

Reliance by Agent

74

 

 

 

 

 

13.5

Delegation of Duties

75

 

iv

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

 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

 

13.6

Resignation of Agent

75

 

 

 

 

 

13.7

Non-Reliance on Agent and Other Lenders

76

 

 

 

 

 

13.8

No Other Duties, etc.

76

 

 

 

 

 

13.9

Collateral and Guaranty Matters

76

 

 

 

 

 

13.10

Interest Rate Protection Agreements and Bank Products Agreements

77

 

 

 

 

 

13.11

Indemnification

78

 

 

 

 

 

13.12

No Obligations of Borrower

78

 

 

 

 

14.

COMMITMENT COSTS AND RELATED MATTERS

78

 

 

 

 

 

14.1

Changed Circumstances

78

 

 

 

 

 

14.2

Indemnity

79

 

 

 

 

 

14.3

Increased Costs

80

 

 

 

 

 

14.4

Taxes

81

 

 

 

 

 

14.5

Federal Reserve System/Wire Transfers

83

 

 

 

 

 

14.6

Assignment of Commitments Under Certain Circumstances; Duty to Mitigate

83

 

v

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

 

INDEX OF EXHIBITS AND SCHEDULES

 

Exhibit A

 

Form of Commitment Assignment and Acceptance

Exhibit B

 

Form of Compliance Certificate

Exhibit C

 

Form of Notice of Borrowing

Exhibit D

 

Request for Conversion/Continuation

 

 

 

Schedule 1.1

 

Schedule of Documents

Schedule 2.1

 

Commitments; Lenders; Pro Rata Shares

Schedule 5.2

 

Location of Offices, Collateral and Books and Records

Schedule 5.5

 

Subsidiaries

Schedule 5.9

 

Intellectual Property

Schedule 5.10

 

Litigation

Schedule 5.17

 

Hazardous Materials

Schedule 5.19

 

Insurance

Schedule 6.16

 

Post-Closing

Schedule 7.7

 

Existing Liens

Schedule 7.8

 

Existing Indebtedness

Schedule 7.10

 

Existing Investments

 

i

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

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (“Agreement”), is entered into as of September 29, 2014,
between DTS, INC., a Delaware corporation (“Borrower”), the lenders hereunder
from time to time, as Lenders, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Agent, effective as of the Closing Date, with reference to the following facts:

 

RECITALS

 

A.                                    Borrower has requested that the Lenders
provide Borrower with a term loan and a revolving line of credit, to be used by
Borrower for refinancing existing indebtedness, working capital needs and
general corporate purposes (including capital expenditures, acquisitions,
dividends and stock repurchases).

 

B.                                    Lenders are willing to extend such
financial accommodations to Borrower, subject to the terms and conditions set
forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

 

1.                                     DEFINITIONS AND ACCOUNTING TERMS

 

1.1                               Defined Terms. As used in this Agreement, the
following terms shall have the respective meanings set forth below:

 

“Acquisition” means any transaction, or any series of related transactions,
consummated after the Closing Date, by which Borrower and/or any of its
Subsidiaries directly or indirectly (a) acquires any ongoing business or all or
substantially all of the assets of any Person engaged in any ongoing business,
whether through purchase of assets, merger or otherwise, (b) acquires control of
securities of a Person engaged in an ongoing business representing more than 50%
of the ordinary voting power for the election of directors or other governing
position if the business affairs of such Person are managed by a board of
directors or other governing body or (c) acquires control of more than 50% of
the ownership interest in any partnership, joint venture, limited liability
company, business trust or other Person engaged in an ongoing business that is
not managed by a board of directors or other governing body.

 

“Adjusted EBITDA” means, with respect to any fiscal period, the sum of (a) Net
Income for that period, plus (b) any non-Cash non-operating, non-recurring loss
or charge reflected in such Net Income in an aggregate amount not to exceed
$10,000,000 for such fiscal period plus (c) any Cash non-operating,
non-recurring loss or charge reflected in such Net Income in an aggregate amount
not to exceed $2,500,000 for such fiscal period, minus (d) any non-operating,
non-recurring gain or income reflected in such Net Income, plus (e) Interest
Expense of Borrower and its Subsidiaries for that period, plus (f) the aggregate
amount of federal, foreign and state tax expense on or measured by income of
Borrower and its Subsidiaries for that period (whether or not payable during
that period), minus (g) the aggregate amount of federal and state credits
against taxes on or measured by income of such Borrower and its Subsidiaries for
that period (whether or not usable during that period)], plus (h) depreciation,
amortization and all other non-Cash operating expenses of Borrower and its
Subsidiaries for that period, plus (i) non-

 

1

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

 

Cash stock compensation expenses, plus (j) expenses directly incurred in
connection with the consummation of any Permitted Acquisition (whether or not
consummated) or any other Acquisition to which the Required Lenders have
consented, limited to amounts that are agreed upon by Agent and Borrower, in
each case as determined on a consolidated basis in accordance with GAAP,
consistently applied. Pro forma credit shall be given for EBITDA of a Person
acquired by Borrower or any of its Subsidiaries as if such Person was owned on
the first day of the applicable period, and companies (or identifiable business
units or divisions) sold, transferred or otherwise disposed of during any period
will be treated as if not owned during the entire applicable period (with any
add backs to be agreed to in writing by Borrower and Agent).

 

“Affiliate” means, with respect to any Person, another Person (i) that directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with such Person; (ii) that beneficially owns or
holds 10% or more of any class of the outstanding voting securities of such
Person; or (iii) 10% or more of any class of the outstanding voting securities
of which is beneficially owned or held by such Person. The term “control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

 

“Agent” means Wells Fargo Bank, National Association, when acting in its
capacity as administrative agent under any of the Loan Documents, or any
successor administrative agent.

 

“Agent’s Office” means the Agent’s address as set forth in Section 12.7.1, or
such other address as the Agent hereafter may designate by written notice to
Borrower and the Lenders.

 

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

 

“Applicable Law” means, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, and all orders and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it or its properties are bound.

 

“Applicable LIBOR Margin” means 1.0%.

 

“Applicable LIBOR Rate” means a rate equal to the LIBOR Basis plus the
Applicable LIBOR Margin.

 

“Authorized Party” means each Person identified in Section 3.12.

 

“Authorized Signatory” means (i) with respect to any Compliance Certificates
delivered to Agent hereunder, (a) the chief executive officer, (b) the
president, (c) the chief financial officer, (d) the vice president-finance and
accounting or (e) the treasurer, in each case of Borrower, and (ii) with respect
to all other documents required to be executed by Borrower and delivered to
Agent and/or Lenders hereunder, each of the foregoing persons or such other
senior personnel of Borrower as may be duly authorized and designated in writing
by Borrower to execute documents, agreements, and instruments on behalf of
Borrower and to pledge Borrower’s real and personal property.

 

2

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

 

“Bank Products Agreement” means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
electronic funds transfer, and other cash management or depository arrangements
entered into between Borrower and any Lender or an Affiliate of any Lender.

 

“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. Sections
101 et seq.), as amended from time to time.

 

“Base Rate” means, at any time, the higher of (i) the rate of interest most
recently announced by Agent as its Prime Rate or (ii) the Federal Funds Rate
plus one-half of one percent (0.50%).

 

“Base Rate Loan” means a Loan that bears interest at a rate based on the Base
Rate.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks in the State of California are authorized or required to close, and
in reference to LIBOR Loans means a Business Day that is also a day on which
banks in the city of London are open for interbank or foreign exchange
transactions.

 

“BVI Sub” means DTS (BVI) Limited, a company incorporated in the British Virgin
Islands.

 

“Capital Expenditure” means any expenditure by Borrower or any of its
Subsidiaries for or related to fixed assets that is treated as a capital
expenditure under GAAP, including any amount which is required to be treated as
an asset subject to a Capital Lease Obligation. The amount of Capital
Expenditures in respect of fixed assets purchased or constructed by Borrower or
any of its Subsidiaries in any fiscal period shall be net of any casualty
insurance proceeds received during such fiscal period by such Borrower or such
Subsidiary for casualties to fixed assets and applied to the repair or
replacement thereof.

 

“Capital Lease Obligations” means all monetary obligations of a Person under any
leasing or similar arrangement which, in accordance with GAAP, is classified as
a capital lease.

 

“Cash” means, when used in connection with any Person, all monetary and
non-monetary items owned by that Person that are treated as cash in accordance
with GAAP, consistently applied.

 

“Cash Equivalents” means, when used in connection with any Person, that Person’s
Investments in:

 

(a)                                 Government Securities due within one year
after the date of the making of the Investment;

 

(b)                                 readily marketable direct obligations of any
State of the United States of America or any political subdivision of any such
State or any public agency or instrumentality thereof given on the date of such
Investment a credit rating of at least Aa by Moody’s Investors Service, Inc. or
AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.), in each
case due within one year from the making of the Investment;

 

3

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

 

(c)                                  certificates of deposit or time deposits
issued by, bank deposits in, Eurodollar deposits through, bankers’ acceptances
of, and repurchase agreements covering Government Securities executed by Lender
or any bank incorporated under the Applicable Law of the United States of
America, any State thereof or the District of Columbia and having on the date of
such Investment combined capital, surplus and undivided profits of at least
$250,000,000, or total assets of at least $5,000,000,000, in each case due
within one year after the date of the making of the Investment;

 

(d)                                 certificates of deposit issued by, bank
deposits in, Eurodollar deposits through, bankers’ acceptances of, and
repurchase agreements covering Government Securities executed by Lender or any
branch or office located in the United States of America of a bank incorporated
under the Applicable Law of any jurisdiction outside the United States of
America having on the date of such Investment combined capital, surplus and
undivided profits of at least $500,000,000, or total assets of at least
$15,000,000,000, in each case due within one year after the date of the making
of the Investment;

 

(e)                                  repurchase agreements covering Government
Securities executed by a broker or dealer registered under Section 15(b) of the
Securities Exchange Act of 1934, as amended, having on the date of the
Investment capital of at least $50,000,000, due within ninety (90) days after
the date of the making of the Investment; provided that the maker of the
Investment receives written confirmation of the transfer to it of record
ownership of the Government Securities on the books of a” primary dealer” in
such Government Securities or on the books of such registered broker or dealer,
as soon as practicable after the making of the Investment;

 

(f)                                   readily marketable commercial paper or
other debt securities issued by corporations doing business in and incorporated
under the Applicable Law of the United States of America or any State thereof or
of any corporation that is the holding company for a bank described in clause
(c) or (d) above given on the date of such Investment a credit rating of at
least P 1 by Moody’s Investors Service, Inc. or A 1 by Standard & Poor’s Rating
Group (a division of McGraw Hill, Inc.), in each case due within one year after
the date of the making of the Investment;

 

(g)                                  a readily redeemable “money market mutual
fund” sponsored by a bank described in clause (c) or (d) hereof, or a registered
broker or dealer described in clause (e) hereof, that has and maintains an
investment policy limiting its investments primarily to instruments of the types
described in clauses (a) through (f) hereof and given on the date of such
Investment a credit rating of at least Aa by Moody’s Investors Service, Inc. and
AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.); and

 

(h)                                 corporate notes or bonds having an original
term to maturity of not more than one year issued by a corporation incorporated
under the Applicable Law of the United States of America or any State thereof,
or a participation interest therein; provided that (i) notes or bonds issued by
such corporation is given on the date of such Investment a credit rating of at
least Aa by Moody’s Investors Service, Inc. and AA by Standard & Poor’s Rating
Group (a division of McGraw Hill, Inc.), (ii) the amount of all such Investments
issued by the same issuer does not exceed $5,000,000 and (iii) the aggregate
amount of all such Investments does not exceed $15,000,000.

 

4

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

 

“Change in Control” means (a) any transaction or series of related transactions
in which any Person or two or more Persons acting in concert acquire beneficial
ownership (within the meaning of Rule 13d 3(a)(1) under the Securities Exchange
Act of 1934, as amended), directly or indirectly, of more than 50% of the
ownership interests in Borrower, (b) Borrower consolidates with or merges into
another Person or conveys, transfers or leases its properties and assets
substantially as an entirety to any Person or any Person consolidates with or
merges into Borrower, in either event pursuant to a transaction in which the
ownership interests in Borrower are changed into or exchanged for Cash,
securities or other Property, with the effect that any Person becomes the
beneficial owner, directly or indirectly, of 50% or more of ownership interests
in Borrower, or (c) a “change in control” (or any similar term) as defined in
any document governing Material Indebtedness of Borrower.

 

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

 

“Charges” means all Federal, state, county, city, municipal, local, foreign or
other governmental taxes (including taxes owed to PBGC at the time due and
payable), levies, assessments, charges, liens, and all additional charges,
interest, penalties, expenses, claims or encumbrances upon or relating to
(a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or
gross receipts of Borrower, (d) the ownership or use of any assets by Borrower,
or (e) any other aspect of Borrower’s business.

 

“Claim” means any and all: suits, actions, or proceedings in any court or forum,
at law, in equity or otherwise; costs, fines, deficiencies, or penalties;
asserted claims or demands by any Person; arbitration demands, proceedings or
awards; damages, losses, liabilities and expenses (including reasonable
attorneys’ fees and disbursements and other costs of collection, defense or
appeal); enforcement of rights and remedies; or criminal, civil or regulatory
investigations.

 

“Closing Date” means the time and Business Day on which the conditions set forth
in Section 4.1 are satisfied or waived.

 

“Collateral” means all of the collateral covered by the Collateral Documents.

 

“Collateral Assignment” means that certain Collateral Assignment executed by
Borrower in favor of Agent and acknowledged by DLL.

 

5

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

 

“Collateral Documents” means, collectively, the Security Agreement, the Pledge
Agreement (BVI Sub), the Collateral Assignment, each Control Agreement, UCC
financing statements, and such other agreements, instruments and documents as
Agent may reasonably require pursuant to this Agreement to grant or perfect a
security interest or Lien in Collateral.

 

“Commitment Assignment and Acceptance” means a Commitment Assignment and
Acceptance substantially in the form of Exhibit A.

 

“Commitments” means, collectively, the Revolving Commitment and the Term
Commitment.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.).

 

“Compliance Certificate” means a Compliance Certificate in the form attached
hereto as Exhibit B signed by an Authorized Signatory.

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

 

“Contract” means, individually and collectively, all contracts, leases,
undertakings, and agreements (other than rights evidenced by chattel paper,
documents or instruments) in or under which any Person may now or hereafter have
any right, title or interest, including any agreement relating to the terms of
payment or the terms of performance of any account.

 

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

 

“Control Agreement” means a deposit account control agreement or an investment
account control agreement executed and delivered by Borrower or any Domestic
Subsidiary, a depositary bank or securities intermediary, and Agent.

 

“Debtor Relief Laws” means the Bankruptcy Code and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief laws from
time to time in effect affecting the rights of creditors generally.

 

“Default” means any event which, with the passage of time or notice or both,
would, unless cured or waived, become an Event of Default.

 

“Default Rate” means (i) for all then outstanding and any future Base Rate
Loans, a per annum default rate equal to the Base Rate plus two percent (2.0%),
and (ii) for all then outstanding LIBOR Loans, a per annum default rate equal to
the Applicable LIBOR Rate plus two percent (2.0%), which Default Rate with
respect to any LIBOR Loans shall be in effect until the end of the LIBOR Loan
Period, at which time (provided an Event of Default is then continuing) any such
LIBOR Loan(s) shall automatically convert to Base Rate Loan(s) and accrue
interest at the Default Rate set forth herein for Base Rate Loans.

 

6

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

 

“Defaulting Lender” means, subject to Section 3.15, any Lender that (a) has
failed to (i) fund all or any portion of the Revolving Loans, the Term Loans,
participations in L/C Obligations or participations in Swingline Loans required
to be funded by it hereunder within two Business Days of the date such Loans or
participations were required to be funded hereunder unless such Lender notifies
Agent and Borrower in writing that such failure is the result of such Lender’s
determination that one or more conditions precedent to funding (each of which
conditions precedent, together with any applicable default, shall be
specifically identified in such writing) has not been satisfied, or (ii) pay
Agent, Fronting Bank, the Swingline Lender or any other Lender any other amount
required to be paid by it hereunder (including in respect of its participation
in Letters of Credit or Swingline Loans) within two Business Days of the date
when due, (b) has notified Borrower, Agent, Fronting Bank or the Swingline
Lender in writing that it does not intend to comply with its funding obligations
hereunder, or has made a public statement to that effect (unless such writing or
public statement relates to such Lender’s obligation to fund a Loan hereunder
and states that such position is based on such Lender’s determination that a
condition precedent to funding (which condition precedent, together with any
applicable default, shall be specifically identified in such writing or public
statement) cannot be satisfied), (c) has failed, within three Business Days
after written request by Agent or Borrower, to confirm in writing to Agent and
Borrower that it will comply with its prospective funding obligations hereunder
(provided that such Lender shall cease to be a Defaulting Lender pursuant to
this clause (c) upon receipt of such written confirmation by Agent and
Borrower), or (d) has, or has a direct or indirect parent company that has,
(i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had
appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets, including the FDIC or
any other state or federal regulatory authority acting in such a capacity;
provided that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a Governmental Authority so long as such
ownership interest does not result in or provide such Lender with immunity from
the jurisdiction of courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permit such Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts
or agreements made with such Lender.  Any determination by Agent that a Lender
is a Defaulting Lender under any one or more of clauses (a) through (d) above
shall be conclusive and binding absent manifest error, and such Lender shall be
deemed to be a Defaulting Lender (subject to Section 3.15) upon delivery of
written notice of such determination to Borrower, Fronting Bank, the Swingline
Lender and each Lender.

 

“Deposit Amount” means, as of each Quarterly Payment Date, the average aggregate
daily balance of Cash and Cash Equivalents on deposit in one or more accounts
maintained by Borrower or any Guarantor with Wells Fargo Bank, National
Association during the preceding Fiscal Quarter; provided that, as of October 1,
2014, the preceding Fiscal Quarter shall be deemed to have started on the
Closing Date.

 

“Direct Deposit Account” means the deposit account maintained by Borrower with
Agent, as from time to time designated by Borrower by written notification to
Agent.

 

“Distribution” means, with respect to any Stock issued by a Person, (a) the
retirement, redemption, purchase or other acquisition for Cash or for Property
by such Person of any such

 

7

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

 

Stock, (b) the declaration or (without duplication) payment by such Person of
any dividend in Cash or in Property on or with respect to any such Stock,
(c) any Investment by such Person in the holder of 5% or more of any such Stock
if a purpose of such Investment is to avoid characterization of the transaction
as a Distribution and (d) any other payment in Cash or Property by such Person
constituting a distribution under Applicable Law with respect to such Stock.

 

“DLL” means DTS Licensing Limited, a company organized under the laws of the
Republic of Ireland.

 

“Dollars” or “$” means lawful currency of the United States.

 

“Domestic Subsidiary” means each direct or indirect Subsidiary of Borrower which
is organized under the laws of the United States of America or any state thereof
or the District of Columbia.

 

“DTS LLC” means DTS LLC, a Delaware limited liability company.

 

“Eligible Assignee” means (a) another Lender (but not a Defaulting Lender),
(b) with respect to any Lender, any Affiliate of that Lender, (c) any commercial
bank having total assets of $1,000,000,000 or more, (d) any (i) savings bank,
savings and loan association or similar financial institution or (ii) insurance
company engaged in the business of writing insurance which, in either case
(A) has total assets of $1,000,000,000 or more, (B) is engaged in the business
of lending money and extending credit under credit facilities substantially
similar to those extended under this Agreement and (C) is operationally and
procedurally able to meet the obligations of a Lender hereunder to the same
degree as a commercial bank and (e) any other financial institution (including a
mutual fund or other fund) having total assets of $1,000,000,000 or more which
meets the requirements set forth in subclauses (B) and (C) of clause (d) above;
provided that each Eligible Assignee must either (aa) be organized under the
laws of the United States of America, any State thereof or the District of
Columbia or (bb) be organized under the laws of the Cayman Islands or any
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of such a country, and (i) act hereunder
through a branch, agency or funding office located in the United States of
America and (ii) be exempt from withholding of tax on interest and deliver the
documents related thereto pursuant to Section 12.17.

 

“Environmental Laws” means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

 

“Environmental Liabilities and Costs” means all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages, costs and
expenses that relate to any health or safety condition regulated under any
Environmental Law or in connection with any other environmental matter or
Release, threatened Release, or the presence of any Hazardous Material.

 

8

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

 

“ERISA” means the Employee Retirement Income Security Act of 1974 and the
regulations thereunder.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
which is a member of a “controlled group of corporations,” a group of trades or
businesses under “common control,” or an “affiliated service group,” which
includes Borrower within the meaning of Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986.

 

“Event of Default” means any of the events specified in Section 9.1.

 

“Excluded Interest Rate Protection Agreement Obligation” means, with respect to
any Guarantor, any guarantee of any Swap Obligations under an Interest Rate
Protection Agreement if, and only to the extent that and for so long as, all or
a portion of the guarantee of such Guarantor of, or the grant by such Guarantor
of a security interest to secure, such Swap Obligation under an Interest Rate
Protection Agreement (or any guarantee thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Guarantor’s failure for any reason to constitute an
“eligible contract participant” as defined in the Commodity Exchange Act at the
time the guarantee of such Guarantor or the grant of such security interest
becomes effective with respect to such Swap Obligation under an Interest Rate
Protection Agreement.  If a Swap Obligation under an Interest Rate Protection
Agreement arises under a master agreement governing more than one swap, such
exclusion shall apply only to the portion of such Swap Obligation under an
Interest Rate Protection Agreement that is attributable to swaps for which such
guarantee or security interest is or becomes illegal for the reasons identified
in the immediately preceding sentence of this definition.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, United States
federal withholding Taxes imposed on amounts payable to or for the account of
such Lender with respect to an applicable interest in a Loan or Commitment
pursuant to a law in effect on the date on which (i) such Lender acquires such
interest in the Loan or Commitment (other than pursuant to an assignment request
by the Borrower under Section 14.6) or (ii) such Lender changes its lending
office, except in each case to the extent that, pursuant to Section 14.4,
amounts with respect to such Taxes were payable either to such Lender’s assignor
immediately before such Lender became a party hereto or to such Lender
immediately before it changed its lending office, (c) Taxes attributable to such
Recipient’s failure to comply with Section 12.17 and (d) any United States
federal withholding Taxes imposed under FATCA.

 

“Existing Credit Agreement” means the Loan Agreement, dated as of July 18, 2012,
among Borrower, the lenders thereunder from time to time, and Union Bank, N.A.,
as administrative agent, as amended, restated, supplemented or otherwise
modified from time to time.

 

9

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

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers on such
day (or, if such day is not a Business Day, for the immediately preceding
Business Day), as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that if such rate is not so
published for any day which is a Business Day, the average of the quotation for
such day on such transactions received by the Agent from three federal funds
brokers of recognized standing selected by the Agent.

 

“Fee Letter” means the separate fee letter agreement, dated as of the date
hereof, between Borrower and Agent.

 

“Financial Statements” means the income statement, balance sheet and statement
of cash flows of Borrower and its Subsidiaries, internally prepared for each
Fiscal Quarter, and audited for each Fiscal Year, in each case prepared in
accordance with GAAP including the notes and schedules thereto.

 

“Fiscal Quarter” means any of the quarterly accounting periods of Borrower,
specifically ending March 31, June 30, September 30, and December 31 of each
year.

 

“Fiscal Year” means the twelve (12) month fiscal period of Borrower ending
December 31 of each year. Subsequent changes of the Fiscal Year of Borrower
shall not change the term “Fiscal Year” unless Agent shall consent in writing to
such change.

 

“Foreign Lender” means a Lender that is not a U.S. Person.

 

“Foreign Subsidiary” means each direct or indirect Subsidiary of Borrower which
is organized in a jurisdiction other than the United States of America or any
state thereof.

 

“Fronting Bank” means Wells Fargo Bank, National Association together with its
successors and assigns.

 

“Funded Debt” means all Indebtedness (including, for the avoidance of doubt, the
undrawn amount of all issued and outstanding letters of credit of Borrower and
its Subsidiaries) minus any Indebtedness permitted by Section 7.8.10.

 

“Funded Debt to Adjusted EBITDA Ratio” means, as of any date of determination,
the ratio of Funded Debt on such date to Adjusted EBITDA for the twelve (12)
month period ending on such date.

 

10

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

 

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

 

“Governmental Authority” means (a) any international, foreign, federal, state,
county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality or public body or (c) any court or administrative
tribunal of competent jurisdiction.

 

“Government Securities” means readily marketable (a) direct full faith and
credit obligations of the United States of America or obligations guaranteed by
the full faith and credit of the United States of America and (b) obligations of
an agency or instrumentality of, or corporation owned, controlled or sponsored
by, the United States of America that are generally considered in the securities
industry to be implicit obligations of the United States of America.

 

“Guarantor” means each of DTS Washington, LLC, a Delaware limited liability
company, Phorus, Inc., a Delaware corporation, DTS LLC, a Delaware limited
liability company, and any other Person who becomes a party to the Guaranty in
accordance with Section 6.10; provided, that no Immaterial Subsidiary shall be a
“Guarantor”.

 

“Guaranty” means that certain Guaranty executed by each Guarantor in favor of
Agent and the Lenders.

 

“Guaranty Obligations” means, with respect to any Person, any obligation of such
Person guaranteeing any indebtedness, lease, dividend, or other obligation
(“primary obligations”) of any other Person (the “primary obligor”) in any
manner, including any obligation or arrangement of such Person (a) to purchase
or repurchase any such primary obligation, (b) to advance or supply funds
(1) for the purchase or payment of any such primary obligation, or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof;
provided that the term shall not include endorsements for collection or deposit
in the ordinary course of business. The amount of any “Guaranty Obligations” at
any time shall be deemed to be an amount equal to the lesser at such time of
(x) the stated or determinable amount of the primary obligation in respect of
which such Guaranty Obligations is made, and (y) the maximum amount for which
such Person may be liable pursuant to the terms of the instrument embodying such
Guaranty Obligations; or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.

 

“Hazardous Material” means any substance, material or waste, the generation,
handling, storage, treatment or disposal of which is regulated by any
Governmental Authority, or forms the basis of liability now or hereafter under,
any Environmental Law in any jurisdiction in which Borrower has owned, leased,
or operated real property or disposed of hazardous materials.

 

11

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

 

“Immaterial Subsidiary” means Manzanita Systems, LLC, a California limited
liability company, and any other Subsidiary agreed to in writing by the
Administrative Agent prior to the Closing Date.

 

“Indebtedness” means, without duplication: (a) all indebtedness for borrowed
money or for the deferred purchase price of property or services (including
reimbursement and all other obligations with respect to letters of credit and
bankers’ acceptances, whether or not matured), excluding (i) trade and other
account payables in the ordinary course of business not past due for more than
60 days after the date on which such account was created, (ii) the amount due
for goods or services purchased from trade vendors and other suppliers through
the use of a commercial credit card purchase card; and (iii) surety bonds;
(b) all obligations evidenced by notes, bonds, debentures or similar
instruments; (c) all indebtedness created or arising under any conditional sale
or other title retention agreements with respect to property acquired (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property);
(d) all Capital Lease Obligations; (e) all Guaranty Obligations; (f) all
Indebtedness referred to in clauses (a), (b), (c), (d) or (e) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in Property owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness; (g) the Obligations; (h) all “Unfunded Pension
Liabilities” (defined as the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Internal Revenue Code of 1986
for the applicable plan year); (i) all obligations under Interest Rate
Protection Agreements as calculated under FASB 133 or other pronouncements under
GAAP; and (j) all obligations with respect to deposits or maintenance reserves
to the extent not supported by Cash reserved specifically therefor.

 

“Indemnified Person” means Agent, Fronting Bank and each Lender and each of
their respective Affiliates, partners, directors, officers, employees,
attorneys, agents, trustees, administrators, managers, advisors and
representatives.

 

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

 

“Intellectual Property” means all of the following now owned or hereafter
acquired by Borrower or any of its Subsidiaries (or that Borrower or any of its
Subsidiaries now or hereafter has a right to license): (a) patents, trademarks,
trade dress, trade names, service marks, copyrights, trade secrets and all other
intellectual property or licenses thereof; and (b) all Proceeds of the
foregoing.

 

“Intercompany Note” means a promissory note evidencing any Indebtedness of a
Subsidiary or Affiliate to Borrower.

 

“Interest Expense” means, with respect to any fiscal period, the consolidated
interest expense of Borrower and its Subsidiaries for that period, determined in
accordance with GAAP, consistently applied.

 

12

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

 

“Interest Rate Protection Agreement” means an ISDA Master Agreement or other
written agreement between Borrower and any Lender or an Affiliate of any Lender
providing for “swap”, “cap”, “collar” or other interest rate protection with
respect to any Indebtedness.

 

“Investment” means, when used in connection with any Person, any investment by
or of that Person, whether by means of purchase or other acquisition of stock or
other securities of any other Person or by means of a loan, advance creating a
debt, capital contribution, guaranty or other debt or equity participation or
interest in any other Person, including any partnership and joint venture
interests of such Person. The amount of any Investment shall be the amount
actually invested (minus any return of capital with respect to such Investment
which has actually been received in Cash or has been converted into Cash),
without adjustment for subsequent increases or decreases in the value of such
Investment.

 

“ISP98” means the International Standby Practices (1998 Revision, effective
January 1, 1999), International Chamber of Commerce Publication No. 590.

 

“L/C Obligations” means at any time, an amount equal to the sum of (a) the
aggregate undrawn and unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 2.8.5.

 

“L/C Participants” means, with respect to any Letter of Credit, the collective
reference to all the Lenders other than Fronting Bank.

 

“L/C Sublimit” means $1,000,000.

 

“Lender” means each Lender named in Schedule 2.1 and each other party that may
be named a “Lender” under this Agreement.

 

“Letter of Credit” means an irrevocable standby letter of credit or a commercial
letter of credit issued by Fronting Bank for the account of Borrower pursuant to
Section 2.8.

 

“Letter of Credit Agreement” has the meaning set forth in Section 2.8.2.

 

“Letter of Credit Application” means an application, in the form specified by
Fronting Lender from time to time, requesting Fronting Lender to issue a Letter
of Credit.

 

“LIBOR” means, for any interest rate calculation with respect to a LIBOR Loan,
the rate of interest per annum determined on the basis of the rate for deposits
in Dollars for a period equal to the applicable LIBOR Loan Period which appears
on Reuters Screen LIBOR01 Page (or any applicable successor page) at
approximately 11:00 a.m. (London time) two (2) London Banking Days prior to the
first day of the applicable LIBOR Loan Period.  If, for any reason, such rate
does not appear on Reuters Screen LIBOR01 Page (or any applicable successor
page), then “LIBOR” shall be determined by Agent to be the arithmetic average of
the rate per annum at which deposits in Dollars would be offered by first class
banks in the London interbank market to Agent at approximately 11:00 a.m.
(London time) two (2) London Banking Days prior to the first day of the
applicable LIBOR Loan Period for a period equal to such LIBOR Loan

 

13

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

 

Period.  Each calculation by Agent of LIBOR shall be conclusive and binding for
all purposes, absent manifest error.

 

“LIBOR Basis” means a per annum interest rate equal to the quotient of (a) LIBOR
divided by (b) one minus the LIBOR Reserve Percentage, stated as a decimal. The
LIBOR Basis shall be rounded upward to the nearest one-hundredth of one percent
(1/100%) and, once determined, shall remain unchanged during the applicable
LIBOR Loan Period, except for changes to reflect adjustments in the LIBOR
Reserve Percentage.

 

“LIBOR Loan” means a Loan that bears interest at a rate based on the LIBOR
Basis.

 

“LIBOR Loan Period” means, for each LIBOR Loan, each one, three or six month
period (or such other longer or shorter period as approved by the relevant
Lenders), as selected by Borrower pursuant to Section 2.2, during which LIBOR
applicable to such LIBOR Loan shall remain unchanged; provided, that (a) any
applicable LIBOR Loan Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day, unless such
Business Day falls in another calendar month, in which case such LIBOR Loan
Period shall end on the immediately preceding Business Day, (b) any applicable
LIBOR Loan Period which begins on a day for which there is no numerically
corresponding day in the calendar month during which such LIBOR Loan Period is
to end shall (subject to clause (a) above) end on the last day of such calendar
month, and (c) no LIBOR Loan Period shall extend beyond the Maturity Date.

 

“LIBOR Reserve Percentage” means, for any day, the percentage (if any) in effect
for such day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) as the maximum reserve requirement (including, without
limitation, any basic, supplemental or emergency reserves) applicable with
respect to eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City. The LIBOR Basis for
any LIBOR Loan shall be adjusted as of the effective date of any change in the
LIBOR Reserve Percentage.

 

“License” means (a) any license granted by Borrower or any Subsidiary under any
written agreement granting any right, title or interest in, to or under any
Intellectual Property or (b) any other license of rights or interests now held
or hereafter acquired by Borrower or such Subsidiary.

 

“Lien” means, with respect to any property, any security deed, mortgage, deed to
secure debt, deed of trust, lien, pledge, assignment, charge, security interest,
title retention agreement, negative pledge, levy, execution, seizure,
attachment, garnishment, legal or equitable right, title or interest of another
Person, option or other encumbrance of any kind in respect of such property,
whether or not choate, vested, or perfected.

 

“Liquidity Amount” means the aggregate amount of Cash and Cash Equivalents of
Borrower and its Subsidiaries on deposit in deposit accounts or investment
accounts maintained with depositary banks and other financial institutions
located both in the United States and outside of the United States.

 

14

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

 

“Loan” means all loans and advances made by Lenders to or for the benefit of
Borrower under this Agreement, including but not limited to the Revolving Loans
and the Term Loans.

 

“Loan Documents” means collectively, this Agreement, the Notes, the Guaranty,
the Collateral Documents, each Letter of Credit Application and Letter of Credit
Agreement, the Fee Letter and any and all other agreements, documents, or
instruments (including financing statements) entered into in connection with the
transactions contemplated by this Agreement, together with all alterations,
amendments, changes, extensions, modifications, refinancings, refundings,
renewals, replacements, restatements, or supplements, of or to any of the
foregoing.

 

“London Banking Day” means any day on which dealings in Dollar deposits are
conducted by and between banks in the London interbank Eurodollar market.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
property, assets, operations or condition (financial or otherwise) of Borrower
and its Subsidiaries, taken as a whole, (b) the ability of Borrower or any
Guarantor to pay or perform any of its Obligations in accordance with the terms
of any of the Loan Documents, (c) the rights and remedies of Agent or any Lender
under any of the Loan Documents or (d) the legality, validity, binding effect or
enforceability against Borrower or any Guarantor of any Loan Document to which
such Person is a party.

 

“Material Indebtedness” means any Indebtedness (other than the Obligations) of
Borrower or any of its Subsidiaries in a principal amount exceeding $5,000,000.

 

“Maturity Date” means the earliest to occur of (a) September 29, 2017, (b) the
date on which the Obligations are accelerated or the obligation of the Lenders
to make further Loans is terminated under Section 9.2 and (c) solely in respect
of Revolving Loans, the date on which the Revolving Commitment is terminated in
whole under Section 3.1.4(b).

 

“Negative Pledge” means a Contractual Obligation which contains a covenant
binding on Borrower or any of its Subsidiaries that prohibits Liens on any of
its Property, other than (a) any such covenant contained in a Contractual
Obligation granting or relating to a particular Lien which affects only the
Property that is the subject of such Lien and (b) any such covenant that does
not apply to Liens securing the Obligations.

 

“Net Income” means, with respect to any fiscal period, the consolidated net
income (or loss) of Borrower and its Subsidiaries for that period, determined in
accordance with GAAP, consistently applied.

 

“Note” means individually or collectively those certain promissory notes
evidencing the Loans made pursuant to this Agreement, including but not limited
to the Term Notes, the Revolving Notes and the Swingline Note.

 

“Notice of Borrowing” means a written request for a Loan substantially in the
form of Exhibit C signed by an Authorized Signatory of Borrower and properly
completed to provide all information required to be included therein.

 

15

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

 

“Obligations” means all loans, advances, debts, expense reimbursements, fees,
liabilities and obligations, for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or amounts are liquidated or determinable) owing by
Borrower or any Guarantor to any of the Lenders, Fronting Bank or Agent of any
kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, arising under this Agreement or in connection
with any of the other Loan Documents (including Interest Rate Protection
Agreements and Bank Products Agreements, provided that Obligations of any
Guarantor shall not include any Excluded Interest Rate Protection Agreement
Obligations of such Guarantor), and all covenants and duties regarding such
amounts. This term includes all principal, interest (including interest which
accrues after the commencement of any case or proceeding in bankruptcy, or for
the reorganization of Borrower), fees, Charges, expenses, reasonable attorneys’
fees and any other sum chargeable to Borrower or any Guarantor under this
Agreement or any of the other Loan Documents, and all principal and interest due
in respect of the Loans.

 

“Party” means any Person which now or hereafter is a party to any of the Loan
Documents.

 

“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (as amended and supplemented from time to time).

 

“Payment Date” means (i) for LIBOR Loan Periods of one or three months, the last
day of the LIBOR Loan Period for such LIBOR Loan and (ii) for six and twelve
month LIBOR Loan Periods, each three-month anniversary as customarily determined
for a six or twelve month LIBOR Loan and the last day of the LIBOR Loan Period
for such LIBOR Loan.

 

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

 

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, which is
subject to Title IV of ERISA and is maintained by Borrower or to which Borrower
contributes or has an obligation to contribute.

 

“Permitted Acquisition” means any Acquisition by Borrower or any Subsidiary if
each of the following conditions are met:

 

(a)                                 no Default or Event of Default then exists
or would result therefrom;

 

(b)                                 after giving pro forma effect to such
Acquisition and any Indebtedness incurred in connection therewith, as of the
proposed closing date of such Acquisition, (1) Borrower is in compliance with
all financial covenants set forth in Section 6.12, (2) the Funded Debt to
Adjusted EBITDA Ratio does not exceed 1.25 to 1.00 and (3) Borrower and its
Subsidiaries, taken as a whole, are Solvent;

 

(c)                                  the Person to be acquired is engaged in the
business conducted by the Borrower and the Subsidiaries on the Closing Date or
in a similar business;

 

16

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

 

(d)                                 Borrower has provided Agent with written
notice of the proposed Acquisition at least 10 Business Days prior to the
anticipated closing date of the proposed Acquisition and, not later than 5
Business Days prior to the anticipated closing date of the proposed Acquisition,
copies of the then current acquisition agreement and other material documents
relative to the proposed Acquisition, provided that Borrower shall provide Agent
with the true, correct, and complete copies of the acquisition agreement and
other material documents no later than 30 days following the closing date of
such proposed Acquisition;

 

(e)                                  the board of directors or other similar
governing body of the Person to be acquired has not indicated publicly its
opposition to the consummation of such Acquisition; and

 

(f)                                   unless otherwise consented to by the
Required Lenders, the aggregate consideration paid or to be paid (whether Cash,
notes, Stock, or assumption of debt or otherwise) by the Borrower and/or its
Subsidiaries in any one such Acquisition does not exceed $50,000,000.

 

“Permitted Indebtedness” has the meaning set forth in Section 7.8.

 

“Permitted Liens” has the meaning set forth in Section 7.7.

 

“Person” means any individual or entity, including a trustee, sole
proprietorship, partnership, limited partnership, limited liability partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, entity or
government (whether Federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).

 

“Plan” means, with respect to Borrower or any of its Affiliates, at any time, an
employee benefit plan, as defined in Section 3(3) of ERISA, which Borrower or
any of its Affiliates maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.

 

“Pledge Agreement (BVI Sub)” means that certain Share Charge, governed by the
laws of the British Virgin Islands, among Borrower, Agent and BVI Sub, with
respect to the charge by Borrower of 65%  of the issued and outstanding shares
of BVI Sub.

 

“Prime Rate” means, at any time, the rate of interest per annum publicly
announced from time to time by the Agent as its prime rate.  Each change in the
Prime Rate shall be effective as of the opening of business on the day such
change in such prime rate occurs.  The parties hereto acknowledge that the rate
announced publicly by the Agent as its prime rate is an index or base rate and
shall not necessarily be its lowest or best rate charged to its customers or
other banks.

 

“Pro Rata Share” means, with respect to each Lender, the percentage of the Term
Commitment or the Revolving Commitment, as applicable, set forth opposite the
name of that Lender on Schedule 2.1. Any Lender’s Pro Rata Share with respect to
Swingline Loans or Letters of Credit shall be the same as its Pro Rata Share of
the Revolving Commitment.

 

“Proceeds” means “proceeds,” as such term is defined in the UCC and, in any
event, shall include: (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower or any Subsidiary from time to time
with respect to any Collateral; (b) any and all

 

17

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

 

payments (in any form whatsoever) made or due and payable to Borrower or any
Subsidiary from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of any Collateral by any governmental body,
authority, bureau or agency (or any Person acting under color of Governmental
Authority); (c) any claim of Borrower or any Subsidiary against third parties
for past, present or future infringement or dilution of any Intellectual
Property or for injury to the goodwill associated with any Intellectual
Property; (d) any recoveries by Borrower or any Subsidiary against third parties
with respect to any litigation or dispute concerning any Collateral; and (e) any
and all other amounts from time to time paid or payable under or in connection
with any Collateral, upon disposition or otherwise.

 

“Property” means any real property or personal property (including Intellectual
Property) owned, leased or operated by Borrower or any Subsidiary.

 

“Qualified ECP Guarantor” means, in respect of any Swap Obligation under an
Interest Rate Protection Agreement, each Credit Party that has total assets
exceeding $10,000,000 at the time the relevant guarantee or grant of the
relevant security interest becomes effective with respect to such Swap
Obligation under an Interest Rate Protection Agreement or such other person as
constitutes an “eligible contract participant” under the Commodity Exchange Act
and can cause another person to qualify as an “eligible contract participant” at
such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the
Commodity Exchange Act.

 

“Quarterly Payment Date” means each January 2, April 1, July 1 and October 1,
commencing with January 2, 2015.

 

“Recipient” means (a) Agent, (b) any Lender and (c) Fronting Bank, as
applicable.

 

“Regulation U” means Regulation U, as at any time amended, of the Board of
Governors of the Federal Reserve System, or any other regulation in substance
substituted therefor.

 

“Regulation X” means Regulation X, as at any time amended, of the Board of
Governors of the Federal Reserve System, or any other regulation in substance
substituted therefor.

 

“Reimbursement Obligation” means the obligation of Borrower to reimburse
Fronting Bank pursuant to Section 2.8.5 for amounts drawn under Letters of
Credit issued by Fronting Bank.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.

 

“Release” means, as to Borrower or any Subsidiary, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials in the indoor or outdoor
environment, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water or property.

 

“Request for Conversion/Continuation” has the meaning set forth in
Section 2.4.4.

 

18

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

 

“Required Lenders” means (a) all Lenders, with respect to those decisions
requiring unanimous consent of all Lenders as set forth in Section 12.16 or
where there are two (2) or fewer Lenders, (b) all affected Lenders, with respect
to those decisions requiring consent of all affected Lenders as set forth in
Section 12.16 and (c) with respect to all other decisions required of the
Lenders hereunder, those Lenders holding in the aggregate 50.1% or more of the
sum of (i) the unused Commitments, (ii) the aggregate outstanding principal
amount of Revolving Loans and participations in Letters of Credit and (iii) the
aggregate outstanding principal amount of Term Loans; provided that at any time
any Lender is a Defaulting Lender, such Defaulting Lender shall be excluded in
determining “Required Lenders”.

 

“Revolving Availability” means, at any time, an amount equal to the Revolving
Commitment then in effect less the Revolving Outstandings.

 

“Revolving Commitment” means Twenty-Five Million Dollars ($25,000,000), as
increased or decreased in accordance with the terms hereof. The respective Pro
Rata Shares of the Lenders with respect to the Revolving Commitment are set
forth in Schedule 2.1.

 

“Revolving Loan” means a loan made by the Lenders to Borrower pursuant to
Section 2.1.1.

 

“Revolving Note” means each promissory note executed and delivered by Borrower
to any Lender in the principal amount of its Pro Rata Share of the Revolving
Commitment, dated as of the Closing Date, together with any other notes
subsequently executed and delivered by Borrower to any Lender evidencing at any
time any portion of the Revolving Loans.

 

“Revolving Outstandings” means (a) the aggregate outstanding principal amount of
all outstanding Revolving Loans plus (b) the aggregate outstanding amount of all
L/C Obligations plus (c) the aggregate outstanding principal amount of all
outstanding Swingline Loans.

 

“Schedule of Documents” means the schedule listing certain documents and
information to be delivered in connection with this Agreement and the other Loan
Documents and the transactions contemplated hereunder and thereunder, in the
form of Schedule 1.1.

 

“Security Agreement” means that certain Security Agreement executed by Borrower
and the Guarantors in favor of Agent.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Solvent” means, with respect to any Person, that the aggregate present fair
saleable value of such Person’s assets is in excess of the total amount of its
probable liabilities on its existing debts as they become absolute and matured,
such Person has not incurred debts beyond its foreseeable ability to pay such
debts as they mature, and such Person has capital adequate to conduct the
business it is presently engaged in or is about to engage in.

 

“Stock” means all certificated and uncertificated shares, options, warrants,
general or limited partnership interests, participation or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock, or any other “equity security”(as such term

 

19

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

 

is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934).

 

“Subordinated Debt” means any Indebtedness of Borrower that (a) does not have
any scheduled principal payment, mandatory principal prepayment or sinking fund
payment due prior to the date that is one year after the Termination Date,
(b) is not secured by any Lien on any Property of Borrower or any of its
Subsidiaries, (c) is not guaranteed by any Subsidiary of Borrower unless such
Subsidiary is party to the Guaranty and such guaranty of such Indebtedness is
subordinated to the Guaranty, (d) is subordinated in right of payment to the
Obligations in a manner reasonably satisfactory to the Required Lenders and
contains such other protective terms with respect to senior debt (such as
amount, maturity, amortization, interest rate, covenants, defaults, remedies,
payment blockage and terms of subordination) as the Required Lenders may
reasonably require, (e) is subject to such financial and other covenants and
events of defaults as may be reasonably acceptable to Agent and Required Lenders
and (f) is subject to customary interest blockage and delayed acceleration
provisions as may be reasonably acceptable to Agent and Required Lenders.

 

“Subsidiary” means, as of any date of determination and with respect to any
Person, any corporation, limited liability company or partnership (whether or
not, in any case, characterized as such or as a “joint venture”), whether now
existing or hereafter organized or acquired: (a) in the case of a corporation or
limited liability company, of which a majority of the securities having ordinary
voting power for the election of directors or other governing body (other than
securities having such power only by reason of the happening of a contingency)
are at the time beneficially owned by such Person and/or one or more
Subsidiaries of such Person, or (b) in the case of a partnership, of which a
majority of the partnership or other ownership interests are at the time
beneficially owned by such Person and/or one or more of its Subsidiaries. Unless
otherwise specified, all references to Subsidiaries mean Subsidiaries of
Borrower.

 

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

 

“Swingline Commitment” means the Swingline Lender’s obligation to make Swingline
Loans pursuant to Section 2.9 in an amount up to, but not exceeding, Five
Million Dollars ($5,000,000.00), as such amount may be reduced from time to time
in accordance with the terms hereof.

 

“Swingline Lender” means Wells Fargo Bank, National Association, together with
its successors and assigns.

 

“Swingline Loan” means a loan made by the Swingline Lender to Borrower pursuant
to Section 2.9.

 

“Swingline Maturity Date” means, with respect to any Swingline Loan, the date
which is ten (10) Business Days after such loan is made.

 

“Swingline Note” means the promissory note of Borrower payable to the order of
the Swingline Lender in a principal amount equal to the amount of the Swingline
Commitment.

 

20

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

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, fines, additions
to tax or penalties applicable thereto.

 

“Term Commitment” means Twenty-Five Million Dollars ($25,000,000), as increased
or decreased in accordance with the terms hereof. The respective Pro Rata Shares
of the Lenders with respect to the Term Commitment are set forth in Schedule
2.1.

 

“Term Loan” means a loan made by the Lenders to Borrower pursuant to
Section 2.1.2.

 

“Term Note” means each promissory note executed and delivered by Borrower to any
Lender in the principal amount of its Pro Rata Share of the Term Commitment,
dated as of the Closing Date, together with any other notes subsequently
executed and delivered by Borrower to any Lender evidencing at any time any
portion of the Term Loans.

 

“Termination Date” means the date on which the Loans and all other Obligations
under this Agreement and the other Loan Documents are indefeasibly paid in full,
in Cash, and Borrower shall have no further right to borrow any moneys or obtain
other credit extensions or financial accommodations under this Agreement.

 

“UCC” means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that in the event by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of Agent’s Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State
of New York, the term “UCC” means the Uniform Commercial Code as enacted and in
effect in such other jurisdiction solely for purposes of the provisions hereof
relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.

 

“Uniform Customs” means the Uniform Customs and Practice for Documentary Credits
(2007 Revision), effective July, 2007 International Chamber of Commerce
Publication No. 600.

 

“Unused Revolving Loan Fee” has the meaning ascribed thereto in Section 3.2.

 

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

 

“Withholding Agent” means Borrower and Agent.

 

1.2                               Accounting Terms. All accounting terms used,
but not specifically defined, in this Agreement shall be construed and defined
in accordance with, and all financial data (including financial ratios and other
financial calculations) required to be submitted pursuant to this Agreement
shall be prepared in conformity with, GAAP, applied on a consistent basis, as in
effect from time to time and in a manner consistent with that used in preparing
the audited financial statements required by Section 8.1, except as otherwise
specifically prescribed herein. Notwithstanding the foregoing, for purposes of
determining compliance with any covenant (including the computation of any
financial covenant) contained herein, Indebtedness of

 

21

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

 

Borrower and its Subsidiaries shall be deemed to be carried at 100% of the
outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB
ASC 470-20 on financial liabilities shall be disregarded. If at any time any
change in GAAP would affect the computation of any financial ratio or
requirement set forth in any Loan Document, and either the Borrower or the
Required Lenders shall so request, the Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of the Required Lenders); provided that, until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) the Borrower shall provide to the Agent and the Lenders
financial statements and other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect to
such change in GAAP.

 

1.3                               UCC. Any terms that are defined in the UCC and
used, but not specifically defined, in this Agreement shall be construed and
defined in accordance with the UCC.

 

1.4                               Construction. For purposes of this Agreement
and the other Loan Documents, the following rules of construction shall apply,
unless specifically indicated to the contrary: (a) wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, the feminine and the
neuter; (b) the term “or” is not exclusive; (c) the term “including” (or any
form thereof) shall not be limiting or exclusive; (d) all references to statutes
and related regulations shall include any amendments thereof and any successor
statutes and regulations; (e) the words “herein,” “hereof” and “hereunder” or
other words of similar import refer to this Agreement as a whole, including the
exhibits and schedules hereto, as the same may from time to time be amended,
modified or supplemented, and not to any particular section, subsection or
clause contained in this Agreement; (f) all references in this Agreement or in
the schedules to this Agreement to sections, schedules, disclosure schedules,
exhibits, and attachments shall refer to the corresponding sections, schedules,
disclosure schedules, exhibits, and attachments of or to this Agreement; (g) all
references to any instruments or agreements, including references to any of the
Loan Documents, shall include any and all modifications or amendments thereto
and any and all extensions or renewals thereof (but only to the extent that such
modifications, amendments, extensions or renewals are not prohibited by any Loan
Document); (h) the word “will” shall be construed to have the same meaning and
effect as the word “shall”; (i) any reference herein to any Person shall be
construed to include such Person’s successors and assigns; (j) the term
“documents” includes any and all instruments, documents, agreements,
certificates, notices, reports, financial statements and other writings, however
evidenced, whether in physical or electronic form; and (k) in the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including”; the words “to” and “until” each mean “to but
excluding”; and the word “through” means “to and including”.

 

1.5                               Rounding. Any financial ratios calculated
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio or percentage is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

 

22

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

 

1.6                               Covenant Compliance Generally.  For purposes
of determining compliance under Sections 6 and 7, any amount in a currency other
than Dollars will be converted to Dollars in a manner consistent with that used
in calculating Net Income in the most recent annual financial statements of the
Borrower and its Subsidiaries delivered pursuant to Section 8.1.

 

1.7                               USA Patriot Act Notice. Each Lender is subject
to the Patriot Act and hereby notifies Borrower that pursuant to the
requirements of the Patriot Act, each Lender is required to obtain, verify and
record information that identifies Borrower, which information includes the name
and address of Borrower and other information that will allow each Lender to
identify Borrower in accordance with the Patriot Act.

 

2.                                      LOANS AND LETTERS OF CREDIT

 

2.1                               Loans-General.

 

2.1.1                     Subject to the terms and conditions of this Agreement,
each Lender shall, pro rata according to its Pro Rata Share of the Revolving
Commitment, extend Revolving Loans to Borrower from time to time until the
Maturity Date. The aggregate amount of Revolving Loans outstanding shall not
exceed at any time the Revolving Commitment. Prior to the Maturity Date,
Borrower may repay at any time any outstanding Revolving Loans, without premium
or penalty (except as provided in Section 14.2) and any amounts so repaid may be
reborrowed, up to the Revolving Availability. Revolving Loans shall be evidenced
by and repayable in accordance with the terms of the Revolving Notes and this
Agreement.

 

2.1.2                     Subject to the terms and conditions of this Agreement,
on the Closing Date, each Lender shall, pro rata according to its Pro Rata Share
of the Term Commitment, make a Term Loan to Borrower under the Term Commitment
such that the aggregate of all such Term Loans equals the Term Commitment.
Amounts repaid under the Term Commitment may not be reborrowed.  Term Loans
shall be evidenced by and repayable in accordance with the terms of the Term
Notes and this Agreement.

 

2.2                               Choice of Interest Rate. Any Loan shall, at
the option of Borrower, be made either as a Base Rate Loan or as a LIBOR Loan;
provided that if a Default or Event of Default has occurred and is continuing,
all Loans shall be made as Base Rate Loans. If Borrower fails to give notice to
Agent specifying whether any LIBOR Loan is to be repaid, continued as a LIBOR
Loan or converted to a Base Rate Loan on the last day of the applicable LIBOR
Loan Period, such LIBOR Loan shall be continued as a LIBOR Loan on the last day
of such LIBOR Loan Period for a LIBOR Loan Period of equal duration, unless a
Default or Event of Default has occurred and is continuing in which case such
LIBOR Loan shall be converted to a Base Rate Loan. Each Notice of Borrowing
shall, among other things, specify (a) the date of the proposed Loan, which
shall be a Business Day, (b) the amount of the Loan, (c) whether it is to be a
Base Rate Loan or a LIBOR Loan, and (d) the LIBOR Loan Period, if applicable.

 

2.3                               Request for Base Rate Loan. Borrower shall
give to Agent irrevocable notice of a request for a Base Rate Loan by delivering
a Notice of Borrowing by electronic mail transmission not later than 9:00 a.m.
(California time) on the date of the proposed Base Rate Loan.

 

23

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

 

2.4                               LIBOR Loans.

 

2.4.1                     Borrower shall give to Agent irrevocable notice of a
request for a LIBOR Loan by delivering a Notice of Borrowing by electronic mail
transmission not later than three (3) Business Days prior to the date of the
proposed LIBOR Loan. Notwithstanding the foregoing, a LIBOR Loan may be
requested by telephone by an Authorized Signatory of Borrower, in which case
Borrower shall confirm such request by promptly delivering a Notice of Borrowing
(conforming to the preceding sentence) in person or by electronic mail
transmission to Agent. Agent shall confirm its determination of the applicable
LIBOR Basis as of two (2) Business Days prior to the date of the requested LIBOR
Loan. Each determination by Agent of a LIBOR Basis shall, absent manifest error,
be deemed final, binding and conclusive upon Borrower. Agent shall incur no
liability whatsoever hereunder in acting upon any telephonic request for a LIBOR
Loan purportedly made by an Authorized Signatory of Borrower, and Borrower
hereby agrees to indemnify Agent from any loss, cost, expense or liability as a
result of so acting, except for any such loss, cost, expense or liability
resulting from Agent’s gross negligence or willful misconduct. The LIBOR Loan
Period for each LIBOR Loan shall be fixed at one, three, six or twelve months.

 

2.4.2                     Each LIBOR Loan shall be in a principal amount of not
less than $250,000 and in an integral multiple of $50,000 and (ii) the total
aggregate principal amount of all LIBOR Loans outstanding at any one time shall
not exceed the aggregate amount of the Commitments.

 

2.4.3                     Unless Agent otherwise consents, at no time shall
there be more than six (6) tranches of LIBOR Loans outstanding under the
Revolving Commitment.

 

2.4.4                     At least three (3) Business Days prior to (i) the last
day of the LIBOR Loan Period for a LIBOR Loan or (ii) the requested date of a
conversion of a Base Rate Loan to a LIBOR Loan, Borrower shall give written
notice substantially in the form of Exhibit D (a “Request for
Conversion/Continuation”) via electronic mail to Lender (which notice shall be
irrevocable three (3) Business Days prior before the requested date of the
applicable Loan) specifying (a) whether all or a portion of such LIBOR Loan
outstanding on the last day of the LIBOR Loan Period is to be continued in whole
or in part as a LIBOR Loan, in which case such notice shall also specify the
LIBOR Loan Period that Borrower shall have selected for such new LIBOR Loan;
provided, that if a Default or Event of Default has occurred and is continuing,
Borrower shall not have the option to continue such LIBOR Loan as a new LIBOR
Loan, (b) whether all or a portion of such LIBOR Loan outstanding on the last
day of the LIBOR Loan Period is to be converted in whole or in part as a Base
Rate Loan, or (c) whether all or a portion of such Base Rate Loan outstanding is
to be converted in whole or in part as a LIBOR Loan, in which case such notice
shall also specify the LIBOR Loan Period that Borrower shall have selected for
such LIBOR Loan; provided, that if a Default or Event of Default has occurred
and is continuing, Borrower shall not have the option to convert such Base Rate
Loan as a LIBOR Loan; provided, that any such conversion or continuation
described in clauses (a) and (b) above shall be in a principal amount of not
less than $250,000 and in an integral multiple of $50,000. Upon the last day of
such LIBOR Loan Period such LIBOR Loan will, subject to the provisions of this
Agreement, be so repaid, converted or continued, as applicable.

 

24

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

 

2.5                               Interest. Borrower shall pay interest to
Lender on each outstanding and unpaid Loan at (a) a fluctuating rate per annum
equal to the Base Rate, computed for the actual number of days elapsed on the
basis of a year of 365 days, if the Loan is a Base Rate Loan or (b) a rate per
annum equal to the Applicable LIBOR Rate, computed for the actual number of days
elapsed on the basis of a year of 360 days, if the Loan is a LIBOR Loan. Each
change in the interest rate under this Section due to a change in the Base Rate,
if applicable, shall take effect simultaneously with the corresponding change in
the Base Rate.

 

2.6                               Request and Disbursement. Any notice in
connection with a requested Loan under this Agreement that is received by Agent
after 9:00 a.m. (California time) on any Business Day, or at any time on a day
that is not a Business Day, shall be deemed received by Agent on the next
Business Day. Agent shall, upon the reasonable request of Borrower from time to
time, promptly provide to Borrower such information with regard to the
determination of the LIBOR Basis as Borrower may request. Promptly following
receipt of a request for a Loan, Agent shall notify each Lender by telephone,
facsimile or electronic mail (and if by telephone, promptly confirmed by
facsimile or electronic mail) of the date and type of Loan, the applicable LIBOR
Loan Period, and that Lender’s Pro Rata Share of the Loan. Not later than
12:00 p.m. (California time) on the date specified for any Loan (which must be a
Business Day), each Lender shall make its Pro Rata Share of the Loan in
immediately available funds available to Agent at Agent’s office. Prior to
2:00 p.m. (California time) on the date of a Loan, Agent shall, subject to the
satisfaction of the conditions set forth in Section 4, disburse the amount of
the requested Loan by deposit into the Direct Deposit Account or as otherwise
directed by Borrower.

 

2.7                               Payment of Interest. Interest shall be due and
payable to Agent for the ratable benefit of the Lenders, in arrears (a) if a
Base Rate Loan, on the Quarterly Payment Date, (b) if a LIBOR Loan, on the
Payment Date, (c) on the Maturity Date, and (d) if any interest accrues or
remains payable after the Maturity Date or during the continuance of an Event of
Default, upon demand by Agent.

 

2.8                               Letters of Credit.

 

2.8.1                     Availability.

 

(a)                                 As a sublimit under the Revolving
Commitment, subject to the terms and conditions hereof, Fronting Bank, in
reliance on the agreements of the Lenders set forth in Section 2.8.4, agrees to
issue standby or commercial letters of credit (each, a “Letter of Credit”) for
the account of the Borrower or, subject to Section 2.8.10, any Subsidiary
thereof, which Letters of Credit may be issued on any Business Day from the
Closing Date through but not including the thirtieth (30th) Business Day prior
to the Maturity Date in such form as may be approved from time to time by
Fronting Bank; provided, that Fronting Bank shall not issue any Letter of Credit
if, after giving effect to such issuance, (a) the L/C Obligations would exceed
the L/C Sublimit or (b) the Revolving Outstandings would exceed the Revolving
Commitment.

 

(b)                                 Each Letter of Credit shall (i) be
denominated in Dollars, (ii) expire on a date no more than twelve (12) months
after the date of issuance or last renewal of such Letter of Credit (subject to
automatic renewal for additional one (1) year periods pursuant to the terms of
the Letter of Credit Application or other documentation acceptable to Fronting

 

25

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

 

Bank), which date shall be no later than the fifth (5th) Business Day prior to
the Maturity Date and (iii) be subject to the Uniform Customs, in the case of a
commercial Letter of Credit, or ISP98, in the case of a standby Letter of
Credit, in each case as set forth in the Letter of Credit Application or as
determined by Fronting Bank and, to the extent not inconsistent therewith, the
laws of the State of New York.

 

(c)                                  Fronting Bank shall not at any time be
obligated to issue any Letter of Credit hereunder if (i) any order, judgment or
decree of any Governmental Authority or arbitrator shall by its terms purport to
enjoin or restrain Fronting Bank from issuing such Letter of Credit, or any
Applicable Law applicable to Fronting Bank or any request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over Fronting Bank shall prohibit, or request that Fronting Bank
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon Fronting Bank with respect to letters
of credit generally or such Letter of Credit in particular any restriction or
reserve or capital requirement (for which Fronting Bank is not otherwise
compensated) not in effect on the Closing Date, or any unreimbursed loss, cost
or expense that was not applicable, in effect or known to Fronting Bank as of
the Closing Date and that Fronting Bank in good faith deems material to it, or
(ii) the conditions set forth in Section 4.2 are not satisfied.  References
herein to “issue” and derivations thereof with respect to Letters of Credit
shall also include extensions or modifications of any outstanding Letters of
Credit, unless the context otherwise requires.  Fronting Bank shall not be under
any obligation to issue any Letter of Credit if any Lender is at that time a
Defaulting Lender, unless Fronting Bank has entered into arrangements, including
the delivery of cash collateral, satisfactory to Fronting Bank (in its sole
discretion) with Borrower or such Defaulting Lender to eliminate the Fronting
Bank’s actual or potential fronting exposure (after giving effect to
Section 3.15.1(d)) with respect to the Defaulting Lender arising from either the
Letter of Credit then proposed to be issued or that Letter of Credit and all
other then outstanding Letters of Credit as to which Fronting Bank has actual or
potential fronting exposure, as it may elect in its sole discretion.

 

2.8.2                     Procedure for Issuance of Letters of Credit.  Borrower
may from time to time request that Fronting Bank issue a Letter of Credit by
delivering to Fronting Bank at its applicable office (with a copy to Agent at
Agent’s Office) a Letter of Credit Application therefor, completed to the
satisfaction of Fronting Bank, and such other certificates, documents and other
papers and information as Fronting Bank or Agent may request.  Upon receipt of
any Letter of Credit Application, Fronting Bank shall process such Letter of
Credit Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to Section 2.8.1 and Section 4, promptly
issue the Letter of Credit requested thereby (but in no event shall Fronting
Bank be required to issue any Letter of Credit earlier than three (3) Business
Days after its receipt of the Letter of Credit Application therefor and all such
other certificates, documents and other papers and information relating thereto)
by issuing the original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed by Fronting Bank and Borrower.  Fronting Bank shall
promptly furnish to Borrower and Agent a copy of such Letter of Credit and Agent
shall promptly notify each Lender of the issuance and upon request by any
Lender, furnish to such Lender a copy of such Letter of Credit and the amount of
such Lender’s participation therein. Each Letter of Credit shall be subject to
the additional terms and conditions of the letter of credit agreement and
related documents, if any, required by Fronting Bank in connection with

 

26

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

 

the issuance thereof (each, as supplemented, modified, amended, extended,
restated or supplanted, a “Letter of Credit Agreement”).

 

2.8.3                     Commissions and Other Charges.

 

(a)                                 Letter of Credit Commissions.  Borrower
shall pay to Agent, for the account of Fronting Bank and the L/C Participants, a
letter of credit commission with respect to each issuance of a Letter of Credit
in the amount equal to (i) in the case of commercial Letters of Credit, the
applicable amount under Fronting Bank’s generally applicable schedule of fees
and charges then in effect for such issuance and (ii) in the case of standby
Letters of Credit, the daily amount available to be drawn under such standby
Letters of Credit times the Applicable LIBOR Margin with respect to Revolving
Loans that are LIBOR Rate Loans (determined, in each case, on a per annum
basis).  Such commission shall be payable quarterly in arrears on the last
Business Day of each calendar quarter, on the Maturity Date and thereafter on
demand of Agent.  Agent shall, promptly following its receipt thereof,
distribute to Fronting Bank and the L/C Participants all commissions received
pursuant to this Section 2.8.3 in accordance with their respective Pro Rata
Shares of the Revolving Commitment.

 

(b)                                 Fronting Fee. Borrower shall pay to Fronting
Bank, at any time that Wells Fargo Bank, National Association is not Fronting
Bank, a fronting fee as agreed to by Fronting Bank and Borrower.

 

(c)                                  Other Fees, Costs, Charges and Expenses. 
In addition to the foregoing fees and commissions, Borrower shall pay or
reimburse Fronting Bank for such normal and customary fees, costs, charges and
expenses as are incurred or charged by Fronting Bank in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit issued
by it.

 

Any letter of credit fees or other amounts described above not yet paid that are
otherwise payable for the account of a Defaulting Lender with respect to any
Letter of Credit as to which such Defaulting Lender has not provided cash
collateral satisfactory to Fronting Bank shall be payable, to the maximum extent
permitted by Applicable Law, to the other Lenders in accordance with the upward
adjustments in the respective Pro Rata Shares allocable to such Letter of Credit
pursuant to Section 3.15.1(d) with the balance of such unpaid fee, if any,
payable to Fronting Bank for its own account.

 

2.8.4                     L/C Participations.

 

(a)                                 Fronting Bank irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce Fronting Bank to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept
and purchase and hereby accepts and purchases from Fronting Bank, on the terms
and conditions hereinafter stated, for such L/C Participant’s own account and
risk an undivided interest equal to such L/C Participant’s Pro Rata Share of the
Revolving Commitment in Fronting Bank’s obligations and rights under and in
respect of each Letter of Credit issued by it hereunder and the amount of each
draft paid by Fronting Bank thereunder.  Each L/C Participant unconditionally
and irrevocably agrees with Fronting Bank that, if a draft is paid under any
Letter of Credit issued by Fronting Bank for which Fronting

 

27

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

 

Bank is not reimbursed in full by Borrower through a Revolving Loan or otherwise
in accordance with the terms of this Agreement, such L/C Participant shall pay
to Fronting Bank upon demand at Fronting Bank’s address for notices specified
herein an amount equal to such L/C Participant’s Pro Rata Share of the Revolving
Commitment of the amount of such draft, or any part thereof, which is not so
reimbursed.

 

(b)                                 Upon becoming aware of any amount required
to be paid by any L/C Participant to Fronting Bank pursuant to
Section 2.8.4(a) in respect of any unreimbursed portion of any payment made by
Fronting Bank under any Letter of Credit, issued by it, Fronting Bank shall
notify Agent of such unreimbursed amount and Agent shall notify each L/C
Participant (with a copy to the Fronting Bank) of the amount and due date of
such required payment and such L/C Participant shall pay to Agent (which, in
turn shall pay Fronting Bank) the amount specified on the applicable due date. 
If any such amount is paid to Fronting Bank after the date such payment is due,
such L/C Participant shall pay to Fronting Bank on demand, in addition to such
amount, the product of (i) such amount, times (ii) the daily average Federal
Funds Rate as determined by Agent during the period from and including the date
such payment is due to the date on which such payment is immediately available
to Fronting Bank, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360.  A
certificate of Fronting Bank with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error.  With respect to
payment to Fronting Bank of the unreimbursed amounts described in this Section,
if the L/C Participants receive notice that any such payment is due (A) prior to
1:00 p.m. on any Business Day, such payment shall be due that Business Day, and
(B) after 1:00 p.m. on any Business Day, such payment shall be due on the
following Business Day.

 

(c)                                  Whenever, at any time after Fronting Bank
has made payment under any Letter of Credit issued by it and has received from
any L/C Participant its Pro Rata Share of the Revolving Commitment of such
payment in accordance with this Section, Fronting Bank receives any payment
related to such Letter of Credit (whether directly from Borrower or otherwise),
or any payment of interest on account thereof, Fronting Bank will distribute to
such L/C Participant its pro rata share thereof; provided, that in the event
that any such payment received by Fronting Bank shall be required to be returned
by Fronting Bank, such L/C Participant shall return to Fronting Bank the portion
thereof previously distributed by Fronting Bank to it.

 

2.8.5                     Reimbursement Obligation of Borrower.  In the event of
any drawing under any Letter of Credit, Borrower agrees to reimburse (either
with the proceeds of a Revolving Loan as provided for in this Section or with
funds from other sources), in same day funds, Fronting Bank on each date on
which Fronting Bank notifies Borrower of the date and amount of a draft paid by
it under any Letter of Credit for the amount of (a) such draft so paid and
(b) any amounts referred to in Section 2.8.3(c) incurred by Fronting Bank in
connection with such payment.  Unless Borrower shall immediately notify Fronting
Bank that Borrower intends to reimburse Fronting Bank for such drawing from
other sources or funds, Borrower shall be deemed to have timely given a Notice
of Borrowing to Agent requesting that the Lenders make a Revolving Loan bearing
interest at the Base Rate on the applicable repayment date in the amount of
(i) such draft so paid and (ii) any amounts referred to in
Section 2.8.3(c) incurred by Fronting Bank in connection with such payment, and
the Revolving Lenders shall make a

 

28

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

 

Revolving Loan bearing interest at the Base Rate in such amount, the proceeds of
which shall be applied to reimburse Fronting Bank for the amount of the related
drawing and such fees and expenses.  Each t Lender acknowledges and agrees that
its obligation to fund a Revolving Loan in accordance with this Section to
reimburse Fronting Bank for any draft paid under a Letter of Credit issued by it
is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, non-satisfaction of the conditions
set forth in Section 2.6 or Section 4.  If Borrower has elected to pay the
amount of such drawing with funds from other sources and shall fail to reimburse
Fronting Bank as provided above, the unreimbursed amount of such drawing shall
bear interest at the rate which would be payable on any outstanding Base Rate
Loans which were then overdue from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full.

 

2.8.6                     Obligations Absolute.  Borrower’s obligations under
this Section 2.8 (including, without limitation, the Reimbursement Obligation)
shall be absolute and unconditional under any and all circumstances and
irrespective of any set off, counterclaim or defense to payment which Borrower
may have or have had against Fronting Bank or any beneficiary of a Letter of
Credit or any other Person.  Borrower also agrees that Fronting Bank and the L/C
Participants shall not be responsible for, and Borrower’s Reimbursement
Obligation under Section 2.8.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among Borrower and any beneficiary of any Letter of Credit or
any other party to which such Letter of Credit may be transferred or any claims
whatsoever of Borrower against any beneficiary of such Letter of Credit or any
such transferee.  Fronting Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit issued by
it, except for errors or omissions caused by Fronting Bank’s gross negligence or
willful misconduct, as determined by a court of competent jurisdiction by final
nonappealable judgment.  Borrower agrees that any action taken or omitted by
Fronting Bank under or in connection with any Letter of Credit issued by it or
the related drafts or documents, if done in the absence of gross negligence or
willful misconduct shall be binding on Borrower and shall not result in any
liability of Fronting Bank or any L/C Participant to Borrower.  The
responsibility of Fronting Bank to Borrower in connection with any draft
presented for payment under any Letter of Credit issued to it shall, in addition
to any payment obligation expressly provided for in such Letter of Credit, be
limited to determining that the documents (including each draft) delivered under
such Letter of Credit in connection with such presentment substantially conforms
to the requirements under such Letter of Credit.

 

2.8.7                     Effect of Letter of Credit Application and Letter of
Credit Agreement.  To the extent that any provision of any Letter of Credit
Application or any Letter of Credit Agreement related to any Letter of Credit is
inconsistent with the provisions of this Section 2.8, the provisions of this
Section 2.8 shall apply.

 

2.8.8                     Resignation of Fronting Bank.

 

(a)                                 Any Lender may at any time resign from its
role as Fronting Bank hereunder upon not less than thirty (30) days prior notice
to Borrower and Agent (or such shorter period of time as may be acceptable to
Borrower and Agent).

 

29

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

 

(b)                                 The resigning Fronting Bank shall retain all
the rights, powers, privileges and duties of Fronting Bank hereunder with
respect to all Letters of Credit issued by it that are outstanding as of the
effective date of its resignation as Fronting Bank and all L/C Obligations with
respect thereto (including, without limitation, the right to require the
Revolving Lenders to take such actions as are required under Section 2.8.4). 
Without limiting the foregoing, upon the resignation of a Lender as Fronting
Bank hereunder, Borrower may, or at the request of such resigned Fronting Bank
Borrower shall, use commercially reasonable efforts to, arrange for one or more
of the other Lenders to issue Letters of Credit as Fronting Bank hereunder in
substitution for the Letters of Credit, if any, issued by such resigned Fronting
Bank and outstanding at the time of such resignation, or make other arrangements
satisfactory to the resigned Fronting Bank to effectively cause another Lender
to assume the obligations of the resigned Fronting Bank with respect to any such
Letters of Credit.

 

2.8.9                     Reporting of Letter of Credit Information..  At any
time that there is a Fronting Bank that is not also the financial institution
acting as Agent, then (a) on the last Business Day of each calendar month,
(b) on each date that a Letter of Credit is amended, terminated or otherwise
expires, (c) on each date that a Letter of Credit is issued or the expiry date
of a Letter of Credit is extended, and (d) upon the request of Agent, Fronting
Bank shall deliver to Agent a report setting forth in form and detail reasonably
satisfactory to Agent information (including, without limitation, any
reimbursement, cash collateral, or termination in respect of Letters of Credit
issued by Fronting Bank) with respect to each Letter of Credit issued by
Fronting Bank that is outstanding hereunder.  No failure on the part of Fronting
Bank to provide such information pursuant to this Section 2.8.9 shall limit the
obligations of Borrower or any Lender hereunder with respect to its
reimbursement and participation obligations hereunder.

 

2.8.10              Letters of Credit Issued for Subsidiaries.  Notwithstanding
that a Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Subsidiary, Borrower shall be
obligated to reimburse, or to cause the applicable Subsidiary to reimburse
Fronting Bank hereunder for any and all drawings under such Letter of Credit. 
Borrower hereby acknowledges that the issuance of Letters of Credit for the
account of any of its Subsidiaries inures to the benefit of Borrower and that
Borrower’s business derives substantial benefits from the businesses of such
Subsidiaries.

 

2.9                               Swingline Loans.

 

2.9.1                     Swingline Commitment. The Swingline Lender shall from
time to time from the Closing Date through the day prior to the Maturity Date
make loans to Borrower in such amounts as Borrower may request, up to an
aggregate maximum amount of $5,000,000 (each, a “Swingline Loan” ), provided
that (a) the amount of each such Swingline Loan does not exceed the Revolving
Availability at such time; and (b) without the consent of all of the Lenders, no
Swingline Loan may be made during the continuation of an Event of Default,
provided written notice of such Event of Default shall have been provided to
Swingline Lender by Agent or a Lender sufficiently in advance of the making of
such Swingline Loan.

 

2.9.2                     Request for Swingline Loan. Borrower may borrow, repay
and reborrow under the Swingline Commitment, subject to the remaining
availability under the Swingline Commitment and the Revolving Commitment, upon
electronic mail request by an Authorized

 

30

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

 

Signatory of Borrower made to Agent not later than 2:00 p.m. (California time),
on the Business Day of the requested borrowing. Each Swingline Loan shall be in
a principal amount of not less than $250,000 and in an integral multiple of
$100,000 thereafter. Promptly after receipt of such a request for borrowing,
Agent shall provide telephonic verification to the Swingline Lender that, after
giving effect to such request, availability under the Swingline Commitment and
the Revolving Commitment will exist (and such verification shall be promptly
confirmed in writing by telecopier or electronic mail). Swingline Loans
requested by Borrower not later than 2:00 p.m. (California time) on a Business
Day shall be made by Swingline Lender on such day. Swingline Loans requested by
Borrower after such time on a Business Day shall be made by Swingline Lender as
soon as possible, but no later than the following Business Day. Borrower shall
notify the Swingline Lender of its intention to make a repayment of a Swingline
Loan not later than 1:00 p.m. (California time) on the date of repayment. If the
Swingline Lender receives repayment, after 3:00 p.m. (California time), on a
Business Day, such payment shall be deemed received on the next Business Day.
The Swingline Lender shall promptly notify Agent of the Swingline Loan
outstanding each time there is a change therein.

 

2.9.3                     Swingline Interest Rate. Swingline Loans shall bear
interest at a fluctuating rate per annum equal to the Base Rate or at a rate
otherwise agreed to by the Swingline Lender and Borrower. Interest shall be
payable quarterly on such dates as may be specified in writing by the Swingline
Lender and in any event on the Maturity Date. The Swingline Lender shall be
responsible for invoicing Borrower for such interest. The interest payable on
Swingline Loans is solely for the account of the Swingline Lender (subject to
Section 2.9.5 below).

 

2.9.4                     Swingline Maturity Date. Subject to Section 2.9.6
below, the principal amount of all Swingline Loans shall be due and payable on
the earlier of (a) ten (10) Business Days after such Swingline Loan is made,
(b) the Maturity Date or (c) upon the occurrence of any Event of Default. The
principal amount of a Swingline Loan may be repaid, without premium or penalty,
at any time before becoming due, including on the same day as such Swingline
Loan is made.

 

2.9.5                     Swingline Participation. Upon the making of a
Swingline Loan, each Lender shall be deemed to have purchased from the Swingline
Lender a participation therein in an amount equal to that Lender’s Pro Rata
Share of the Revolving Commitment times the amount of the Swingline Loan. Upon
demand made by the Swingline Lender, which shall occur not more than once per
week, each Lender shall, according to its Pro Rata Share of the Revolving
Commitment, promptly provide to the Swingline Lender an amount equal to its
participation purchase price as described in the foregoing sentence. The
obligation of each Lender to so provide its purchase price to the Swingline
Lender shall be absolute and unconditional (except for modifications or demand
made by the Swingline Lender) and shall not be affected by the existence of an
uncured Event of Default; provided that no Lender shall be obligated to purchase
its Pro Rata Share of (a) the Swingline Loans to the extent that, after giving
effect to such Swingline Loan, the Revolving Outstandings at any time exceed the
Revolving Commitment, (b) Swingline Loans to the extent that, after giving
effect to such Swingline Loan, the aggregate amount of Swingline Loans
outstanding exceed $5,000,000, or (c) any Swingline Loan made (absent the
consent of all of the Lenders) during the continuation of an Event of Default if
written notice of such Event of Default shall have been provided to Swingline
Lender

 

31

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

 

by Agent or a Lender sufficiently in advance of the making of such Swingline
Loan; provided, that the obligation of such Lender to purchase such
participation shall be reinstated upon the date on which such Event of Default
has been waived in accordance with this Agreement. Each Lender that has provided
to the Swingline Lender the purchase price due for its participation in
Swingline Loans shall thereupon acquire a pro rata participation, to the extent
of such payment, in the claim of the Swingline Lender against Borrower for
principal and interest and shall share, in accordance with that pro rata
participation, in any principal payment made by Borrower with respect to such
claim and in any interest payment made by Borrower (but only with respect to
periods subsequent to the date such Lender paid the Swingline Lender its
purchase price) with respect to such claim.

 

2.9.6                     Swingline Repayment; Revolving Loans. The Swingline
Lender may, at any time, in its sole discretion, but not less than two Business
Days’ prior written notice to Borrower and Lenders, demand payment of the
Swingline Loans by way of a Revolving Loan in the full amount or any portion of
the outstanding amount of Swingline Loans. In each case, Agent shall
automatically provide the advances made by each Lender to the Swingline Lender
(which the Swingline Lender shall then apply to the outstanding amount of the
Swingline Loans). In the event that Borrower fails to request a Revolving Loan
within the time specified by this Section 2.9.6 on any such date, Agent may, but
is not required to, without notice to or the consent of Borrower, cause Base
Rate Loans to be made by the Lenders under the Revolving Commitment in amounts
which are sufficient to reduce the outstanding amount of the Swingline Loans as
required above. The proceeds of such advances shall be paid directly to the
Swingline Lender for application to the outstanding amount of the Swingline
Loans.

 

2.10                        Use of Proceeds. On the Closing Date, the proceeds
of the Loans shall be used by Borrower and its Subsidiaries solely as follows:
(a) first, to repay in full the Indebtedness outstanding under the Existing
Credit Agreement and (b) second, to pay fees, commissions and expenses required
to be paid under Section 4.1. After the Closing Date, the proceeds of the Loans
shall be used for working capital needs and general corporate purposes
(including Capital Expenditures, Permitted Acquisitions and Distributions, in
each case, to the extent permitted hereunder).

 

3.                                      PAYMENT AND FEES.

 

The following provisions shall apply to all Loans made by the Lenders to
Borrower pursuant to this Agreement.

 

3.1                               Principal and Interest.

 

3.1.1                     Interest. Interest shall be payable on the outstanding
daily unpaid principal amount of each Loan from the date thereof until payment
in full is made and shall accrue and be payable in arrears at the rates set
forth or provided for herein before and after Default, before and after
maturity, before and after judgment, and before and after the commencement of
any proceeding under any Debtor Relief Law, with interest accruing on any
overdue amounts at the Default Rate to the fullest extent permitted by
Applicable Law.

 

32

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

 

3.1.2                     Default Interest. Upon the occurrence and during the
continuance of an Event of Default, interest on all outstanding Obligations
shall, upon the election of Agent, after approval of Required Lenders pursuant
to Section 9.2.1, confirmed by written notice from Agent to Borrower, accrue and
be payable at the Default Rate. Interest accruing at the Default Rate shall be
payable to Agent, for the ratable benefit of Lenders, on demand and in any event
on the Maturity Date. Agent shall not be required to (a) accelerate the maturity
of the Loans or (b) exercise any other rights or remedies under the Loan
Documents, in order to charge the Default Rate. Upon the occurrence and during
the continuance of an Event of Default specified in Sections 9.1.5, 9.1.6, or
9.1.7, the interest rate shall be increased automatically to the Default Rate
without the necessity of any action by Agent.

 

3.1.3                     Principal. If not sooner paid, Borrower shall repay
the aggregate outstanding principal amount of the Loans as follows:

 

(a)                                 the amount, if any, by which the Revolving
Outstandings at any time exceed the Revolving Commitment shall be payable
immediately;

 

(b)                                 commencing on October 1, 2015, the aggregate
outstanding principal amount of the Term Loans shall be payable in installments
to the Agent, for the ratable benefit of the Lenders, as set forth below:

 

Term Loan Amortization
Payment Date

 

Principal Amount

October 1, 2015

 

$5,000,000

January 2, 2016

 

$1,250,000

April 1, 2016

 

$1,250,000

July 1, 2016

 

$1,250,000

October 1, 2016

 

$1,250,000

January 2, 2017

 

$1,250,000

April 1, 2017

 

$1,250,000

July 1, 2017

 

$1,250,000

Maturity Date

 

Aggregate outstanding principal balance

 

(c)                                  the aggregate outstanding principal amount
of the Loans shall in any event be payable on the Maturity Date.

 

3.1.4                     Voluntary Prepayment; Termination of Revolving
Commitment.

 

(a)                                 Any Loan may, at any time and from time to
time, voluntarily be paid or prepaid in whole or in part without premium or
penalty, except that with respect to any voluntary prepayment (i) each
prepayment shall be in an aggregate principal amount of at least $250,000,
(ii) each prepayment of principal on any LIBOR Loan shall be accompanied by
payment of interest accrued to the date of payment on the amount of principal
paid, and (iii) any payment or prepayment of all or any part of any LIBOR Loan
on a day other than the last day of the applicable LIBOR Loan Period shall be
subject to Section 14.2. Provided no Event of

 

33

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

 

Default exists, any prepayment shall be applied to Base Rate Loans or LIBOR
Loans as directed by Borrower, subject to Section 3.9.

 

(b)                                 Upon at least five (5) Business Days prior
written notice to Agent (which notice Agent shall promptly transmit to each of
the Lenders), Borrower may terminate the Revolving Commitment in whole or reduce
the Revolving Commitment in increments of $250,000, without premium or penalty,
prior to the scheduled Maturity Date; provided, that at such time Borrower shall
(i) prepay all outstanding Revolving Loans to the extent they exceed the reduced
Revolving Commitment amount elected by Borrower, (ii) pay all accrued interest
and fees thereon, and (iii) reimburse Lenders for any reasonable and documented,
out-of-pocket expenses incurred by Lenders in connection with such prepayment
and termination, including any amounts set forth in Section 14.2.

 

3.1.5                     Maximum Rate of Interest. In no event shall the
aggregate of all interest on the Obligations charged or collected pursuant to
the terms of this Agreement or pursuant to the Notes exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. In the event that such a court determines
that a Lender has charged or received interest under this Agreement or the Notes
in excess of the highest applicable rate, the rate in effect under this
Agreement or the Notes shall automatically be reduced to the maximum rate
permitted by Applicable Law and Lender shall promptly apply such excess to
reduce the principal balance of the Obligations, or if the principal balance of
the Obligations owing have been paid in full, Lender shall promptly apply such
excess to reduce any other Obligations, and if all Obligations have been paid in
full, then Lender shall refund to Borrower any interest received by Lender in
excess of the maximum lawful rate; provided, that if at any time thereafter the
rate of interest payable hereunder is less than the highest applicable rate,
Borrower shall continue to pay interest hereunder at the highest applicable
rate, until such time as the total interest received by Lender from the making
of Loans hereunder is equal to the total interest that Lender would have
received had the interest rate payable hereunder been (but for the operation of
this Section 3.1.5) the interest rate payable since the Closing Date as
otherwise provided in this Agreement. It is the intent of this Agreement that
Borrower not pay or contract to pay, and that Lender not receive or contract to
receive, directly or indirectly, interest in excess of that which may be paid by
Borrower under Applicable Law.

 

3.2                               Unused Revolving Loan Fee. Borrower shall pay
to Agent a non-refundable fee for the ratable benefit of the Lenders (the
“Unused Revolving Loan Fee”) commencing as of the Closing Date, payable
quarterly in arrears, on each Quarterly Payment Date, commencing on January 2,
2015, and ending on the Termination Date. The Unused Revolving Loan Fee shall
be, for each day after the Closing Date through the Termination Date, an amount
equal to (a) the difference between (i) the Revolving Commitment, and (ii) the
closing balance of the Revolving Loans for such day, not including Swingline
Loans but including issued and outstanding Letters of Credit, multiplied by
(b) (i) 0.20% if the Deposit Amount as of the most recent Quarterly Payment Date
was greater than or equal to $10,000,000 or (ii) 0.30% otherwise, the product of
which is then divided by (c) 360.

 

3.3                               Fees to Agent. On each date upon which a fee
is payable or costs are reimbursable, Borrower shall pay to Agent such fees or
cost reimbursements as agreed upon by

 

34

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

 

letter agreement between Borrower and Agent in accordance with such letter
agreement, which fees and cost reimbursements shall be solely for Agent’s own
account and are nonrefundable, subject to the terms of such letter agreement.

 

3.4                               Late Payments. If any installment of principal
or interest or any fee or cost or other amount payable under any Loan Document
to any Lender is not paid when due, it shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate, to
the fullest extent permitted by Applicable Law. Accrued and unpaid interest on
past due amounts (including, without limitation, interest on past due interest)
shall be compounded monthly, on the last day of each calendar month, to the
fullest extent permitted by Applicable Law.

 

3.5                               [Reserved].

 

3.6                               Term of Revolving Commitment. The Revolving
Commitment shall be in effect until the Maturity Date unless earlier terminated
as provided in this Agreement. The Revolving Loans and all other Obligations
shall be automatically due and payable in full on the Maturity Date, unless
earlier due and payable or terminated as provided in this Agreement.

 

3.7                               Note and Accounting. Agent shall provide a
quarterly accounting to Borrower of the Loans and other transactions under this
Agreement, including Agent’s calculation of principal and interest. Each and
every such accounting shall, absent manifest error, be deemed final, binding and
conclusive upon Borrower, unless Borrower, within sixty (60) days after the date
any such accounting is rendered, provides Agent with written notice of any
objection which Borrower may have to any item in such accounting, describing the
basis for such objection with reasonable specificity. In that event, only those
items expressly objected to in such notice shall be deemed to be disputed by
Borrower, and in the event the parties cannot resolve their dispute, such
dispute shall be resolved in accordance with the terms and conditions of
Section 11.

 

3.8                               Manner of Payment.

 

3.8.1                     When Payments Due.

 

(a)                                 Except as expressly set forth in this
Agreement, each payment (including any prepayment) by Borrower on account of the
principal of or interest on the Loans and any other amount owed to Lenders on
account of the Obligations shall be made not later than 12:00 p.m. (California
time) on the date specified for payment under this Agreement to Agent in lawful
money of the United States and in immediately available funds. Any payment
received by Agent on a day that is not a Business Day or after 12:00 p.m.
(California time) on a Business Day, shall be deemed received on the next
Business Day. The amount of all payments received by Agent for the account of
each Lender shall be immediately paid by Agent to the applicable Lender in
immediately available funds and, if such payment was received by Agent by
12:00 p.m. (California time), on a Business Day and not so made available to the
account of a Lender on that Business Day, Agent shall reimburse that Lender for
the cost to such Lender of funding the amount of such payment at the Federal
Funds Rate. All payments shall be made in lawful money of the United States of
America.

 

35

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

 

(b)                                 If any payment on any Obligation is
specified to be made upon a day that is not a Business Day, it shall (subject to
the provisions of the LIBOR Loan Period which may require payment by one
(1) earlier Business Day) be deemed to be specified to be made on the next
succeeding day that is a Business Day, and such extension of time shall in such
case be included in computing interest and fees, if any, in connection with such
payment.

 

3.8.2                     No Deductions. Borrower shall pay principal, interest,
fees, and all other amounts due on the Obligations without set-off or
counterclaim or any deduction whatsoever.

 

3.8.3                     Inadequate Payments. If, on the date on which any
amount (including any payment of principal, interest or other costs and
expenses) shall be due and payable by Borrower to Lenders, the amount received
by any such Lenders from Borrower shall not be adequate to pay the entire amount
then due and payable, then Agent shall be authorized, but shall not be
obligated, to make a Base Rate Loan to Borrower in the amount of the deficiency.

 

3.9                               Application of Payments. Borrower irrevocably
waives the right to direct the application of any and all payments received at
any time by any Lender from or on behalf of Borrower and specifically waives the
provisions of California Civil Code Sections 1479 and 2822 or similar provisions
under any other Applicable Law giving Borrower the right to designate
application of payments. All amounts received by Agent for application to the
Obligations shall be applied by Agent in the following order of priority:
(a) first, to the payment of any fees then due and payable to Agent, Fronting
Bank or any Lender, (b) second, to the payments of all other amounts not
otherwise referred to in the other clauses of this Section 3.9 then due and
payable hereunder or under the other Loan Documents to Agent, Fronting Bank or
any Lender (including any indemnities and any costs and expenses incurred by
Agent, Fronting Bank or any Lender as a result of a Default or an Event of
Default), (c) third, to the payment of interest then due and payable on the
Loans, (d) fourth, to the payment of principal then due and payable on the Loans
and (e) fifth, to the payment of any liabilities then due and payable under any
Interest Rate Protection Agreements or Bank Products Agreements. Notwithstanding
the foregoing, Borrower irrevocably agrees that, during the occurrence of an
Event of Default, Lenders shall have the continuing exclusive right to determine
the order and method of the application of payments against the then due and
payable Obligations in Lenders’ sole discretion and to revise such application
prospectively or retroactively in Lenders’ sole discretion.

 

3.10                        Use of Proceeds. Borrower will not, directly or
indirectly, use any part of any Loan proceeds for the purpose of purchasing or
carrying any margin stock within the meaning of Regulation U or to extend credit
to any Person for the purpose of purchasing or carrying any such margin stock,
or for any purpose which violates, or is inconsistent with, Regulation X.

 

3.11                        All Obligations to Constitute One Obligation. All
Obligations related to the Loans constitute one general obligation of Borrower
and shall be secured by Agent’s Liens upon all of the Collateral.

 

3.12                        Authorization to Make Loans. Agent and each Lender
(each, an “Authorized Party”) are authorized to make the Loans based on
telephonic or other oral or written instructions received from any Person that
an Authorized Party believes in good faith to be an authorized representative of
Borrower, or at the discretion of such Authorized Party, if such Loans are

 

36

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

 

necessary to satisfy any of the Obligations. Borrower consents to the
recordation of any telephonic or other communications between an Authorized
Party and Borrower for the purpose of maintaining such party’s business records
of such transactions.

 

3.13                        Authorization to Debit Accounts. Borrower authorizes
Agent, upon prior notice to Borrower, to debit any of Borrower’s bank accounts
with Agent for the purpose of Borrower’s payment of interest, fees or, to the
extent reimbursable under this Agreement or any other Loan Document, costs and
expenses due and payable by Borrower to Agent or the Lenders under this
Agreement.

 

3.14                        Agent’s Right to Assume Funds Available for Loans.
Unless Agent shall have been notified by any Lender no later than 10:00 a.m.
(California time) on the Business Day of the proposed funding by Agent of any
Loan that such Lender does not intend to make available to Agent such Lender’s
portion of the total amount of such Loan, Agent may assume that such Lender has
made such amount available to Agent on the date of the Loan and Agent may, in
reliance upon such assumption, make available to Borrower a corresponding
amount. If Agent has made funds available to Borrower based on such assumption
and such corresponding amount is not in fact made available to Agent by such
Lender, Agent shall be entitled to recover such corresponding amount on demand
from such Lender. If such Lender does not pay such corresponding amount
forthwith upon Agent’s demand therefor, Agent promptly shall notify Borrower and
Borrower shall pay such corresponding amount to Agent. Agent also shall be
entitled to recover from such Lender interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by Agent to Borrower to the date such corresponding amount is recovered by
Agent, at a rate per annum equal to the daily Federal Funds Rate. Nothing herein
shall be deemed to relieve any Lender from its obligation to fulfill its Pro
Rata Share of the Commitments or to prejudice any rights which Agent or Borrower
may have against any Lender as a result of any default by such Lender hereunder.

 

3.15                        Defaulting Lenders.

 

3.15.1              Adjustments. Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then,
until such time as that Lender is no longer a Defaulting Lender, to the extent
permitted by Applicable Law:

 

(a)                                 Waivers and Amendments. That Defaulting
Lender’s right to approve or disapprove any amendment, waiver or consent with
respect to this Agreement shall be restricted as set forth in Section 12.16.

 

(b)                                 Reallocation of Payments. Any payment of
principal, interest, fees or other amounts received by Agent for the account of
that Defaulting Lender (whether voluntary or mandatory, at maturity, or
otherwise, and including any amounts made available to the Agent by that
Defaulting Lender pursuant to Section 12.10), shall be applied at such time or
times as may be determined by Agent as follows: first, to the payment of any
amounts owing by that Defaulting Lender to Agent hereunder; second, to the
payment on a pro rata basis of any amounts owing by that Defaulting Lender to
Fronting Bank or Swingline Lender hereunder; third, if so determined by Agent or
requested by Fronting Bank, to be held as cash collateral for future funding
obligations of that Defaulting Lender of any participation in any Letter of
Credit;

 

37

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

 

fourth, as Borrower may request (so long as no Default or Event of Default
exists), to the funding of any Loan in respect of which that Defaulting Lender
has failed to fund its portion thereof as required by this Agreement, as
determined by Agent; fifth, if so determined by Agent and Borrower, to be held
in a non-interest bearing deposit account and released in order to satisfy
obligations of that Defaulting Lender to fund Loans under this Agreement; sixth,
to the payment of any amounts owing to the Lenders, Fronting Bank or Swingline
Lender as a result of any judgment of a court of competent jurisdiction obtained
by any Lender, Fronting Bank or Swingline Lender against that Defaulting Lender
as a result of that Defaulting Lender’s breach of its obligations under this
Agreement; seventh, so long as no Default or Event of Default exists, to the
payment of any amounts owing to Borrower as a result of any judgment of a court
of competent jurisdiction obtained by Borrower against that Defaulting Lender as
a result of that Defaulting Lender’s breach of its obligations under this
Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a
court of competent jurisdiction; provided that if (x) such payment is a payment
of the principal amount of any Loans in respect of which that Defaulting Lender
has not fully funded its appropriate share and (y) such Loans were made at a
time when the conditions set forth in Section 4 were satisfied or waived, such
payment shall be applied solely to pay the Loans of all non-Defaulting Lenders
on a pro rata basis prior to being applied to the payment of any Loans of that
Defaulting Lender. Any payments, prepayments or other amounts paid or payable to
a Defaulting Lender that are applied (or held) to pay amounts owed by a
Defaulting Lender or to post cash collateral pursuant to this
Section 3.15.1(b) shall be deemed paid to and redirected by that Defaulting
Lender, and each Lender irrevocably consents hereto.

 

(c)                                  Certain Fees. That Defaulting Lender
(i) shall not be entitled to receive any Unused Revolving Loan Fee for any
period during which that Lender is a Defaulting Lender (and Borrower shall not
be required to pay any such fee that otherwise would have been required to have
been paid to that Defaulting Lender) and (ii) shall be limited in its right to
receive commissions and fees as provided in Section 2.8.3.

 

(d)                                 Reallocation of Applicable Percentages to
Reduce Fronting Exposure. During any period in which there is a Defaulting
Lender, for purposes of computing the amount of the obligation of each
non-Defaulting Lender to acquire, refinance or fund participations in Letters of
Credit pursuant to Section 2.8.4 or fund participations in Swingline Loans
pursuant to Section 2.9.5, the Pro Rata Share of each non-Defaulting Lender
shall be computed without giving effect to the portion of the Revolving
Commitment of that Defaulting Lender; provided, that, (i) each such reallocation
shall be given effect only if, at the date the applicable Lender becomes a
Defaulting Lender, no Default or Event of Default exists; and (ii) the aggregate
obligation of each non-Defaulting Lender to acquire, refinance or fund
participations in Letters of Credit and/or Swingline Loans shall not exceed the
positive difference, if any, of (A) the portion of the Revolving Commitment of
that non-Defaulting Lender minus (B) the aggregate outstanding amount of the
Revolving Loans of that Lender.

 

(e)                                  Termination of Requirement. Cash collateral
(or the appropriate portion thereof) provided to reduce fronting exposure or
other obligations shall no longer be required to be held as cash collateral
following (i) the elimination of the applicable fronting exposure or other
obligations giving rise thereto (including by the termination of Defaulting
Lender status of the applicable Lender), or (ii) the determination by Agent and
Fronting Bank

 

38

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

 

that there exists excess cash collateral; provided, that the Person providing
cash collateral and the Fronting Bank may agree that cash collateral shall be
held to support future anticipated fronting exposure or other obligations and
provided further, that to the extent that such cash collateral was provided by
Borrower, such cash collateral shall remain subject to the security interest
granted pursuant to the Loan Documents.

 

3.15.2              Defaulting Lender Cure. If Borrower, Agent, Fronting Bank
and Swingline Lender agree in writing in their respective sole discretion that a
Defaulting Lender should no longer be deemed to be a Defaulting Lender, Agent
will so notify the parties hereto, whereupon as of the effective date specified
in such notice and subject to any conditions set forth therein, that Lender
will, to the extent applicable, purchase that portion of outstanding Loans of
the other Lenders or take such other actions as Agent may determine to be
necessary to cause the Loans and funded and unfunded participations in Letters
of Credit and Swingline Loans to be held on a pro rata basis by the Lenders in
accordance with their Pro Rata Shares (without giving effect to
Section 3.15.1(d)), whereupon that Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of Borrower while that Lender was a
Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected Parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from that Lender’s having been a Defaulting Lender.

 

4.                                      CONDITIONS PRECEDENT

 

4.1                               Conditions Precedent to Closing. The Lenders
shall not be obligated to make Loans and Fronting Bank shall not be obligated to
issue Letters of Credit, in each case, on the Closing Date until the following
conditions have been satisfied or waived by each such Lender:

 

4.1.1                     Agent shall have received:

 

(a)                                 Originals (to the extent available) or
copies of the documents set forth on the Schedule of Documents, each duly
executed by Borrower or its Affiliates or Subsidiaries, as applicable, and
executed by the other parties thereto, together with such other assurances,
certificates, documents or consents related to the foregoing as Agent reasonably
may require, all in form and substance satisfactory to Agent;

 

(b)                                 such documentation as Agent may reasonably
require to establish the due organization, valid existence and good standing of
Borrower and each Guarantor, its qualification to engage in business in each
material jurisdiction in which it is engaged in business or required to be so
qualified, its authority to execute, deliver and perform the Loan Documents to
which it is a party, the identity, authority and capacity of each Authorized
Signatory thereof authorized to act on its behalf, including certified copies of
articles of incorporation or organization and amendments thereto, bylaws and
operating agreements and amendments thereto, certificates of good standing
and/or qualification to engage in business, certificates of corporate
resolutions, incumbency certificates, and the like;

 

39

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

 

(c)                                  insurance certificates or other evidence of
property and liability insurance and loss payable endorsements and additional
insured endorsements, in form and substance satisfactory to Agent, with respect
thereto;

 

(d)                                 favorable written opinions, dated as of the
date hereof, of counsel to Borrower and the Guarantors acceptable to Agent
(which shall include DLA Piper LLP (US) and Walkers), addressed to Agent and
Lenders (and their respective assigns) and otherwise in form and substance
satisfactory to Agent as to such matters as Agent shall determine;

 

(e)                                  copies of all consents and authorizations
of, permits from or filings with, any Governmental Authority or other Person
required in connection with the execution, delivery, performance or
enforceability of the Loan Documents or any provision thereof, if any, and no
material changes in governmental regulations affecting Borrower, Agent or the
Lenders shall have occurred; and

 

(f)                                   a certified UCC search from the applicable
jurisdictions of organization with respect to Borrower and each Guarantor and
any other searches as may be reasonably required by Agent.

 

4.1.2                     (a) All of the Indebtedness outstanding under the
Existing Credit Agreement shall be repaid in full, all commitments (if any) in
respect thereof shall have been terminated and all guarantees therefor and
security therefor shall be released, and the Agent shall have received a payoff
letter, authorization for the Borrower or its representatives to file or
execute, as applicable, UCC-3 termination statements and other releases, in each
case, in form and substance reasonably satisfactory to it evidencing such
repayment, termination and authorization and (b) all letters of credit issued
under the Existing Credit Agreement shall have been cash collateralized,
supported or replaced, as applicable, by a Letter of Credit issued hereunder.

 

4.1.3                     All of the UCC-1 financing statements and other
applicable documentation with respect to the Collateral Documents shall have
been filed with the appropriate Governmental Authorities, and Agent, except as
set forth in any of the Collateral Documents, shall hold a first priority
perfected Lien in the Collateral, subject only to Permitted Liens.

 

4.1.4                     No material adverse change in the business, property,
operations, prospects or condition (financial or otherwise) of Borrower and its
Subsidiaries shall have occurred since December 31, 2013.

 

4.1.5                     Payment by Borrower to Agent of (a) all fees payable
on the Closing Date under the Fee Letter and (b) all fees and documented costs
and expenses of closing (including reasonable fees of legal counsel to Agent
invoiced on or prior to the Closing Date) payable pursuant to Section 12.2 and
invoiced to Borrower on or prior to the Closing Date;

 

4.1.6                     No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
Governmental Authority or legislative body (a) to enjoin, restrain or prohibit,
or to obtain damages in respect of, or which is related to or arises out of,
this Agreement or any other Loan Document or the consummation of the

 

40

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

 

transactions contemplated hereby or thereby and which, in Agent’s sole judgment,
would make it inadvisable to consummate the transactions contemplated by this
Agreement or (b) that could reasonably be expected to have a Material Adverse
Effect;

 

4.1.7                     All of the representations and warranties of Borrower
under this Agreement shall be true and correct in all material respects (except
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof) as of the Closing Date; and

 

4.1.8                     Borrower shall be in compliance with all the terms and
provisions of the Loan Documents, and no Default or Event of Default shall have
occurred and be continuing.

 

If any other term of any Loan Document should conflict, or appear to conflict,
with this Section 4.1, the terms of this Section 4.1 shall control.

 

4.2                               Conditions to All Loans. It shall be a
condition to the funding of any Loan or the issuance of any Letter of Credit
that the following statements be true on the date of each such funding or
issuance:

 

4.2.1                     Agent shall have timely received a Notice of Borrowing
or a Letter of Credit Application, as applicable.

 

4.2.2                     all of the representations and warranties of Borrower
under this Agreement and the other Loan Documents shall be true and correct in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) as of such date, except to the
extent any such representations and warranties relate to an earlier date, both
before and after giving effect to the funding of such Loan or the issuance of
such Letter of Credit, and Agent shall have received, if it so elects and
notifies Borrower thereof, a certification to that effect signed by an
Authorized Signatory;

 

4.2.3                     No Default or Event of Default shall have occurred and
be continuing or shall result from the funding of such Loan or the issuance of
such Letter of Credit;

 

4.2.4                     no circumstance or event shall have occurred since the
Closing Date, or would result from the funding of such Loan or the issuance of
such Letter of Credit, that constitutes a Material Adverse Effect; and

 

4.2.5                     Agent, except as set forth in any of the Collateral
Documents, shall hold a perfected, first priority Lien on all Collateral,
subject only to Permitted Liens.

 

The request and acceptance by Borrower of the requested Loan or Letter of Credit
shall be deemed to constitute, as of the date of such Loan, (a) a representation
and warranty by Borrower that the conditions in this Section 4.2 have been
satisfied or waived by each Lender and (b) a confirmation by Borrower of the
granting and continuance of Agent’s Liens pursuant to the Collateral Documents.

 

41

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

 

5.                                      REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants that on the Closing Date and on the date of the
funding of each Loan or the issuance of each Letter of Credit hereunder:

 

5.1                               Corporate Existence; Compliance with Law.
Borrower and each of its Subsidiaries duly organized or formed, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation. Borrower and each of its Subsidiaries is duly qualified or registered
to transact business and is in good standing in each other jurisdiction in which
the conduct of its business or the ownership or leasing of its Property makes
such qualification or registration necessary, except where the failure to be so
qualified or registered could not reasonably be expected to have a Material
Adverse Effect. Borrower and each of its Subsidiaries has all requisite power
and authority to conduct its business, to own, pledge, mortgage or otherwise
encumber and operate its Property, to lease the Property it operates under
lease, to conduct its business as now or proposed to be conducted, to execute
and deliver each Loan Document to which it is a party and to perform its
Obligations. Borrower and each of its Subsidiaries is in compliance with all
Applicable Law and other legal requirements applicable to its business, has
obtained all authorizations, consents, approvals, orders, licenses and permits
from, and has accomplished all filings, registrations and qualifications with,
or obtained exemptions from any of the foregoing from, any Governmental
Authority that are necessary for the transaction of its business, except where
the failure to be so qualified or registered could not reasonably be expected to
have a Material Adverse Effect.

 

5.2                               Executive Offices; Corporate or Other Names;
Conduct of Business. The locations of Borrower’s and its Subsidiaries’ chief
executive office, other corporate offices, warehouses, other locations of
Collateral and locations where all of Borrower’s books and records are kept are
as set forth in Schedule 5.2. None of Borrower or its Subsidiaries shall change
its (a) name, (b) chief executive office, (c) jurisdiction of formation, or
(d) locations of books and records, without, in each instance, giving ten
(10) Business Days’ prior written notice thereof (or such lesser period of time
as consented to by Agent) to Agent and taking all actions deemed reasonably
necessary or appropriate by Agent to protect and perfect Agent’s Liens
continuously upon the Collateral.

 

5.3                               Authority; Compliance with Other Agreements
and Instruments and Government Regulations. The execution, delivery and
performance by Borrower and any Subsidiary of the Loan Documents to which each
is a party have been duly authorized by all necessary corporate or limited
liability company action, and do not and will not:

 

5.3.1                     Require any consent or approval not heretofore
obtained of any member, partner, director, stockholder, security holder or
creditor of such Person;

 

5.3.2                     Violate or conflict with any provision of such
Person’s operating agreement, charter, articles or certificate of incorporation
or bylaws, as applicable;

 

5.3.3                     Result in or require the creation or imposition of any
Lien (other than pursuant to the Loan Documents) upon or with respect to any
Property now owned or leased or hereafter acquired or leased by such Person;

 

42

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

 

5.3.4                     Violate any Applicable Law applicable to such Person,
which violation could reasonably be expected to have a Material Adverse Effect;
or

 

5.3.5                     Result in a breach of or constitute a default under,
or cause or permit the acceleration of any obligation owed under, any indenture
or loan or credit agreement or any other Contractual Obligation to which such
party is a party or by which such party or any of its Property is bound or
affected which could reasonably be expected to have a Material Adverse Effect;
and such party is not in violation of, or default under, any Applicable Law or
Contractual Obligation, or any indenture, loan or credit agreement, in any
respect which could reasonably be expected to have a Material Adverse Effect.

 

5.4                               No Governmental Approvals Required. Except as
previously obtained or made, no authorization, consent, approval, order, license
or permit from, or filing, registration or qualification with, any Governmental
Authority is or will be required to authorize or permit under Applicable Law the
execution, delivery and performance by Borrower and any Subsidiary of the Loan
Documents to which it is a party, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

5.5                               Subsidiaries. Except as disclosed to the Agent
on or prior to the Closing Date, Schedule 5.5 hereto correctly sets forth the
names, forms of legal entity, issued and outstanding Stock, owned Stock and
jurisdictions of organization of all Subsidiaries of Borrower as of the Closing
Date. Except as described in Schedule 5.5, as of the Closing Date, Borrower does
not own any capital stock, equity interest or debt security which is
convertible, or exchangeable, for capital stock or equity interest in any
Person. Unless otherwise indicated in Schedule 5.5, as of the Closing Date, all
of the outstanding shares of capital stock, or all of the units of equity
interest, as the case may be, of each Subsidiary are owned of record and
beneficially by Borrower, there are no outstanding options, warrants or other
rights to purchase capital stock of any such Subsidiary, and all such shares or
equity interests so owned are duly authorized, validly issued, fully paid and
non-assessable, and were issued in compliance with all applicable state and
federal securities laws and other Applicable Law, and are free and clear of all
Liens, except for Permitted Liens.

 

5.6                               Financial Statements. Borrower has furnished
to Agent the audited financial statements of Borrower and its Subsidiaries (on a
consolidated basis) as of the fiscal year ending December 31, 2013 (including
balance sheets, income statements and operating statements). The financial
information contained therein fairly presents in all material respects the
financial condition, results of operations and changes in financial position of
Borrower and its Subsidiaries (on a consolidated basis) as of such date and for
such period.

 

5.7                               No Other Liabilities; No Material Adverse
Effect. As of the Closing Date, Borrower and its Subsidiaries do not have any
material liability or material contingent liability required under GAAP to be
reflected or disclosed, and not reflected or disclosed, in the financial
statements described in Section 5.6 other than liabilities and contingent
liabilities arising in the ordinary course of business since the date of such
financial statements. As of the Closing Date, no circumstance or event has
occurred since December 31, 2013 that constitutes a Material Adverse Effect.

 

43

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

 

5.8                               Title To and Location of Property. The
Borrower and its Subsidiaries own and have good and marketable title, or a valid
leasehold interest in, all their Property as reflected in the most recent
Financial Statements delivered to the Agent (except those assets and properties
disposed of in the ordinary course of business or otherwise in compliance with
this Agreement since the date of such Financial Statements) and all respective
Property acquired by the Borrower and its Subsidiaries since such date (except
those disposed of in the ordinary course of business or otherwise in compliance
with this Agreement), except, in each case, such defects in title that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Such Property is subject to no Lien, except for Permitted Liens.

 

5.9                               Intellectual Property. Borrower and its
Subsidiaries own, or possess the right to use to the extent necessary in their
respective businesses, all material Intellectual Property, and, to the best of
their knowledge, no such Intellectual Property conflicts with the valid
Intellectual Property of any other Person to the extent such conflict could
reasonably be expected to have a Material Adverse Effect. Schedule 5.9 sets
forth, as of the Closing Date, (a) all United States and foreign registrations
of trademarks owned by Borrower and each of its Subsidiaries, and all pending
applications for any such registrations, (b) all issued United States and
foreign patents and pending patent applications owned by Borrower and each of
its Subsidiaries, (c) all United States and foreign registered copyrights owned
by Borrower and each of its Subsidiaries, and all pending applications for any
such registrations and (d) all other material Intellectual Property necessary
for Borrower and its Subsidiaries to conduct their respective businesses,
including all material registered Intellectual Property licensed from third
parties.

 

5.10                        Litigation. Except for (a) matters set forth in
Schedule 5.10, (b) any matter fully covered as to subject matter and amount
(subject to applicable deductibles and retentions) by insurance, (c) any matter,
or series of related matters, involving a claim against Borrower or any of its
Subsidiaries of less than $5,000,000 or (d) matters of an administrative nature
not involving a claim or charge against Borrower or any of its Subsidiaries, as
of the Closing Date, there are no actions, suits, proceedings or investigations
pending as to which Borrower or any of its Subsidiaries have been served or have
received notice or, to the best knowledge of Borrower, threatened against or
affecting Borrower or any of its Subsidiaries or any Property of any of them,
the Collateral, or any other transactions contemplated by this Agreement.
Notwithstanding any contrary provision contained herein or any other Loan
Document, as of the Closing Date, none of the matters set forth on Schedule 5.10
could reasonably be expected to have a Material Adverse Effect.

 

5.11                        Binding Obligations. Each of the Loan Documents to
which Borrower and any Subsidiary is a party will, when executed and delivered
by such Party, constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or equitable principles
relating to the granting of specific performance and other equitable remedies as
a matter of judicial discretion..

 

5.12                        No Default. No event has occurred and is continuing
that is a Default or Event of Default.

 

44

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

 

5.13                        ERISA.

 

5.13.1              With respect to each Pension Plan:

 

(a)                                 such Pension Plan complies in all material
respects with ERISA and any other Applicable Law;

 

(b)                                 such Pension Plan has not incurred any
“accumulated funding deficiency”(as defined in Section 302 of ERISA);

 

(c)                                  no “reportable event”(as defined in
Section 4043 of ERISA, but excluding such events as to which the PBGC has by
regulation waived the requirement therein contained that it be notified within
thirty (30) days of the occurrence of such event) has occurred; and

 

(d)                                 neither Borrower nor any of its Subsidiaries
has engaged in any non-exempt “prohibited transaction”(as defined in
Section 4975 of the Code).

 

5.13.2              Neither Borrower nor any of its Subsidiaries has incurred or
expects to incur any withdrawal liability to any Multiemployer Plan.

 

5.14                        Regulation U; Investment Company Act. No part of the
proceeds of any Loan hereunder will be used to purchase or carry, or to extend
credit to others for the purpose of purchasing or carrying, any margin stock in
violation of Regulation U. Neither Borrower nor any of its Subsidiaries is or is
required to be registered as an “investment company” under the Investment
Company Act of 1940.

 

5.15                        Disclosure. No written statement made by an
Authorized Signatory to Agent in connection with this Agreement or any Loan, as
of the date of such statement, contained any untrue statement of a material fact
or omitted a material fact necessary to make the statement made not misleading
in light of all the circumstances existing at the date the statement was made.

 

5.16                        Tax Liability. Borrower and its Subsidiaries have
filed all federal, state and other material tax returns which are required to be
filed, and have paid, or made provision for the payment of, all federal, state
and other material taxes with respect to the periods, Property or transactions
covered by said returns, or pursuant to any assessment received by Borrower or
any of its Subsidiaries, except such taxes, if any, as are being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been established and maintained.

 

5.17                        Environmental Matters. Except as described in
Schedule 5.17, as of the Closing Date (a) neither Borrower nor any of its
Subsidiaries at any time has disposed of, discharged, released or threatened the
release of any Hazardous Materials in material violation of any applicable
Environmental Laws, (b) to the best knowledge of Borrower, no condition exists
that violates any Environmental Law affecting any real property owned by
Borrower or any of its Subsidiaries, (c) no real property or any portion thereof
is or has been utilized by Borrower or any of its Subsidiaries as a site for the
manufacture of any Hazardous Materials and (d) to the extent that any Hazardous
Materials are used, generated or stored by Borrower or any of its Subsidiaries
on any real property, or transported to or from such real property by Borrower
or

 

45

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

 

any of its Subsidiaries, such use, generation, storage and transportation are in
compliance with all Environmental Laws in all material respects.

 

5.18                        Security Interests. Upon the execution and delivery
of this Agreement and the Collateral Documents and the completion of all actions
to perfect the security interests so created, except as set forth in the
Collateral Documents, Agent will hold a valid first priority security interest
in the Collateral described therein securing the Obligations.

 

5.19                        Insurance. Schedule 5.19 lists, as of the Closing
Date, all current insurance of any nature maintained by Borrower, as well as a
summary of the terms of such insurance.

 

5.20                        Solvency. Borrower and its Subsidiaries, taken as a
whole, are, and after giving effect to each credit extension hereunder, will be,
Solvent.

 

6.                                      AFFIRMATIVE COVENANTS (OTHER THAN
INFORMATION AND REPORTING REQUIREMENTS)

 

So long as any portion of the Commitments remains in force or any Obligations
remain unpaid, Borrower shall, and shall cause its Subsidiaries to:

 

6.1                               Payment of Taxes and Other Potential Liens.
Pay and discharge promptly all taxes, assessments and governmental charges or
levies imposed upon any of them, upon their respective Property or any part
thereof and upon their respective income or profits or any part thereof, except
that Borrower and its Subsidiaries shall not be required to pay or cause to be
paid (a) any tax, assessment, charge or levy that is not yet past due, or is
being contested in good faith by appropriate proceedings so long as the relevant
Person has established and maintains adequate reserves for the payment of the
same or (b) any immaterial tax so long as no material Property of Borrower or
its Subsidiaries is at impending risk of being seized, levied upon or forfeited.

 

6.2                               Preservation of Existence. Preserve and
maintain their respective existences in the jurisdiction of their formation and
all material authorizations, rights, franchises, privileges, consents,
approvals, orders, licenses, permits, or registrations from any Governmental
Authority that are necessary for the transaction of their respective businesses
and qualify and remain qualified to transact business in each jurisdiction in
which such qualification is necessary in view of their respective businesses or
the ownership or leasing of their respective Property, except (a) a merger or
consolidation permitted by Section 7.2, a Disposition permitted by Section 7.1
or as otherwise permitted by this Agreement or (b) where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.

 

6.3                               Maintenance of Insurance. Maintain liability,
casualty and other insurance (subject to customary deductibles and retentions)
on all Property with responsible insurance companies in such amounts and against
such risks as is carried by responsible companies engaged in similar businesses
and owning similar assets in the general areas in which Borrower and its
Subsidiaries operate and shall furnish to Agent, upon Agent’s reasonable
request, statements of its insurance coverage. Borrower shall take commercially
reasonable actions to maintain the foregoing insurance and/or to comply with all
material requirements of such insurance coverage. Agent shall be named as
additional insured on all liability insurance and Agent shall be named as a loss
payee under all insurance policies insuring the Collateral.

 

46

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

 

Borrower shall deliver to Agent endorsements to all of its (a) “All Risk” and
business interruption insurance policies naming Agent as loss payee, and
(b) general liability and other liability policies naming Agent as an additional
insured. All policies of insurance on real and personal property will include an
endorsement, in form and substance acceptable to Agent, showing loss payable to
Agent (Form 438 BFU or equivalent) and extra expense and business interruption
endorsements. Borrower shall use commercially reasonable efforts to ensure that
such endorsement, or an independent instrument furnished to Agent, will provide
that the insurer will give at least thirty (30) days prior written notice to
Agent before any such policy or policies of insurance shall be canceled. Upon
the occurrence and continuation of a Default or Event of Default, Agent may
require that Borrower direct all present and future insurers under its and its
Subsidiaries’ “All Risk” policies of insurance to pay all proceeds payable
thereunder directly to Agent for the ratable benefit of Lenders.

 

6.4                               Compliance with Applicable Law. Comply with
all Applicable Law, except that Borrower and its Subsidiaries need not comply
with an Applicable Law then being contested by any of them in good faith by
appropriate proceedings or where the failure to comply could not reasonably be
expected to have a Material Adverse Effect.

 

6.5                               Inspection Rights. Upon reasonable notice, at
any time during regular business hours and as often as reasonably requested (but
not so as to materially interfere with the business of Borrower or any of its
Subsidiaries) permit Agent, or any authorized employee or representative
thereof, to examine, audit and make copies and abstracts from the books and
records of, and to visit and inspect the Property of, Borrower and its
Subsidiaries and to discuss the affairs, finances and accounts of Borrower and
its Subsidiaries with its chief executive officer, president or chief financial
officer. At all times, it is understood and agreed by Borrower that all expenses
in connection with any such inspection which may be incurred by Borrower, any
officers and employees thereof and the attorneys and independent certified
public accountants therefor shall be expenses payable by Borrower and shall not
be expenses of Agent or Lenders; provided, that the Borrower shall not be
responsible for any of the foregoing expenses more than one (1) time per
calendar year unless an Event of Default has occurred and is continuing.

 

6.6                               Keeping of Records and Books of Account. Keep
adequate records and books of account reflecting all financial transactions in
material conformity with GAAP, consistently applied, and in material conformity
with all applicable requirements of any Governmental Authority having regulatory
jurisdiction over Borrower and its Subsidiaries.

 

6.7                               Compliance with Agreements. Promptly and fully
comply with all Contractual Obligations to which any one or more of them is a
party, except for any such Contractual Obligations (a) the performance of which
would cause a Default, (b) then being contested by any of them in good faith by
appropriate proceedings or (c) the non-compliance with which could not
reasonably be expected to have a Material Adverse Effect.

 

6.8                               Use of Proceeds. Use the proceeds of the Loans
only for the purposes set forth in this Agreement.

 

47

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

 

6.9                               Environmental Laws. Keep and maintain all real
property used and/or owned by Borrower or any of its Subsidiaries and each
portion thereof in compliance in all material respects with all applicable
Environmental Laws, except to the extent that no Material Adverse Effect could
reasonably be expected to result therefrom, and promptly notify Agent in writing
(attaching a copy of any pertinent written material in Borrower’s reasonable
discretion) of (a) any and all material enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened in
writing by a Governmental Authority pursuant to any applicable Environmental
Laws, (b) any and all material claims made or threatened in writing by any
Person against Borrower or any of its Subsidiaries relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Materials and (c) discovery by any senior officer of Borrower or any
of its Subsidiaries of any material occurrence or condition on any real property
adjoining or in the vicinity of such real property that could reasonably be
expected to cause such real property or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of such real
property under any applicable Environmental Laws.

 

6.10                        Future Subsidiaries. Borrower shall, at its own
expense promptly, and in any event within forty five (45) days after the
formation or acquisition of any Domestic Subsidiary or Foreign Subsidiary
(including, without limitation, (x) in connection with a Permitted Acquisition
and (y) with respect to any such currently existing Subsidiary formed or
acquired prior to the Closing Date, other than an Immaterial Subsidiary):
(a) notify Agent of such event in writing, (b) cause each such Domestic
Subsidiary to become a party to the Guaranty and the Security Agreement and each
other applicable Collateral Document in accordance with the terms thereof,
execute additional Collateral Documents if reasonably requested by Agent and
amend the Collateral Documents as appropriate in light of such event to pledge
to Agent (i) 100% of the equity securities of each such Subsidiary that is a
Domestic Subsidiary; and (ii) 65% of the equity securities of each such
Subsidiary that is a first-tier Foreign Subsidiary (provided that, if, as a
result of any change in the tax laws of the United States of America after the
date of this Agreement, the pledge by any Person of any additional equity
securities in any such Foreign Subsidiary to Agent under the Collateral
Documents would not result in adverse tax consequences to Borrower, then,
promptly after the change in such laws, all such additional equity securities
shall be so pledged under the Collateral Documents) and, except as set forth in
any of the Collateral Documents, execute and deliver all documents or
instruments reasonably required thereunder or appropriate to perfect the
security interest created thereby, (c) deliver (or use commercially reasonable
efforts to cause the appropriate Person to deliver) to Agent all certificates
and other instruments constituting Collateral thereunder free and clear of all
adverse Liens accompanied by undated stock powers or other instruments of
transfer executed in blank (and take such other steps as may be reasonably
requested by Agent to perfect Agent’s Lien in such Collateral consisting of
equity securities in compliance with any applicable laws of jurisdictions
outside of the United States of America), (d) cause each document (including
each Uniform Commercial Code financing statement) required by law or reasonably
requested by Agent to be filed, registered or recorded in order to create in
favor of Agent a perfected, first-priority security interest in and Lien on the
Collateral subject to (i) the Collateral Documents to be so filed, registered or
recorded and evidence thereof delivered to Agent and (ii) Permitted Liens,
(e) if requested by Agent, deliver an opinion of counsel in form and substance
reasonably satisfactory to Agent with respect to each such new Domestic
Subsidiary or Foreign Subsidiary, and/or the pledge of the equity securities of
each such Domestic Subsidiary and Foreign

 

48

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

 

Subsidiary and the matters set forth in this Section 6.10, provided that this
clause (e) shall not apply with respect to Subsidiaries acquired or created in
connection with a transaction where the aggregate consideration paid or invested
was less than $20,000,000, and (f) deliver to Agent the same organization
documents, resolutions, certificates, lien searches and other matters with
respect to such new Domestic Subsidiary or Foreign Subsidiary as required under
Section 4.1 to be delivered with respect to Borrower on the date hereof, in form
and substance reasonably satisfactory to Agent.

 

6.11                        Further Assurances; Schedule Supplements. At any
time and from time to time, upon the written request of Agent and at the sole
expense of Borrower, promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as such Agent may
reasonably request to obtain the full benefits of this Agreement and to protect,
preserve and maintain all rights of Agent and the Lenders in the Collateral and
under this Agreement. Upon the occurrence and continuation of a Default or Event
of Default and as often as Agent may thereafter require, Borrower will
supplement each Schedule to this Agreement with respect to any matter hereafter
arising that, if existing or occurring as of the Closing Date, would have been
required to be set forth or described in such Schedule; provided, that such
supplement shall not be deemed to be an amendment thereof unless expressly
consented to in writing by Agent.

 

6.12                        Financial Covenants. Maintain the following
financial covenants on a consolidated basis, as of the end of each Fiscal
Quarter:

 

6.12.1              Minimum Liquidity. Maintain a Liquidity Amount of at least
$35,000,000.

 

6.12.2              Minimum Adjusted EBITDA. Achieve Adjusted EBITDA of at least
(a) $30,000,000 for the twelve (12) month period ending at the end of each
Fiscal Quarter ending on or prior to December 31, 2014 and (b) $32,000,000 for
the twelve (12) month period ending at the end of each Fiscal Quarter ending
after December 31, 2014.

 

6.13                        Maintenance of Property. Maintain in good order and
condition, consistent with industry practice and standards (taking into
consideration wear and tear), all of its Property and not permit any waste
thereof, and, in the ordinary course of business, make all needful and proper
repairs, replacements, additions and improvements thereto as are necessary for
the conduct of its business, except where the failure to maintain, not permit
any waste of, preserve and protect any such Property could not reasonably be
expected to have a Material Adverse Effect.

 

6.14                        Notification of Reportable Event. Borrower shall
notify Agent immediately in writing upon the occurrence of any “Reportable
Event” as defined in Title IV of ERISA or a prohibited transaction with respect
to any Plan of Borrower or any of its ERISA Affiliates, or the institution or
threatened institution by the PBGC of proceedings under ERISA to terminate or to
partially terminate any such Plan, or the commencement or threatened
commencement of any litigation against any Plan, its fiduciaries or its assets,
or against Borrower or any ERISA Affiliate in connection with any Plan.

 

6.15                        [Reserved].

 

49

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

 

6.16                        Post-Closing. Borrower shall deliver each of the
items listed on Schedule 6.16 promptly and in any event no later than the time
period provided for therein with respect to each such item (or such later time
period as consented to in writing by the Agent).

 

7.                                      NEGATIVE COVENANTS

 

So long as any portion of the Commitments remains in force or any Obligations
remain unpaid, Borrower shall not, and shall cause its Subsidiaries to not:

 

7.1                               Disposition of Property. Make any sale, sale
and leaseback, transfer, lease or other disposition in any single transaction or
series of related transactions of any Property or group of related items of
Property of Borrower or any of its Subsidiaries, whether now owned or hereafter
acquired (“Disposition” ), except for the following:

 

7.1.1                     any Disposition of inventory in the ordinary course of
business;

 

7.1.2                     any Disposition of damaged, worn or obsolete assets no
longer useful in the conduct of Borrower’s business for not less than fair
market value;

 

7.1.3                     any Disposition of Investments permitted by
Section 7.10.2 or 7.10.6;

 

7.1.4                     any Disposition (a) by Borrower or any Subsidiary to
Borrower or any Subsidiary that is a Guarantor or (b) by any Subsidiary that is
not a Guarantor to any Subsidiary that is not a Guarantor, provided that the
aggregate amount of the higher of the market value and the book value of all
such Dispositions made under this clause (b) shall not exceed $5,000,000 at any
time;

 

7.1.5                     non-exclusive licenses of Intellectual Property owned
by Borrower to DLL;

 

7.1.6                     non-exclusive licenses of Intellectual Property owned
by or licensed to Borrower or any Subsidiary to any third party in the ordinary
course of business; and

 

7.1.7                     any other Dispositions provided that the aggregate
consideration received or to be received (whether Cash, notes, Stock, or
assumption of debt or otherwise) by Borrower and/or its Subsidiaries in any one
Disposition does not exceed $10,000,000 and such aggregate consideration with
respect to all such Dispositions does not exceed (a) $20,000,000 in any Fiscal
Year or (b) $50,000,000 during the term of this Agreement.

 

7.2                               Fundamental Changes. Merge or consolidate with
or into any Person, except (a) mergers and consolidations of a Subsidiary into
Borrower (so long as Borrower is the surviving Person) or another Subsidiary (so
long as a Subsidiary that is a Guarantor is the surviving Person) and (b) a
merger or consolidation of a Person into Borrower or with or into a Subsidiary
of Borrower that is a Permitted Acquisition (so long as Borrower or such
Subsidiary, as applicable, is the surviving Person); provided that (i) no Change
in Control results therefrom, (iii) no Default or Event of Default then exists
or would result therefrom, (iv) Borrower executes such amendments to the Loan
Documents as Agent may reasonably determine are appropriate as a result of such
merger or consolidation in order to preserve the enforceability of the Loan

 

50

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

 

Documents on the parties thereto and their successors, if any, and, except to
the extent set forth in the Collateral Documents, maintain the perfection of
Agent’s Liens on the Collateral, and otherwise complies with Section 6.10 and
(v) no violation of the terms of Section 6.2 or Section 7.3 would result
therefrom. Borrower shall promptly notify Agent of any merger or consolidation
involving Borrower.

 

7.3                               Acquisitions. Consummate an Acquisition except
Permitted Acquisitions.

 

7.4                               Distributions. Make any Distribution, whether
from capital, income or otherwise, whether in Cash or other Property; except for
the following:

 

7.4.1                     Borrower may declare and pay Distributions in Cash to
the holders of Borrower’s Stock (including to purchase, redeem or otherwise
acquire Stock issued by it); provided that after giving effect to any such
Distribution, as of the proposed date thereof, (a) Borrower is in pro forma
compliance with the financial covenants set forth in Section 6.12, (b) the
Funded Debt to Adjusted EBITDA Ratio does not exceed 1.25 to 1.00, (c) the
Liquidity Amount is not less than $40,000,000 and (d) no Default or Event of
Default has occurred and is continuing;

 

7.4.2                     Subsidiaries may make Distributions in Cash to
Borrower;

 

7.4.3                     Borrower and each Subsidiary may declare and make
Distributions payable solely in their common Stock; and

 

7.4.4                     Notwithstanding the provisions of Section 7.4.1 to the
contrary, Distributions consisting of the purchase of options, restricted equity
interests or equivalent rights in Borrower held by officers, directors and
employees of Borrower and its Subsidiaries in an aggregate amount not to exceed
$5,000,000 during the term of this Agreement, but only to the extent such
Distributions are required pursuant to written agreements with such officers,
directors and employees as in effect as of the Closing Date.

 

7.5                               ERISA. At any time, permit any Pension Plan
to: (a) engage in any non-exempt “prohibited transaction”(as defined in
Section 4975 of the Code); (b) fail to comply with ERISA or any other Applicable
Law; (c) incur any material “accumulated funding deficiency”(as defined in
Section 302 of ERISA); or (d) terminate in any manner.

 

7.6                               Change in Control. Permit any Change in
Control to occur.

 

7.7                               Liens and Negative Pledges. Create, incur,
assume or suffer to exist any Lien or Negative Pledge of any nature upon or with
respect to any of its respective Property or any Collateral or engage in any
sale and leaseback transaction with respect to any of its respective Property or
any Collateral, whether now owned or hereafter acquired, except the following
(“Permitted Liens”):

 

7.7.1                     Liens as of the Closing Date set forth on Schedule
7.7.

 

7.7.2                     Liens created under the Loan Documents;

 

51

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

 

7.7.3                     Purchase money Liens incurred to finance the purchase
or construction of capital assets using the proceeds of Indebtedness, including
Capital Lease Obligations, permitted under Section 7.8.3, and limited to the
capital assets purchased or constructed;

 

7.7.4                     Liens incurred in connection with the extension,
renewal or refinancing of the Indebtedness secured by the Liens described in
Section 7.7.1 or 7.7.3; provided that any Lien incurred in connection with such
extension, renewal or refinancing (a) is limited to the property covered by the
existing Lien and (b) secures Indebtedness which is no greater in amount than
the Indebtedness secured by the existing Lien;

 

7.7.5                     Liens securing taxes, assessments, and other
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA) or the claims of materialmen, mechanics, carriers,
repairmen, warehousemen, or landlords or other like Liens incurred in the
ordinary course of business, but which (a) have been bonded, (b) which are being
contested in good faith by appropriate proceedings and for which Borrower shall
have set aside on its books adequate reserves with respect thereto in accordance
with GAAP or (c) are not yet past due;

 

7.7.6                     Deposits under workers’ compensation, unemployment
insurance and social security laws or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases,
or to secure statutory obligations of surety, appeal or customs bonds or to
secure indemnity, performance or other similar bonds in the ordinary course of
business;

 

7.7.7                     any judgment Lien not giving rise to an Event of
Default;

 

7.7.8                     leases or subleases granted to others (in the ordinary
course of business consistent with past practices) not interfering in any
material respect with the ordinary conduct of the business or operations of
Borrower or any Subsidiary;

 

7.7.9                     easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary conduct
of the business of Borrower or any Subsidiary;

 

7.7.10              deposits in the ordinary course of business to secure
liabilities to insurance carriers, lessor, utilities and other service
providers;

 

7.7.11              bankers liens and rights of setoff with respect to customary
depository arrangements entered into in the ordinary course of business;

 

7.7.12              Liens arising by reason of security for surety or appeal
bonds in the ordinary course of business of Borrower or any Subsidiary;

 

7.7.13              a non-exclusive license, or similar right, of or to
Intellectual Property granted in the ordinary course of business;

 

7.7.14              any Liens securing Indebtedness or other obligations
permitted under Section 7.8.5; and

 

52

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

 

7.7.15     any other Liens securing Indebtedness or other obligations permitted
under Section 7.8.11, provided that such Liens shall not attach to any real
property owned by Borrower or any of its Subsidiaries.

 

The foregoing exceptions, however, shall not permit any Lien in or on any Stock
of any Subsidiary, except for Liens created under the Collateral Documents.

 

7.8          Indebtedness and Guaranty Obligations. Create, incur or assume any
Indebtedness or Guaranty Obligation except the following (“Permitted
Indebtedness”):

 

7.8.1       Indebtedness existing on the Closing Date and disclosed in Schedule
7.8;

 

7.8.2       Indebtedness under the Loan Documents;

 

7.8.3       Purchase money Indebtedness or Capital Lease Obligations incurred to
finance the purchase or construction of capital assets (which shall be deemed to
exist if the Indebtedness or Capitalized Lease Obligation is incurred at or
within ninety (90) days before or after the purchase or construction of the
capital asset) in an aggregate amount not to exceed $5,000,000 outstanding at
any one time;

 

7.8.4       Any extension, renewal or refinancing (but not the increase in the
aggregate principal amount) of the Indebtedness described in Section 7.8.1 or
7.8.3;

 

7.8.5       Subordinated Debt in such amount as may be approved in writing by
the Required Lenders;

 

7.8.6       Indebtedness consisting of Interest Rate Protection Agreements;

 

7.8.7       Indebtedness arising from agreements of Borrower or any Subsidiary
providing for indemnification and adjustment of purchase price incurred in
connection with any Permitted Acquisition;

 

7.8.8       Guaranty Obligations in support of the obligations of a Subsidiary,
provided that such obligations are not prohibited by this Agreement;

 

7.8.9       Indebtedness of a Person acquired in a Permitted Acquisition which
is outstanding at the time of such Acquisition (other than Indebtedness incurred
solely in contemplation of such Acquisition);

 

7.8.10     Indebtedness of a Subsidiary of Borrower owed to Borrower or a wholly
owned Subsidiary of the Borrower or Indebtedness of Borrower owed to a
Subsidiary of Borrower, which Indebtedness shall (i) in the case of Indebtedness
owed to Borrower or a Guarantor, be pledged under the Security Agreement,
(ii) be on terms (including subordination terms) reasonably acceptable to the
Agent, and (iii) be otherwise permitted under the provisions of Section 7.10;

 

7.8.11     Other Indebtedness in an aggregate principal amount not to exceed
$5,000,000 outstanding at any one time.

 

53

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

 

7.9          Transactions with Affiliates. Make, or suffer to exist, any loan or
advance or extend any credit to any Person, including, without limitation, any
Affiliate of the Borrower other than:

 

7.9.1       employment, consulting, service, termination, compensation, expense
reimbursement or indemnification arrangements entered into with directors or
officers in the ordinary course of business;

 

7.9.2       transactions that are fully disclosed to the board of directors (or
a committee thereof) of Borrower and expressly authorized by a resolution of the
board of directors (or committee) of Borrower which is approved by a majority of
the directors (or committee) not having an interest in the transaction;

 

7.9.3       transactions specifically permitted by Sections 7.1, 7.2, 7.4 and
7.8;

 

7.9.4       advances to employees officers, directors and employees of Borrower
and its Subsidiaries for travel, entertainment, relocation, anticipated bonus
and analogous ordinary business purposes;

 

7.9.5       trade credit advanced in the ordinary course of business;

 

7.9.6       transactions between or among Borrower and its Subsidiaries; and

 

7.9.7       transactions on overall terms at least as favorable to Borrower or
its Subsidiaries as would be the case in an arm’s length transaction between
unrelated parties of equal bargaining power.

 

7.10        Investments. Make or suffer to exist any Investment, other than:

 

7.10.1     Investments in existence on the Closing Date and disclosed on
Schedule 7.10;

 

7.10.2     Investments consisting of Cash Equivalents;

 

7.10.3     Investments consisting of Permitted Acquisitions;

 

7.10.4     Investments consisting of advances to officers, directors and
employees of Borrower and its Subsidiaries for travel, entertainment,
relocation, anticipated bonus and analogous ordinary business purposes not to
exceed $250,000 in the aggregate outstanding at any time;

 

7.10.5     Investments in a Subsidiary that is a Guarantor or in Borrower;

 

7.10.6     Investments in a Subsidiary that is not a Guarantor so long as:

 

(a)           after giving effect to any such Investment no Default or Event of
Default has occurred and is continuing; and

 

54

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

 

(b)           the aggregate amount of such Investments does not exceed
$5,000,000 during the term of this Agreement;

 

provided that the maximum amount set forth in clause (b) immediately above shall
not apply to intercompany advances made to Borrower’s Foreign Subsidiaries to
the extent such advances are made to pay for costs and expenses reasonably
related to revenue generation by Borrower and its Subsidiaries.

 

7.10.7     Investments consisting of the extension of credit to customers or
suppliers of Borrower and its Subsidiaries in the ordinary course of business
and any Investments received in satisfaction or partial satisfaction thereof;

 

7.10.8     Investments received in connection with a bona fide legal dispute
with another Person or insurance proceeds received by Borrower;

 

7.10.9     Investments made in accordance with the cash investment policy of
Borrower, as in effect from time to time, to the extent the current version
thereof has been delivered to Agent promptly following its adoption; or

 

7.10.10  Investments made in a Subsidiary that is not a Guarantor by a
Subsidiary that is not a Guarantor.

 

7.11        Change in Nature of Business. Make any material change in the nature
of the businesses of Borrower and its Subsidiaries, as conducted historically
and on the Closing Date.

 

7.12        Change in Fiscal Year or Accounting Method. Make any change in
Borrower’s Fiscal Year or any material change in the accounting method used by
Borrower not in accordance with GAAP without the prior written consent of Agent.

 

8.                                      INFORMATION AND REPORTING REQUIREMENTS

 

8.1          Reports and Notices. Borrower covenants and agrees that, so long as
any portion of the Commitments remains in force or any Obligations remain
unpaid, Borrower shall deliver to Agent (for distribution by it to the Lenders):

 

8.1.1       within three (3) Business Days after filing with the SEC, but in no
event later than forty-five (45) days after the end of each Fiscal Quarter (
other than the fourth Fiscal Quarter in any Fiscal Year), (a) an
internally-prepared consolidated balance sheet, income statement and cash flow
statement of Borrower and its Subsidiaries as at the end of such Fiscal Quarter
and the portion of the Fiscal Year ended with such Fiscal Quarter, all in
reasonable detail and (b) a Compliance Certificate as of the end of such Fiscal
Quarter signed by an Authorized Signatory which (i) states that no Default has
occurred and is continuing, or, if any such Default has occurred and is
continuing, a statement as to the nature thereof and what action the Borrower
proposes to take with respect thereto, and (ii) sets forth, for such Fiscal
Quarter or as of the last day of such Fiscal Quarter, a summary of the
calculation of the financial ratios and tests provided in Section 6.12 hereof.
Such financial statements shall be certified by an Authorized Signatory of
Borrower as fairly presenting the financial condition, results of operations and
cash flows of Borrower and its Subsidiaries in accordance with GAAP (other than
footnote disclosures),

 

55

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

 

consistently applied, as at such date and for such periods, subject only to
normal year-end accruals and audit adjustments;

 

8.1.2       within three (3) Business Days after filing with the SEC, but in no
event later than ninety (90) days after the end of each Fiscal Year, the audited
annual financial statements of Borrower and its Subsidiaries for such Fiscal
Year prepared by an independent CPA firm satisfactory to Agent (which shall
include Deloitte LLP) and accompanied by an audit opinion, which opinion shall
not be subject to any qualification or exceptions as to the scope of the audit,
together with a Compliance Certificate signed by an Authorized Signatory;

 

8.1.3       the Security Agreement Supplement, together with the Supplements to
Schedules, as required pursuant to and subject to the terms of the Security
Agreement;

 

8.1.4       promptly upon their becoming available and to the extent disclosure
thereof is permitted by law, copies of any correspondence or notices received by
Borrower or any Subsidiary from any Governmental Authority which regulates the
operations of Borrower or any Subsidiary or from the Internal Revenue Service or
any other state or federal tax authority relating to an actual or threatened
change or development which would have, or could reasonably be expected to have,
a Material Adverse Effect;

 

8.1.5       promptly, notice in writing of any known litigation, legal
proceeding or dispute, other than disputes in the ordinary course of business
affecting Borrower or any Subsidiary as a defendant, whether or not fully
covered by insurance, and regardless of the subject matter thereof, which
litigation, proceeding or dispute has a material probability of being resolved
against the Borrower or any Subsidiary and, if determined or resolved against
Borrower or any Subsidiary, is reasonably likely to have a Material Adverse
Effect; and

 

8.1.6       promptly upon the earlier of the date on which the Borrower becomes
aware or, in the exercise of reasonable due diligence should have become aware
of the same, notify the Agent of the occurrence of any of the following:

 

(a)           any Default or Event of Default; and

 

(b)           any change in any Applicable Law, including changes in tax laws
and regulations, which could reasonably be expected to have a Material Adverse
Effect on the Borrower or any Subsidiary; and

 

8.2          Budgets. Borrower shall deliver to Agent (a) prior to the end of
each Fiscal Year, (1) a draft budget and projection by Fiscal Quarter for the
following Fiscal Year, including projected statement of operations of Borrower
and its Subsidiaries, and (2) a draft summary forecast for each subsequent
Fiscal Year through the Maturity Date, all in reasonable detail, and
(b) promptly following the final approval thereof by the board of directors of
Borrower, but in no event later than ninety (90) days after the end of each
Fiscal Year, (1) a budget and projection by Fiscal Quarter for the following
Fiscal Year, including projected statements of operations of Borrower and its
Subsidiaries, and (2) a summary forecast for each subsequent Fiscal Year through
the Maturity Date, all in reasonable detail.

 

8.3          [Reserved].

 

56

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

 

8.4          Other Reports. Borrower shall provide to Agent and the Lenders such
other reports and information as from time to time may be reasonably requested
by Agent.

 

9.                                      EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

9.1          Events of Default. The occurrence of any one or more of the
following events shall constitute an “Event of Default” under this Agreement:

 

9.1.1       Borrower shall fail to make any regularly scheduled payment of
principal or interest in respect of any Obligations within five (5) Business
Days after the same shall become due and payable or is declared in writing to be
due and payable; provided that no grace period shall apply to nonpayment of the
Obligations on the Maturity Date; or

 

9.1.2       Borrower or any Guarantor shall fail or neglect to perform, keep or
observe any of the covenants, promises, agreements, requirements, conditions or
other terms, Obligations (other than under Section 9.1.1) or provisions
contained in this Agreement or any of the other Loan Documents and such default
shall have continued for a period of thirty (30) days (or with respect to any
defaults under Section 8, for a period of ten (10) days) after Agent’s notice to
Borrower in writing of such default hereunder; provided there shall be no grace
period for Borrower’s failure to perform, keep or observe any of the covenants,
promises, agreements, requirements, conditions or other terms or provisions
contained in Section 6.12, Section 6.16 and Section 7; or

 

9.1.3       an event of default shall occur under any agreement relating to any
Indebtedness to which Borrower or any Subsidiary is a party, or by which any
such Person or its Property is bound, and such event of default (1) involves the
failure to make any payment, whether of principal, interest or otherwise, and
whether due by scheduled maturity, required prepayment, acceleration, demand or
otherwise, in respect of any Indebtedness (other than the Obligations) of such
Person in an aggregate amount exceeding $2,500,000, and (2) accelerates the
payment of (or permits any holder of such Indebtedness or a trustee to
accelerate the payment of) such Indebtedness, or a portion thereof, in an
aggregate amount exceeding $2,500,000 to become due prior to its stated maturity
or prior to its regularly scheduled dates of payment; or

 

9.1.4       any representation or warranty in this Agreement or any other Loan
Document, or in any written statement, report or certificate pursuant hereto or
thereto, shall be untrue or incorrect in any material respect as of the date
when made or reaffirmed by the Borrower or any Subsidiaries; or

 

9.1.5       any of the assets of Borrower or any Subsidiary having a value of
$2,500,000 or more shall be attached, seized, levied upon or subjected to a writ
or distress warrant or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of such Person, and any of
the foregoing shall remain unstayed or undismissed for sixty (60) consecutive
days; or any Person other than Borrower or any Subsidiary shall apply for the
appointment of a receiver, trustee or custodian for the assets of Borrower or
any Subsidiary and the order appointing such receiver, trustee or custodian
shall remain unstayed or undismissed for sixty (60) consecutive days; or
Borrower or any Subsidiary shall have concealed, removed or permitted to be
concealed or removed, any part of its Property

 

57

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

 

with intent to hinder, delay or defraud its creditors or any of them or made or
suffered a transfer of any of its Property or the incurring of an obligation
which may be fraudulent under any bankruptcy, fraudulent transfer or other
similar law; or

 

9.1.6       a case or proceeding shall have been commenced involuntarily against
Borrower or any Subsidiary in a court having competent jurisdiction seeking a
decree or order: (a) under the Bankruptcy Code or any other applicable Federal,
state or foreign Bankruptcy or other similar law, and seeking either (i) the
appointment of a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of such Person or of any substantial part of
its Property, or (ii) the reorganization or winding up or liquidation of the
affairs of any such Person and such case or proceeding shall remain undismissed
or unstayed for sixty (60) consecutive days or such court shall enter a decree
or order granting the relief sought in such case or proceeding; or
(b) invalidating or denying (i) any Person’s right, power, or competence to
enter into or perform any of its obligations under any Loan Document, or
(ii) the validity or enforceability of this Agreement or any other Loan Document
or any action taken hereunder or thereunder; or

 

9.1.7       Borrower or any Subsidiary shall (a) file a petition under the
Bankruptcy Code or any other applicable Federal, state or foreign bankruptcy or
other similar law, (b) consent to the institution of proceedings thereunder or
to the filing of any such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) of any such Person or of any substantial part of its Property,
(c) fail generally to pay (or admit in writing its inability to pay) its debts
as such debts become due, or (d) take any corporate action in furtherance of any
such action; or

 

9.1.8       there is entered against Borrower or any Subsidiary (i) one or more
final judgments or orders for the payment of money in an aggregate amount (as to
all such judgments or orders) exceeding $2,500,000 (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage), or (ii) any one or more non-monetary final judgments that have, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order or (B) there is a period
of 30 consecutive days during which a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, is not in effect; or

 

9.1.9       Except as otherwise specifically permitted herein, Borrower or any
Subsidiary voluntarily or involuntarily dissolves (provided Borrower shall have
sixty (60) days to cure any involuntary dissolution), or is dissolved,
terminates or is terminated; except Borrower may dissolve inactive Subsidiaries;
or

 

9.1.10     Borrower or any Subsidiary is enjoined, restrained, or in any way
prevented by the order of any court or other Governmental Authority, the effect
of which order restricts such Person from conducting all or any material part of
its business, unless such order is subject to a good faith dispute being
diligently pursued according to appropriate legal proceedings and such order
could not reasonably be expected to have a Material Adverse Effect; or

 

58

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

 

9.1.11     the loss, suspension or revocation of, or failure to renew, any
License now or hereafter in effect or any permit now held or hereafter acquired
by Borrower or any Subsidiary, which loss, suspension, revocation or failure to
renew could reasonably be expected to have a Material Adverse Effect; or

 

9.1.12     any Lien or any provision of any Loan Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms, or any
Lien granted, or intended by the Loan Documents to be granted, to Agent shall
cease to be a valid and perfected Lien having the first priority (or a lesser
priority if expressly permitted in the Loan Documents) in any of the Collateral
covered or purported to be covered thereby; or

 

9.1.13     Any Pension Plan maintained by Borrower is finally determined by the
PBGC to have an “accumulated funding deficiency” as that term is defined in
Section 302 of ERISA in excess of an amount equal to 5% of the consolidated
total assets of Borrower as of the most recently ended Fiscal Quarter.

 

9.2          Remedies.

 

9.2.1       If any Default has occurred and is continuing, then Agent may, with
the prior written approval of Required Lenders, terminate or suspend Lenders’
obligation to make further Loans. If any Event of Default has occurred and is
continuing, then Agent may, with the prior written approval of Required Lenders
and upon written notice to Borrower from Agent, increase the rate of interest
applicable to the Loans to the Default Rate effective as of the date of the
initial Default giving rise to such Event of Default. In addition, if any Event
of Default shall have occurred and be continuing, Agent may (upon prior written
approval of Required Lenders), without notice, take any one or more of the
following actions: (a) declare all or any portion of the Obligations to be
forthwith due and payable, whereupon such Obligations shall become and be due
and payable; or (b) exercise any rights and remedies provided to Agent under the
Loan Documents or at law or equity, including all remedies provided under the
UCC; provided, that upon the occurrence of an Event of Default specified in
Sections 9.1.5, 9.1.6 or 9.1.7, the Obligations shall become immediately due and
payable (and any obligation of Lenders to make further Loans, if not previously
terminated, shall immediately be terminated) without declaration, notice or
demand by Agent.

 

9.2.2       Each Lender’s rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lenders may
have under any Loan Document or at law or in equity. Recourse to the Collateral
shall not be required. All rights, remedies and powers provided in this
Agreement may be exercised only to the extent that the exercise thereof does not
violate any Applicable Law, and all provisions of this Agreement are intended to
be subject to any Applicable Law that may be controlling and to be limited, to
the extent necessary, so that they do not render this Agreement invalid,
unenforceable, in whole or in part.

 

9.3          Waivers by Borrower. Except as otherwise provided for in this
Agreement and to the fullest extent permitted by Applicable Law (to be effective
upon and limited to the occurrence and during the continuance of an Event of
Default), Borrower waives: (a) presentment, demand and protest, and notice of
presentment, dishonor, intent to accelerate,

 

59

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

 

acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Loan Documents, the Notes or any
other notes, commercial paper, accounts, Contracts, documents, instruments,
chattel paper and guaranties at any time held by or entered into with any of
Agent, Fronting Bank or the Lenders on which Borrower may in any way be liable,
other than notices specifically required by the Loan Documents or Applicable
Law; (b) all rights to notice and a hearing prior to Agent’s or Lenders’ taking
possession or control of, or to Agent’s or Lenders’ replevin, attachment or levy
upon, any Collateral or any bond or security which might be required by any
court prior to allowing Agent or the Lenders to exercise any of their remedies,
other than notices specifically required by the Loan Documents or Applicable
Law; and (c) the benefit of all valuation, appraisal and exemption laws.
Borrower acknowledges that it has been advised by counsel with respect to this
Agreement, the other Loan Documents and the transactions evidenced hereby and
thereby.

 

9.4          Proceeds. The Proceeds of any sale, disposition or other
realization upon any Collateral shall be applied by any Lender upon receipt as
set forth in Section 3.9.

 

10.                               SUCCESSORS AND ASSIGNS

 

Each Loan Document shall be binding on and shall inure to the benefit of
Borrower, Lenders, Agent and their respective successors and assigns, except as
otherwise provided herein or therein. Borrower shall not assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
under any Loan Document without the prior written consent of all of the Lenders,
and any such purported assignment, transfer, hypothecation or other conveyance
by Borrower without the prior express written consent of all of the Lenders
shall be void. The terms and provisions of this Agreement and the other Loan
Documents are for the purpose of defining the relative rights and obligations of
Borrower and Lenders with respect to the transactions contemplated hereby and
thereby, and there shall be no third party beneficiaries of any of the terms and
provisions of any of the Loan Documents. Subject to Section 12.8.2 of this
Agreement, each Lender reserves the right at any time to create and sell a
participation in any portion of the Loans and the Loan Documents and to sell,
transfer or assign any or all of its rights in the Loans and under the Loan
Documents.

 

11.                               [RESERVED]

 

12.                               MISCELLANEOUS

 

12.1        Complete Agreement; Modification of Agreement. This Agreement and
the other Loan Documents constitute the complete agreement among the parties
with respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings or inducements (oral or written,
expressed or implied), and may not be modified, altered or amended except by a
written agreement signed by Agent, Lenders, Borrower and each other Person
executing this Agreement or any other Loan Document, as applicable.

 

12.2        Reimbursement and Expenses. Borrower will promptly pay:

 

12.2.1     without regard for whether any Loans are made, all reasonable and
documented, out-of-pocket expenses of Agent invoiced to Borrower in connection
with the preparation, negotiation, execution, and delivery of this Agreement and
the other Loan

 

60

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

 

Documents, including all due diligence, all post-closing matters, syndication,
and the transactions contemplated hereunder and thereunder and the making of the
Loans, including, recording and filing fees, and the reasonable and documented
attorneys’ fees and disbursements of counsel for Agent;

 

12.2.2     except as otherwise provided herein, all reasonable out-of-pocket
expenses of Agent in connection with the administration or monitoring of the
Loans, the Collateral, this Agreement and the other Loan Documents in accordance
with the provisions thereof, the restructuring and refinancing of the
transaction herein contemplated, and in connection with the preparation,
negotiation, execution, and delivery of any waiver, amendment, or consent by
Agent relating to this Agreement or the other Loan Documents, including
reasonable auditing costs and expenses with respect to the Collateral and the
reasonable and documented attorneys’ fees and expenses of counsel;

 

12.2.3     all of Agent’s and each Lenders’ out-of-pocket costs and expenses of
obtaining performance under this Agreement or the other Loan Documents, of
collection of the Obligations and of enforcement of the Loan Documents,
including in any arbitration, mediation, legal action or proceeding (including
any case under the Bankruptcy Code or similar laws), which, in each case, shall
include reasonable fees and expenses of counsel for Agent and each Lender; and

 

12.2.4     all Charges levied on, or assessed, placed or made against any
Collateral, the Notes or the other Loan Documents or the Obligations.

 

12.3        Indemnity.

 

12.3.1     Borrower shall indemnify and hold each Indemnified Person harmless
from and against any Claim which may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit having been
extended or not extended under this Agreement and the other Loan Documents or
otherwise in connection with or arising out of the transactions contemplated
hereunder or thereunder, including any Claim for Environmental Liabilities and
Costs and legal costs and expenses of disputes between the parties to this
Agreement; provided, that Borrower shall not be liable for indemnification of an
Indemnified Person from and against any Claim to the extent that (a) such Claim
is brought by any Indemnified Person against Borrower and Borrower is the
prevailing party thereunder, (b) such Claim is finally determined by a court of
competent jurisdiction to have resulted from such Indemnified Person’s gross
negligence or willful misconduct or (c) such Claim is asserted against such
Indemnified Person by another Indemnified Person. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED OR NOT EXTENDED UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER. This
Section 12.3.1 shall survive the Termination Date.

 

61

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

 

12.3.2     All obligations of Borrower with respect to any item of Collateral
shall be and remain enforceable against, and only against, Borrower and shall
not be enforceable against Agent or any Lender.

 

12.4        No Waiver. Neither Agent’s nor any Lender’s failure, at any time or
times, to require strict performance by Borrower of any provision of any Loan
Document, nor Agent’s or any Lender’s failure to exercise, nor any delay in
exercising, any right, power or privilege under this Agreement, (a) shall waive,
affect or diminish any right of Agent or any Lender thereafter to demand strict
compliance and performance therewith, or (b) shall operate as a waiver thereof.
Any suspension or waiver of a Default, Event of Default, or other provision
under the Loan Documents must be in writing signed by an authorized employee of
Agent or any Lender to be effective and shall not suspend, waive or affect any
other Default or Event of Default, whether the same is prior or subsequent
thereto and whether of the same or of a different type, and shall not be
construed as a bar to any right or remedy which Agent or any Lender would
otherwise have had on any future occasion.

 

12.5        Severability; Drafting. Wherever possible, each provision of the
Loan Documents shall be interpreted in such manner as to be effective and valid
under Applicable Law, but if any provision of any Loan Document shall be
prohibited by or invalid under Applicable Law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of such
Loan Document. Except as otherwise expressly provided herein or in any other
Loan Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon Borrower and all rights of Agent and Lenders,
all as contained in the Loan Documents, shall not terminate or expire, but
rather shall survive such termination or cancellation and shall continue in full
force and effect until the Termination Date; provided, that the reimbursement
and expense provisions of Section 12.2, the indemnity provisions of
Section 12.3, the governing law and venue provisions of Section 12.14 and the
waiver of jury trial provisions of Section 12.15 shall all survive the
Termination Date. In the event of a dispute between any of the parties hereto
over the meaning of this Agreement, all parties shall be deemed to have been the
drafter hereof, and any Applicable Law that states that contracts are construed
against the drafter shall not apply.

 

12.6        Conflict of Terms. Except as otherwise provided in any Loan Document
by specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent with,
any provision in any other Loan Document, the provision contained in this
Agreement shall govern and control.

 

12.7        Notices.

 

12.7.1     All notices and other communications under this Agreement and the
other Loan Documents shall be in writing and shall be deemed to have been given
three (3) days after deposit in the mail, first class mail, postage prepaid, or
one (1) day after being entrusted to a reputable commercial overnight delivery
service, or when sent out by facsimile transmission or electronic mail addressed
to the party to which such notice is directed at its address determined as
provided in this Section 12.7. All notices and other communications under this
Agreement shall be given to the parties hereto at the following addresses:

 

62

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

 

(a)                                 If to Borrower:

 

DTS, Inc.
5220 Las Virgenes Road
Calabasas, California 91302
Attn: Rachel Cahn
Telephone No.: 818-436-1222
Facsimile No.: 818-436-1722
Electronic Mail: Rachel.Cahn@dts.com

 

and to:

 

DTS, Inc.
5220 Las Virgenes Road
Calabasas, California 91302
Attn: Jeanine Pisoni
Telephone No.: 818-436-1353
Facsimile No.: 818-436-1850
Electronic Mail: Jeanine.Pisoni@dts.com

 

with a copy (which shall not constitute notice) to:

 

DLA Piper LLP (US)
1251 Avenue of the Americas
New York, New York 10020
Attn: Jamie Knox
Facsimile No.: (212) 884-8692
Electronic Mail: Jamie.Knox@dlapiper.com

 

(b)                                 If to Agent:

 

Wells Fargo Bank, National Association
1800 Century Park East, Suite 1300
Los Angeles, CA 90067
Attn: Greg Cohn
Telephone No.: (310) 789-5304
Electronic Mail: greg.cohn@wellsfargo.com

 

with a copy to:

 

Bingham McCutchen LLP
355 South Grand Avenue, 43rd Floor
Los Angeles, CA 90071
Attn: Mark Spitzer
Telephone No.: (213) 680-6656
Facsimile No.: (213) 830-8756
Electronic Mail: mark.spitzer@bingham.com

 

63

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

 

12.7.2              Any party to this Agreement may change the address to which
notices shall be directed under this Section 12.7 by giving ten (10) days’
written notice of such change to the other parties.

 

12.8                        Binding Effect; Assignment.

 

12.8.1              Subject to the terms of Section 10, this Agreement and the
other Loan Documents to which Borrower is a party will be binding upon and inure
to the benefit of Borrower, Agent, Fronting Bank and each of Lenders and their
respective successors and assigns. Each Lender represents that it is not
acquiring its Note with a view to the distribution thereof within the meaning of
the Securities Act of 1933, as amended (subject to any requirement that
disposition of such Note must be within the control of such Lender). Any Lender
may at any time pledge its Note or any other instrument evidencing its rights as
a lender under this Agreement to a Federal Reserve Bank, but no such pledge
shall release that Lender from its obligations hereunder or grant to such
Federal Reserve Bank the rights of a Lender hereunder absent foreclosure of such
pledge.

 

12.8.2              From time to time following the Closing Date, each Lender
may assign to one or more Eligible Assignees all or any portion of its Pro Rata
Share of the Commitments; provided that (a) such assignment shall be approved by
Agent and, provided no Default or Event of Default then exists, Borrower, which
approval(s) shall not be unreasonably withheld, conditioned or delayed; (b) such
assignment shall be evidenced by a Commitment Assignment and Acceptance, a copy
of which shall be furnished to Agent as hereinbelow provided and made available
to Borrower upon its request; (c) except in the case of an assignment (i) to an
Affiliate of the assigning Lender or to another Lender or (ii) of the entire
remaining Commitments of the assigning Lender, the assignment shall not assign a
Pro Rata Share of the Commitments that is equivalent to less than $5,000,000;
and (d) the effective date of any such assignment shall be as specified in the
Commitment Assignment and Acceptance, but not earlier than the date which is
five (5) Business Days after the date Agent has received the Commitment
Assignment and Acceptance. Upon the effective date of such Commitment Assignment
and Acceptance, the Eligible Assignee named therein shall be a Lender for all
purposes of this Agreement, with the Pro Rata Share of the Commitments therein
set forth and, to the extent of such Pro Rata Share, the assigning Lender shall
be released from its further obligations under this Agreement. Borrower agrees
that it shall execute and deliver (against delivery by the assigning Lender to
Borrower of its Notes) to such assignee Lender, Notes evidencing that assignee
Lender’s Pro Rata Share of the Commitments, and to the assigning Lender, Notes
evidencing the Pro Rata Share retained by the assigning Lender.

 

12.8.3              By executing and delivering a Commitment Assignment and
Acceptance, the Eligible Assignee thereunder acknowledges and agrees that:
(a) other than the representation and warranty that it is the legal and
beneficial owner of the Pro Rata Share of the Commitments being assigned thereby
free and clear of any adverse claim, the assigning Lender has made 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 or
sufficiency of this Agreement or any other Loan Document; (b) the assigning
Lender has made no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower or the performance by

 

64

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

 

Borrower of the Obligations; (c) it has received a copy of this Agreement,
together with copies of the most recent financial statements delivered pursuant
to Section 8 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Commitment Assignment and Acceptance; (d) it will, independently and without
reliance upon Agent or any 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; (e) it appoints and
authorizes Agent to take such action and to exercise such powers under this
Agreement as are delegated to Agent by this Agreement; and (f) it will perform
in accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

 

12.8.4              Agent shall maintain at Agent’s Office a copy of each
Commitment Assignment and Acceptance delivered to it and a register (the
“Register”) of the names and address of each of the Lenders and the Pro Rata
Share of the Commitments held by each Lender, giving effect to each Commitment
Assignment and Acceptance. The Register shall be available during normal
business hours for inspection by Borrower or any Lender upon reasonable prior
notice to Agent. After receipt of a completed Commitment Assignment and
Acceptance executed by any Lender and an Eligible Assignee, and receipt of a
non-refundable assignment fee of Three Thousand Five Hundred Dollars ($3,500)
from such Lender or Eligible Assignee, Agent shall, promptly following the
effective date thereof, provide to Borrower and the Lenders a revised Schedule
2.1 giving effect thereto. Borrower, Agent and the Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of the
Pro Rata Share of the Commitments listed therein for all purposes hereof, and no
assignment or transfer of any such Pro Rata Share of the Commitments shall be
effective, in each case unless and until a Commitment Assignment and Acceptance
effecting the assignment or transfer thereof shall have been accepted by Agent
and recorded in the Register as provided above. Prior to such recordation, all
amounts owed with respect to the applicable Pro Rata Share of the Commitments
shall be owed to the Lender listed in the Register as the owner thereof, and any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is listed in the Register as a
Lender shall be conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Pro Rata Share of the Commitments.

 

12.8.5              Each Lender may from time to time grant participations to
one or more banks or other financial institutions (other than Defaulting
Lenders) in a portion of its Pro Rata Share of the Commitments; provided,
however, that (a) such Lender’s obligations under this Agreement shall remain
unchanged; (b) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations; (c) the participating banks or
other financial institutions shall not be a Lender hereunder for any purpose;
(d) Borrower, Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement; (e) the participation interest shall be
expressed as a percentage of the granting Lender’s Pro Rata Share of the
Commitments as it then exists and shall not restrict an increase in the
Commitments, or in the granting Lender’s Pro Rata Share of the Commitments, so
long as the amount of the participation interest is not affected thereby; and
(f) the consent of the holder of such participation interest shall not be
required for amendments or waivers of provisions of the Loan Documents other
than those which (i) increase the Commitments, (ii) extend the Maturity Date or
any other date upon which any payment of money is due to the Lenders,
(iii) reduce the rate of interest on the Notes, any fee or any other

 

65

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

 

monetary amount payable to the Lenders, or (iv) release any material Collateral
from the Lien of the Collateral Documents, except if such release of material
Collateral occurs in connection with a disposition permitted under this
Agreement in which case such release shall not require the consent of any of the
Lenders or of any holder of a participation interest in the Commitments.

 

12.8.6              In connection with any assignment of rights and obligations
of any Defaulting Lender hereunder, no such assignment shall be effective unless
and until, in addition to the other conditions thereto set forth herein, the
parties to the assignment shall make such additional payments to Agent in an
aggregate amount sufficient, upon distribution thereof as appropriate (which may
be outright payment, purchases by the assignee of participations or
subparticipations, or other compensating actions, including funding, with the
consent of Borrower and Agent, the applicable pro rata share of Loans previously
requested but not funded by the Defaulting Lender, to each of which the
applicable assignee and assignor hereby irrevocably consent), to (x) pay and
satisfy in full all payment liabilities then owed by such Defaulting Lender to
Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire
(and fund as appropriate) its full Pro Rata Share of all Loans and
participations in Letters of Credit. Notwithstanding the foregoing, in the event
that any assignment of rights and obligations of any Defaulting Lender hereunder
shall become effective under Applicable Law without compliance with the
provisions of this paragraph, then the assignee of such interest shall be deemed
to be a Defaulting Lender for all purposes of this Agreement until such
compliance occurs.

 

12.9                        Right of Setoff. If an Event of Default has occurred
and is continuing, Agent, Fronting Bank and any Lender other than a Defaulting
Lender (but in each case only with the consent of the Required Lenders) may
exercise its rights under Article 9 of the Uniform Commercial Code and other
Applicable Law and, to the extent permitted by Applicable Law, apply any funds
in any deposit account maintained with it by Borrower and/or any Property of
Borrower in its possession against the Obligations.

 

12.10                 Sharing of Setoffs. Each Lender severally agrees that if
it, through the exercise of any right of setoff, banker’s lien or counterclaim
against Borrower, or otherwise, receives payment of the Obligations held by it
that is ratably more than any other Lender, through any means, receives in
payment of the Obligations held by that Lender, then, subject to Applicable Law:
(a) the Lender exercising the right of setoff, banker’s lien or counterclaim or
otherwise receiving such payment shall purchase, and shall be deemed to have
simultaneously purchased, from each of the other Lenders a participation in the
Obligations held by the other Lenders and shall pay to the other Lenders a
purchase price in an amount so that the share of the Obligations held by each
Lender after the exercise of the right of setoff, banker’s lien or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker’s lien or counterclaim or receipt of
payment; and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the Lenders
share any payment obtained in respect of the Obligations ratably in accordance
with each Lender’s share of the Obligations immediately prior to, and without
taking into account, the payment; provided that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker’s lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by Borrower or any Person claiming through or succeeding
to the rights of Borrower, the purchase of a participation shall be rescinded
and the

 

66

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

 

purchase price thereof shall be restored to the extent of the recovery, but
without interest. Each Lender that purchases a participation in the Obligations
pursuant to this Section 12.10 shall from and after the purchase have the right
to give all notices, requests, demands, directions and other communications
under this Agreement with respect to the portion of the Obligations purchased to
the same extent as though the purchasing Lender were the original owner of the
Obligations purchased. Borrower expressly consents to the foregoing arrangements
and agrees that any Lender holding a participation in an Obligation so purchased
pursuant to this Section 12.10 may exercise any and all rights of setoff,
banker’s lien or counterclaim with respect to the participation as fully as if
the Lender were the original owner of the Obligation purchased.

 

12.11                 Section Titles. The Section titles and Table of Contents
contained in this Agreement and any other Loan Document are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

 

12.12                 Counterparts. Each Loan Document may be executed in any
number of identical counterparts, which shall constitute an original and
collectively and separately constitute a single instrument or agreement.

 

12.13                 Time of the Essence. Time is of the essence for payment
and performance of the Obligations.

 

12.14                 Governing Law; Jurisdiction, Etc.

 

12.14.1       Governing Law.  This Agreement and the other Loan Documents and
any claim, controversy, dispute or cause of action (whether in contract or tort
or otherwise) based upon, arising out of or relating to this Agreement or any
other Loan Document (except, as to any other Loan Document, as expressly set
forth therein) and the transactions contemplated hereby and thereby shall be
governed by, and construed in accordance with, the law of the State of New York.

 

12.14.2       Submission to Jurisdiction.  Borrower irrevocably and
unconditionally agrees that it will not commence any action, litigation or
proceeding of any kind or description, whether in law or equity, whether in
contract or in tort or otherwise, against Agent, any Lender, Fronting Bank, the
Swingline Lender, or any Related Party of the foregoing in any way relating to
this Agreement or any other Loan Document or the transactions relating hereto or
thereto, in any forum other than the courts of the State of New York sitting in
New York County, and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, and each of the
parties hereto irrevocably and unconditionally submits to the jurisdiction of
such courts and agrees that all claims in respect of any such action, litigation
or proceeding may be heard and determined in such New York State court or, to
the fullest extent permitted by Applicable Law, in such federal court.  Each of
the parties hereto agrees that a final judgment in any such action, litigation
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Nothing in this
Agreement or in any other Loan Document shall affect any right that Agent, any
Lender, Fronting Bank or the Swingline Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document
against Borrower, any Guarantor or its properties in the courts of any
jurisdiction.

 

67

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

 

12.14.3       Waiver of Venue.  Borrower irrevocably and unconditionally waives,
to the fullest extent permitted by Applicable Law, any objection that it may now
or hereafter have to the laying of venue of any action or proceeding arising out
of or relating to this Agreement or any other Loan Document in any court
referred to in Section 12.14.2.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by Applicable Law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

 

12.14.4       Service of Process.  Each party hereto irrevocably consents to
service of process in the manner provided for notices in Section 12.7.  Nothing
in this Agreement will affect the right of any party hereto to serve process in
any other manner permitted by Applicable Law.

 

12.15                 WAIVER OF JURY TRIAL.

 

12.15.1       EACH PARTY HERETO HEREBY IRREVOCABLY 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 ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

 

12.15.2       IN THE EVENT ANY SUCH LEGAL PROCEEDING IS BROUGHT OR FILED IN ANY
UNITED STATES FEDERAL COURT SITTING IN THE STATE OF CALIFORNIA OR IN ANY STATE
COURT OF THE STATE OF CALIFORNIA, AND THE WAIVER OF JURY TRIAL SET FORTH IN
SECTION 12.15.1 IS DETERMINED OR HELD TO BE INEFFECTIVE OR UNENFORCEABLE, EACH
OF THE PARTIES HERETO HEREBY CONSENTS TO THE ADJUDICATION OF ALL CLAIMS PURSUANT
TO JUDICIAL REFERENCE AS PROVIDED IN CALIFORNIA CODE OF CIVIL PROCEDURE
SECTION 638, AND THE JUDICIAL REFEREE SHALL BE EMPOWERED TO HEAR AND DETERMINE
ALL ISSUES IN SUCH REFERENCE, WHETHER FACT OR LAW.

 

12.15.3       EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND CONSENT AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

12.16                 Amendments; Consents. No amendment, modification,
supplement, extension, termination or waiver of any provision of this Agreement
or any other Loan Document, no approval or consent thereunder, and no consent to
any departure by Borrower or any other party therefrom, may in any event be
effective unless in writing signed by Agent and the Required Lenders (and, in
the case of any amendment, modification or supplement of or to any Loan Document
to which Borrower is a party, signed by Borrower, and, in the case of any
amendment,

 

68

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

 

modification or supplement to Section 13, signed by Agent, respectively), and
then only in the specific instance and for the specific purpose given; provided,
however, that:

 

12.16.1                   Any amendment, waiver or consent which would (i) amend
or waive this Section 12.16 or any part thereof; (ii) amend or waive any of the
conditions precedent set forth in Section 4.1; or (iii) amend any provision of
this Agreement that expressly requires the consent or approval of all or a
specified portion of the Lenders, must be in writing and signed or approved in
writing by all of the Lenders;

 

12.16.2                   Any amendment, waiver or consent which releases any
substantial part of the Collateral must be in writing and signed or approved in
writing by all Lenders, except that any release in connection with a sale or
other disposition of Collateral authorized by Section 7.1 shall not require the
approval of any Lenders;

 

12.16.3                   Any amendment, waiver or consent which increases or
decreases the Pro Rata Share of any Lender must be in writing and signed by such
Lender;

 

12.16.4                   Any amendment, waiver or consent which extends the
commitment of any Lender must be in writing and signed by such Lender; and

 

12.16.5                   Any amendment, waiver or consent which modifies the
amount of principal, principal prepayments or the rate of interest payable on,
any Note, or the amount of any Unused Revolving Loan Fee payable to any Lender,
or any other fee or amount payable to any Lender under the Loan Documents or to
waive an Event of Default consisting of the failure of Borrower to pay when due
principal, interest or any fee must be in writing and signed by such Lender.

 

Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 12.16 shall apply equally to, and shall be binding upon, all the
Lenders and Agent. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Pro Rata Share of such Lender may
not be increased or extended without the consent of such Lender.

 

12.17                 Foreign Lenders and Participants.

 

12.17.1       Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to Borrower and Agent, at the time or times reasonably requested by
Borrower or Agent, such properly completed and executed documentation reasonably
requested by Borrower or Agent as will permit such payments to be made without
withholding or at a reduced rate of withholding.  In addition, any Lender, if
reasonably requested by Borrower or Agent, shall deliver such other
documentation prescribed by Applicable Law or reasonably requested by Borrower
or Agent as will enable Borrower or Agent to determine whether or not such
Lender is subject to backup withholding or information reporting requirements. 
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in Section 12.17(ii)(a), (ii)(b) and (ii)(d) below)
shall not be required if in the Lender’s reasonable judgment such completion,
execution or submission

 

69

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

 

would subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

 

12.17.2       Without limiting the generality of the foregoing,

 

(a)                                 any Lender that is a U.S. Person shall
deliver to Borrower and Agent on or prior to the date on which such Lender
becomes a Lender under this Agreement or receives a participation interest
herein pursuant to Section 12.8, if applicable (and from time to time thereafter
upon the reasonable request of the Borrower or the Administrative Agent),
executed originals of IRS Form W-9 certifying that such Lender is exempt from
U.S. federal backup withholding tax;

 

(b)                                 any Foreign Lender shall, to the extent it
is legally entitled to do so, deliver to Borrower and Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement or receives a
participation interest herein pursuant to Section 12.8, if applicable (and from
time to time thereafter upon the reasonable request of the Borrower or the
Administrative Agent), whichever of the following is applicable:

 

(i)                                     in the case of a Foreign Lender claiming
the benefits of an income tax treaty to which the United States is a party
(x) with respect to payments of interest under any Loan Document, executed
originals of IRS Form W-8BEN establishing an exemption from, or reduction of,
U.S. federal withholding Tax pursuant to the “interest” article of such tax
treaty and (y) with respect to any other applicable payments under any Loan
Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from,
or reduction of, U.S. federal withholding Tax pursuant to the “business profits”
or “other income” article of such tax treaty;

 

(ii)                                  executed originals of IRS Form W-8ECI;

 

(iii)                               in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under Section 881(c) of the
Code, (x) a certificate substantially in the form of Exhibit E-1 to the effect
that such Foreign Lender is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign
corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN or IRS
Form W-8BEN-E; or

 

(iv)                              to the extent a Foreign Lender is not the
beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS
Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance
Certificate substantially in the form of Exhibit E-2 or Exhibit E-3, IRS
Form W-9, and/or other certification documents from each beneficial owner, as
applicable; provided that if the Foreign Lender is a partnership and one or more
direct or indirect partners of such Foreign Lender are claiming the portfolio
interest exemption, such

 

70

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

 

Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in
the form of Exhibit E-4 on behalf of each such direct and indirect partner;

 

(c)                                  any Foreign Lender shall, to the extent it
is legally entitled to do so, deliver to Borrower and Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed originals of any other form prescribed by Applicable Law as a
basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be
prescribed by Applicable Law to permit Borrower or Agent to determine the
withholding or deduction required to be made; and

 

(d)                                 if a payment made to a Lender under any Loan
Document would be subject to U.S. federal withholding Tax imposed by FATCA if
such Lender were to fail to comply with the applicable reporting requirements of
FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Lender shall deliver to the Borrower and the Administrative
Agent at the time or times prescribed by law and at such time or times
reasonably requested by the Borrower or the Administrative Agent such
documentation prescribed by Applicable Law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be
necessary for Borrower and Agent to comply with their obligations under FATCA
and to determine that such Lender has complied with such Lender’s obligations
under FATCA or to determine the amount to deduct and withhold from such
payment.  Solely for purposes of this clause (D), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.

 

12.17.3       Each Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify the Borrower and the
Administrative Agent in writing of its legal inability to do so.

 

12.17.4       In the event that Borrower or Agent become aware that a
participation has been granted pursuant to Section 12.8.5 to a financial
institution that is incorporated or otherwise organized under the laws of a
jurisdiction other than the United States of America, any State thereof or the
District of Columbia, then, upon request made by Borrower or Agent to the Lender
which granted such participation, such Lender shall cause such participant
financial institution to deliver the same documents and information to Borrower
and Agent as would be required under this Section if such financial institution
were a Lender.

 

12.18                 Confidentiality. Each of the Agent and the Lenders agrees
to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to

 

71

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

 

the extent required by Applicable Law or by any subpoena or similar legal
process, (d) to any other party to this Agreement, (e) in connection with the
exercise of any remedies under this Agreement or any other Loan Document or any
suit, action or proceeding relating to this Agreement or any other Loan Document
or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or participant in, or any prospective assignee of or
participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Agent or any Lender on a non-confidential basis
from a source other than the Borrower. For the purposes of this Section,
“Information” means all information received from the Borrower relating to the
Borrower or its business, other than any such information that (x) is available
to the Agent or any Lender on a non-confidential basis prior to disclosure by
the Borrower or (y) is clearly identified at the time of delivery as not being
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

 

Anything in this Agreement to the contrary notwithstanding, Agent may disclose
information concerning the terms and conditions of this Agreement and the other
Loan Documents to loan syndication and pricing reporting services or in its
marketing or promotional materials, with such information to consist of deal
terms and other information customarily found in such publications or marketing
or promotional materials and may otherwise use the name, logos, and other
insignia of Borrower or its Subsidiaries and the lending commitments provided
hereunder in any customary “tombstone” or other customary advertisements, on its
website or in other customary marketing materials of Agent.

 

12.19                 Keepwell.  Each Qualified ECP Guarantor hereby jointly and
severally absolutely, unconditionally and irrevocably undertakes to provide such
funds or other support as may be needed from time to time by the Borrower and
each Guarantor to honor all of their respective obligations under the Guaranty
and the other Loan Documents in respect of Swap Obligations under any Interest
Rate Protection Agreement (provided, however, that each Qualified ECP Guarantor
shall only be liable under this Section 12.19 for the maximum amount of such
liability that can be hereby incurred without rendering its obligations under
this Section 12.19, or otherwise under the Guaranty, voidable under Applicable
Law relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount). Subject to Section 8 of the Guaranty, the obligations of each
Qualified ECP Guarantor under this Section 12.19 shall remain in full force and
effect until the Termination Date. Each Qualified ECP Guarantor intends that
this Section 12.19 constitute, and this Section 12.19 shall be deemed to
constitute, a “keepwell, support, or other agreement” for the benefit of the
Borrower and each other Guarantor for all purposes of
Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

72

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

 

13.                               AGENT

 

13.1                        Appointment and Authorization.

 

13.1.1                          Each of the Lenders and Fronting Bank hereby
irrevocably appoints Wells Fargo Bank, National Association to act on its behalf
as Agent hereunder and under the other Loan Documents and authorizes Agent to
take such actions on its behalf and to exercise such powers as are delegated to
Agent by the terms hereof or thereof, together with such actions and powers as
are reasonably incidental thereto.  The provisions of this Section 13 are solely
for the benefit of Agent, the Lenders and Fronting Bank, and neither Borrower
nor any Subsidiary thereof and no Guarantor shall have rights as a third-party
beneficiary of any of such provisions.  It is understood and agreed that the use
of the term “agent” herein or in any other Loan Documents (or any other similar
term) with reference to Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any Applicable
Law. Instead such term is used as a matter of market custom, and is intended to
create or reflect only an administrative relationship between contracting
parties.

 

13.1.2                          Agent shall also act as the “collateral agent”
under the Loan Documents, and each of the Lenders (including in its capacity as
a potential party to an Interest Rate Protection Agreement or Bank Products
Agreement) and Fronting Bank hereby irrevocably appoints and authorizes Agent to
act as the agent of such Lender and Fronting Bank for purposes of acquiring,
holding and enforcing any and all Liens on Collateral granted by any of Borrower
or the Guarantors to secure any of the Obligations, together with such powers
and discretion as are reasonably incidental thereto (including, without
limitation, to enter into additional Loan Documents or supplements to existing
Loan Documents on behalf of the applicable secured parties).  In this
connection, Agent, as “collateral agent” and any co-agents, sub-agents and
attorneys-in-fact appointed by Agent pursuant to this Section 13 for purposes of
holding or enforcing any Lien on the Collateral (or any portion thereof) granted
under the Collateral Documents, or for exercising any rights and remedies
thereunder at the direction of Agent), shall be entitled to the benefits of all
provisions of Section 12 (including Sections 12.2 and 12.3, as though such
co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under
the Loan Documents) and this Section 13 as if set forth in full herein with
respect thereto.

 

13.2                        Rights as a Lender.  The Person serving as Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not Agent and the
term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless
the context otherwise requires, include the Person serving as Agent hereunder in
its individual capacity.  Such Person and its Affiliates may accept deposits
from, lend money to, own securities of, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
Borrower or any Subsidiary or Guarantor or other Affiliate thereof as if such
Person were not Agent hereunder and without any duty to account therefor to the
Lenders.

 

13.3                        Exculpatory Provisions.

 

13.3.1              Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents, and its duties
hereunder and thereunder shall be administrative in nature.  Without limiting
the generality of the foregoing, Agent:

 

(a)                                 shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default or Event of Default has
occurred and is continuing;

 

73

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

 

(b)                                 shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents
that Agent is required to exercise as directed in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents), provided that shall not be
required to take any action that, in its opinion or the opinion of its counsel,
may expose Agent to liability or that is contrary to any Loan Document or
Applicable Law, including for the avoidance of doubt any action that may be in
violation of the automatic stay under any Debtor Relief Law or that may effect a
forfeiture, modification or termination of property of a Defaulting Lender in
violation of any Debtor Relief Law; and

 

(c)                                  shall not, except as expressly set forth
herein and in the other Loan Documents, have any duty to disclose, and shall not
be liable for the failure to disclose, any information relating to Borrower, any
Guarantor, or any of Subsidiaries or Affiliates of Borrower or any Guarantor
that is communicated to or obtained by the Person serving as Agent or any of its
Affiliates in any capacity.

 

13.3.2              Agent shall not be liable for any action taken or not taken
by it (a) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as Agent
shall believe in good faith shall be necessary, under the circumstances as
provided in Section 12.16 and Section 9.2) or (b) in the absence of its own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction by final nonappealable judgment.  Agent shall be deemed not to have
knowledge of any Default or Event of Default unless and until notice describing
such Default or Event of Default is given to Agent by Borrower, a Lender or
Fronting Bank.

 

13.3.3              Agent shall not be responsible for or have any duty to
ascertain or inquire into (a) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (b) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith (including, without
limitation, any report provided to it by Fronting Bank pursuant to
Section 2.8.9), (c) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default or Event of Default, (d) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, (e) the satisfaction of any condition
set forth in Section 4 or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to Agent or (f) the utilization of
Letters of Credit (it being understood and agreed that Fronting Bank shall
monitor utilization of Letters of Credit without any further action by Agent).

 

13.4                        Reliance by Agent.  Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person.  Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made
by the proper Person, and shall not incur any liability for relying thereon.  In
determining compliance with any condition hereunder to the making of a Loan, or
the issuance, extension, renewal or increase of a Letter of Credit, that by its

 

74

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

 

terms must be fulfilled to the satisfaction of a Lender or Fronting Bank, Agent
may presume that such condition is satisfactory to such Lender or Fronting Bank
unless Agent shall have received notice to the contrary from such Lender or
Fronting Bank prior to the making of such Loan or the issuance of such Letter of
Credit.  Agent may consult with legal counsel (who may be counsel for Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

 

13.5                        Delegation of Duties.  Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other
Loan Document by or through any one or more sub-agents appointed by Agent. 
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers by or through their respective Related Parties.  The
exculpatory provisions of this Section 13 shall apply to any such sub-agent and
to the Related Parties of Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the Commitments (if
any) as well as activities as Agent.  Agent shall not be responsible for the
negligence or misconduct of any sub-agents except to the extent that a court of
competent jurisdiction determines in a final and nonappealable judgment that
Agent acted with gross negligence or willful misconduct in the selection of such
sub-agents.

 

13.6                        Resignation of Agent.

 

13.6.1              Agent may at any time give notice of its resignation to the
Lenders, Fronting Bank and Borrower.  Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, in consultation with
Borrower, to appoint a successor, which shall be a bank with an office in the
United States, or an Affiliate of any such bank with an office in the United
States.  If no such successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation (or such earlier day as shall be
agreed by the Required Lenders) (the “Resignation Effective Date”), then the
retiring Agent may (but shall not be obligated to), on behalf of the Lenders and
Fronting Bank, appoint a successor Agent meeting the qualifications set forth
above; provided, that in no event shall any such successor Administrative Agent
be a Defaulting Lender.  Whether or not a successor has been appointed, such
resignation shall become effective in accordance with such notice on the
Resignation Effective Date.

 

13.6.2              If the Person serving as Agent is a Defaulting Lender
pursuant to clause (d) of the definition thereof, the Required Lenders may, to
the extent permitted by Applicable Law, by notice in writing to Borrower and
such Person, remove such Person as Agent and, in consultation with the Borrower,
appoint a successor. If no such successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days (or
such earlier day as shall be agreed by the Required Lenders) (the “Removal
Effective Date”), then such removal shall nonetheless become effective in
accordance with such notice on the Removal Effective Date.

 

13.6.3              With effect from the Resignation Effective Date or the
Removal Effective Date (as applicable), (1) the retiring or removed Agent shall
be discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by Agent on
behalf of the Lenders or Fronting Bank under any of the

 

75

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

 

Loan Documents, the retiring or removed Agent shall continue to hold such
collateral security until such time as a successor Agent is appointed) and
(2) except for any indemnity payments owed to the retiring or removed Agent, all
payments, communications and determinations provided to be made by, to or
through Agent shall instead be made by or to each Lender and Fronting Bank
directly, until such time, if any, as the Required Lenders appoint a successor
Agent as provided for above.  Upon the acceptance of a successor’s appointment
as Agent hereunder, such successor shall succeed to and become vested with all
of the rights, powers, privileges and duties of the retiring or removed Agent
(other than any rights to indemnity payments owed to the retiring or removed
Agent), and the retiring or removed Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents.  The fees
payable by Borrower to a successor Agent shall be the same as those payable to
its predecessor unless otherwise agreed between Borrower and such successor. 
After the retiring or removed Agent’s resignation or removal hereunder and under
the other Loan Documents, the provisions of this Section and Sections 12.2 and
12.3 shall continue in effect for the benefit of such retiring or removed Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring or removed Agent
was acting as Agent.

 

13.6.4              Any resignation by, or removal of, Wells Fargo Bank,
National Association as Agent pursuant to this Section shall also constitute its
resignation as Fronting Bank and Swingline Lender.  Upon the acceptance of a
successor’s appointment as Agent hereunder, (a) such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring Fronting Bank, if in its sole discretion it elects to, and Swingline
Lender, (b) the retiring Fronting Bank and Swingline Lender shall be discharged
from all of their respective duties and obligations hereunder or under the other
Loan Documents, and (c) the successor Fronting Bank, if in its sole discretion
it elects to, shall issue letters of credit in substitution for the Letters of
Credit, if any, outstanding at the time of such succession or make other
arrangement satisfactory to the retiring Fronting Bank to effectively assume the
obligations of the retiring Fronting Bank with respect to such Letters of
Credit.

 

13.7                        Non-Reliance on Agent and Other Lenders.  Each
Lender and Fronting Bank acknowledges that it has, independently and without
reliance upon Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender and
Fronting Bank also acknowledges that it will, independently and without reliance
upon Agent or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any
document furnished hereunder or thereunder.

 

13.8                        No Other Duties, etc.  Anything herein to the
contrary notwithstanding, none of the syndication agents, documentation agents,
co-agents, arrangers or bookrunners listed on the cover page hereof shall have
any powers, duties or responsibilities under this Agreement or any of the other
Loan Documents, except in its capacity, as applicable, as Agent, a Lender or
Fronting Bank hereunder.

 

76

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

 

13.9                        Collateral and Guaranty Matters.

 

13.9.1              Each of the Lenders (including in its or any of its
Affiliate’s capacities as a potential counterparty to an Interest Rate
Protection Agreement or Bank Products Agreement) irrevocably authorize Agent, at
its option and in its discretion:

 

(a)                                 to release any Lien on any Collateral
granted to or held by Agent under any Loan Document (i) upon the termination of
the Revolving Commitment and payment in full of all Obligations (other than
(1) contingent indemnification obligations under any of the Loan Documents and
(2) obligations and liabilities under Interest Rate Protection Agreements or
Bank Products Agreements as to which arrangements reasonably satisfactory to the
applicable Lender shall have been made) and the expiration or termination of all
Letters of Credit (other than Letters of Credit as to which other arrangements
reasonably satisfactory to Fronting Bank shall have been made), (ii) that is
sold or otherwise disposed of or to be sold or otherwise disposed of as part of
or in connection with any sale or other disposition permitted under the Loan
Documents, or (iii) if approved, authorized or ratified in writing in accordance
with Section 12.16;

 

(b)                                 to subordinate any Lien on any Collateral
granted to or held by Agent under any Loan Document to the holder of any
Permitted Lien; and

 

(c)                                  to release any Guarantor from its
obligations under any Loan Documents if such Person ceases to be a Subsidiary as
a result of a transaction permitted under the Loan Documents.

 

Upon request by Agent at any time, the Required Lenders will confirm in writing
Agent’s authority to release or subordinate its interest in particular types or
items of property, or to release any Guarantor from its obligations under the
Guaranty Agreement pursuant to this Section 13.9.  In each case as specified in
this Section 13.9, Agent will, at Borrower’s expense, execute and deliver to the
applicable Party such documents as such Party may reasonably request to evidence
the release of such item of Collateral from the assignment and security interest
granted under the Collateral Documents or to subordinate its interest in such
item, or to release such Guarantor from its obligations under any of the Loan
Documents, in each case in accordance with the terms of the Loan Documents and
this Section 13.9.  In the case of any such sale, transfer or disposal of any
property constituting Collateral in a transaction constituting a Disposition
permitted pursuant to Section 7.1, the Liens created by any of the Collateral
Documents on such property shall be automatically released without need for
further action by any Person.

 

13.9.2              Agent shall not be responsible for or have a duty to
ascertain or inquire into any representation or warranty regarding the
existence, value or collectability of the Collateral, the existence, priority or
perfection of Agent’s Lien thereon, or any certificate prepared by any Party in
connection therewith, nor shall Agent be responsible or liable to the Lenders
for any failure to monitor or maintain any portion of the Collateral.

 

13.10                 Interest Rate Protection Agreements and Bank Products
Agreements.  No lender that is a party to an Interest Rate Protection Agreement
or Bank Products Agreement that obtains the benefits of any Collateral by virtue
of the provisions hereof or of any Collateral Document shall have any right to
notice of any action or to consent to, direct or object to any action

 

77

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

 

hereunder or under any other Loan Document or otherwise in respect of the
Collateral (including the release or impairment of any Collateral) other than in
its capacity as a Lender and, in such case, only to the extent expressly
provided in the Loan Documents.  Notwithstanding any other provision of this
Section 13 to the contrary, Agent shall not be required to verify the payment
of, or that other satisfactory arrangements have been made with respect
to, Interest Rate Protection Agreements and Bank Products Agreements unless
Agent has received written notice of such Interest Rate Protection Agreements
and Bank Products Agreements, together with such supporting documentation as
Agent may request, from the applicable lender party thereto, as the case may be

 

13.11                 Indemnification. Each Lender shall, ratably in accordance
with its proportion of the Commitments, indemnify and hold Agent and its
directors, officers, agents, employees and attorneys harmless against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
(including reasonable attorneys’ fees and disbursements and allocated costs of
attorneys employed by Agent) that may be imposed on, incurred by or asserted
against it or them in any way relating to or arising out of the Loan Documents
(other than losses incurred by reason of the failure of Borrower to pay the
Indebtedness represented by the applicable Note) or any action taken or not
taken by it as Agent thereunder, except such as result from its own gross
negligence or willful misconduct. Without limitation on the foregoing, each
Lender shall reimburse Agent upon demand for that Lender’s Pro Rata Share (in
respect of the Revolving Commitment) of any out of pocket cost or expense
incurred by Agent in connection with the negotiation, preparation, execution,
delivery, amendment, waiver, restructuring, reorganization (including a
bankruptcy reorganization), enforcement or attempted enforcement of the Loan
Documents, to the extent that Borrower or any other party is required by
Section 12.2 to pay that cost or expense but fails to do so upon demand. Nothing
in this Section 13.10 shall entitle Agent or any indemnitee referred to above to
recover any amount from Lenders if and to the extent that such amount has
theretofore been recovered from Borrower. To the extent that Agent or any
indemnitee referred to above is later reimbursed such amount by Borrower, it
shall return the amounts paid to it by Lenders in respect of such amount.

 

13.12                 No Obligations of Borrower. Nothing contained in this
Section 13 shall be deemed to impose upon Borrower any obligation in respect of
the due and punctual performance by Agent of its obligations to Lenders under
any provision of this Agreement, and Borrower shall have no liability to Agent
or any of Lenders in respect of any failure by Agent or any Lender to perform
any of its obligations to Agent or Lenders under this Agreement.

 

14.                               COMMITMENT COSTS AND RELATED MATTERS.

 

14.1                        Changed Circumstances.

 

14.1.1              Circumstances Affecting LIBOR Availability.  In connection
with any request for a LIBOR Loan or a conversion to or continuation thereof, if
for any reason (a) Agent shall determine (which determination shall be
conclusive and binding absent manifest error) that Dollar deposits are not being
offered to banks in the London interbank Eurodollar market for the applicable
amount and LIBOR Loan Period of such Loan, (b) Agent shall determine (which
determination shall be conclusive and binding absent manifest error) that
reasonable and

 

78

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

 

adequate means do not exist for the ascertaining the LIBOR Basis for such LIBOR
Loan Period with respect to a proposed LIBOR Loan or (c) the Required Lenders
shall determine (which determination shall be conclusive and binding absent
manifest error) that the LIBOR Basis does not adequately and fairly reflect the
cost to such Lenders of making or maintaining such Loans during such LIBOR Loan
Period, then Agent shall promptly give notice thereof to Borrower.  Thereafter,
until Agent notifies Borrower that such circumstances no longer exist, the
obligation of the Lenders to make LIBOR Loans and the right of Borrower to
convert any Loan to or continue any Loan as a LIBOR Loan shall be suspended, and
Borrower shall either (i) repay in full (or cause to be repaid in full) the then
outstanding principal amount of each such LIBOR Loan together with accrued
interest thereon, on the last day of the then current LIBOR Loan Period
applicable to such LIBOR Loan; or (ii) convert the then outstanding principal
amount of each such LIBOR Loan to a Base Rate Loan as of the last day of such
LIBOR Loan Period.

 

14.1.2              Laws Affecting LIBOR Basis Availability.  If, after the date
hereof, the introduction of, or any change in, any Applicable Law or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any of the Lenders (or any of their
respective lending offices) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency, shall make it unlawful or impossible for any of the Lenders (or any of
their respective lending offices) to honor its obligations hereunder to make or
maintain any LIBOR Loan, such Lender shall promptly give notice thereof to Agent
and Agent shall promptly give notice to Borrower and the other Lenders. 
Thereafter, until Agent notifies Borrower that such circumstances no longer
exist, (a) the obligations of the Lenders to make LIBOR Loans, and the right of
Borrower to convert any Loan to a LIBOR Loan or continue any Loan as a LIBOR
Loan shall be suspended and thereafter Borrower may select only Base Rate Loans
and (b) if any of the Lenders may not lawfully continue to maintain a LIBOR Loan
to the end of the then current LIBOR Loan Period applicable thereto, the
applicable Loan shall immediately be converted to a Base Rate Loan for the
remainder of such LIBOR Loan Period.

 

14.2                        Indemnity.  Borrower hereby indemnifies each of the
Lenders against any loss or expense (including any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain a LIBOR Loan
or from fees payable to terminate the deposits from which such funds were
obtained) which may arise or be attributable to each Lender’s obtaining,
liquidating or employing deposits or other funds acquired to effect, fund or
maintain any Loan (a) as a consequence of any failure by Borrower to make any
payment when due of any amount due hereunder in connection with a LIBOR Loan,
(b) due to any failure of Borrower to borrow, continue or convert on a date
specified therefor in a Notice of Borrowing or Request for
Conversion/Continuation or (c) due to any payment, prepayment or conversion of
any LIBOR Loan on a date other than the last day of the LIBOR Loan Period
therefor.  The amount of such loss or expense shall be determined, in the
applicable Lender’s sole discretion, based upon the assumption that such Lender
funded its Pro Rata Share of the LIBOR Loans in the London interbank market and
using any reasonable attribution or averaging methods which such Lender deems
appropriate and practical.  A certificate of such Lender setting forth the basis
for determining such amount or amounts necessary to compensate such Lender shall
be forwarded to Borrower through Agent and shall be conclusively presumed to be
correct save for manifest error.

 

79

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

 

14.3                        Increased Costs.

 

14.3.1              Increased Costs Generally.  If any Change in Law shall:

 

(a)                                 impose, modify or deem applicable any
reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or advances,
loans or other credit extended or participated in by, any Lender (except any
reserve requirement reflected in the LIBOR Basis) or Fronting Bank;

 

(b)                                 subject any Recipient to any Taxes (other
than (i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (d) of
the definition of Excluded Taxes and (iii) Connection Income Taxes) on its
loans, loan principal, letters of credit, commitments, or other obligations, or
its deposits, reserves, other liabilities or capital attributable thereto; or

 

(c)                                  impose on any Lender or Fronting Bank or
the London interbank market any other condition, cost or expense (other than
Taxes) affecting this Agreement or LIBOR Loans made by such Lender or any Letter
of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such
Lender, Fronting Bank or such other Recipient of making, converting to,
continuing or maintaining any Loan (or of maintaining its obligation to make any
such Loan), or to increase the cost to such Lender, Fronting Bank or such other
Recipient of participating in, issuing or maintaining any Letter of Credit (or
of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender, Fronting Bank or such other Recipient hereunder (whether of principal,
interest or any other amount) then, upon written request of such Lender,
Fronting Bank or other Recipient, Borrower shall promptly pay to any such
Lender, Fronting Bank or other Recipient, as the case may be, such additional
amount or amounts as will compensate such Lender, Fronting Bank or other
Recipient, as the case may be, for such additional costs incurred or reduction
suffered.

 

14.3.2              Capital Requirements.  If any Lender or Fronting Bank
determines that any Change in Law affecting such Lender or Fronting Bank or any
lending office of such Lender or such Lender’s or Fronting Bank’s holding
company, if any, regarding capital or liquidity requirements, has or would have
the effect of reducing the rate of return on such Lender’s or Fronting Bank’s
capital or on the capital of such Lender’s or Fronting Bank’s holding company,
if any, as a consequence of this Agreement, the Revolving Commitment of such
Lender or the Loans made by, or participations in Letters of Credit or Swingline
Loans held by, such Lender, or the Letters of Credit issued by Fronting Bank, to
a level below that which such Lender or Fronting Bank or such Lender’s or
Fronting Bank’s holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s or Fronting Bank’s policies and the
policies of such Lender’s or Fronting Bank’s holding company with respect to
capital adequacy), then from time to time upon written request of such Lender or
Fronting Bank Borrower shall promptly pay to such Lender or Fronting Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or Fronting Bank or such Lender’s or Fronting Bank’s holding company for
any such reduction suffered.

 

80

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

 

14.3.3              Certificates for Reimbursement.  A certificate of a Lender,
or Fronting Bank or such other Recipient setting forth the amount or amounts
necessary to compensate such Lender Fronting Bank, such other Recipient or any
of their respective holding companies, as the case may be, as specified in
Section 14.3.1 or 14.3.2 and delivered to Borrower, shall be conclusive absent
manifest error.  Borrower shall pay such Lender or Fronting Bank or such other
Recipient, as the case may be, the amount shown as due on any such certificate
within ten (10) days after receipt thereof.

 

14.3.4              Delay in Requests.  Failure or delay on the part of any
Lender or Fronting Bank or such other Recipient to demand compensation pursuant
to this Section shall not constitute a waiver of such Lender’s or Fronting
Bank’s or such other Recipient’s right to demand such compensation; provided
that Borrower shall not be required to compensate any Lender or Fronting Bank or
any other Recipient pursuant to this Section for any increased costs incurred or
reductions suffered more than nine (9) months prior to the date that such Lender
or Fronting Bank or such other Recipient, as the case may be, notifies Borrower
of the Change in Law giving rise to such increased costs or reductions, and of
such Lender’s or Fronting Bank’s or such other Recipient’s intention to claim
compensation therefor (except that if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

 

14.4                        Taxes.

 

14.4.1              Defined Terms.  For purposes of this Section 14.4, the term
“Lender” includes Fronting Bank and the term “Applicable Law” includes FATCA.

 

14.4.2              Payments Free of Taxes.  Any and all payments by or on
account of any obligation of Borrower or any Guarantor under any Loan Document
shall be made without deduction or withholding for any Taxes, except as required
by Applicable Law.  If any Applicable Law (as determined in the good faith
discretion of an applicable Withholding Agent) requires the deduction or
withholding of any Tax from any such payment by a Withholding Agent, then the
applicable Withholding Agent shall be entitled to make such deduction or
withholding and shall timely pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with Applicable Law and, if such
Tax is an Indemnified Tax, then the sum payable by Borrower or the applicable
Guarantor shall be increased as necessary so that, after such deduction or
withholding has been made (including such deductions and withholdings applicable
to additional sums payable under this Section), the applicable Recipient
receives an amount equal to the sum it would have received had no such deduction
or withholding been made.

 

14.4.3              Payment of Other Taxes by Borrower.  Borrower shall timely
pay to the relevant Governmental Authority in accordance with Applicable Law, or
at the option of Agent timely reimburse it for the payment of, any Other Taxes.

 

14.4.4              Indemnification by Borrower.  Borrower shall indemnify each
Recipient, within ten (10) days after demand therefor, for the full amount of
any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section) payable or paid by such
Recipient or required to be withheld or deducted from a

 

81

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

 

payment to such Recipient and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority.  A certificate as to
the amount of such payment or liability delivered to Borrower by a Recipient
(with a copy to Agent), or by Agent on its own behalf or on behalf of a
Recipient, shall be conclusive absent manifest error.

 

14.4.5              Indemnification by the Lenders.  Each Lender shall severally
indemnify Agent, within ten (10) days after demand therefor, for (a) any
Indemnified Taxes attributable to such Lender (but only to the extent that
Borrower has not already indemnified Agent for such Indemnified Taxes and
without limiting the obligation of Borrower to do so), and (b) any Excluded
Taxes attributable to such Lender, in each case, that are payable or paid by
Agent in connection with any Loan Document, and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  A
certificate as to the amount of such payment or liability delivered to any
Lender by Agent shall be conclusive absent manifest error.  Each Lender hereby
authorizes Agent to set off and apply any and all amounts at any time owing to
such Lender under any Loan Document or otherwise payable by Agent to the Lender
from any other source against any amount due to the Administrative Agent under
this Section 14.4.5.

 

14.4.6              Evidence of Payments.  As soon as practicable after any
payment of Taxes by Borrower to a Governmental Authority pursuant to this
Section 14.4, Borrower shall deliver to Agent the original or a certified copy
of a receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to Agent.

 

14.4.7              Treatment of Certain Refunds.  If any party determines, in
its sole discretion exercised in good faith, that it has received a refund of
any Taxes as to which it has been indemnified pursuant to this Section 14.4
(including by the payment of additional amounts pursuant to this Section 14.4),
it shall pay to the indemnifying party an amount equal to such refund (but only
to the extent of indemnity payments made under this Section with respect to the
Taxes giving rise to such refund), net of all out-of-pocket expenses (including
Taxes) of such indemnified party and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund).  Such
indemnifying party, upon the request of such indemnified party, shall repay to
such indemnified party the amount paid over pursuant to this Section 14.4.7
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) in the event that such indemnified party is required to
repay such refund to such Governmental Authority.  Notwithstanding anything to
the contrary in this Section 14.4.7, in no event will the indemnified party be
required to pay any amount to an indemnifying party pursuant to this
Section 14.4.7) the payment of which would place the indemnified party in a less
favorable net after-Tax position than the indemnified party would have been in
if the Tax subject to indemnification and giving rise to such refund had not
been deducted, withheld or otherwise imposed and the indemnification payments or
additional amounts with respect to such Tax had never been paid.  This
Section shall not be construed to require any indemnified party to make
available its Tax returns (or any other information relating to its Taxes that
it deems confidential) to the indemnifying party or any other Person.

 

82

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

 

14.4.8              Survival.  Each party’s obligations under this Section 14.4
shall survive the resignation or replacement of Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Loan
Document.

 

14.5                        Federal Reserve System/Wire Transfers. The
obligation of any Lender to make any loan by wire transfer to Borrower or any
other Person shall be subject to all Applicable Law, including the policy of the
Board of Governors of the Federal Reserve System on Reduction of Payments System
Risk as in effect from time to time. Borrower acknowledges that such laws,
regulations and policy may delay the transmission of any funds to Borrower.

 

14.6                        Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate.

 

14.6.1              If any Lender requests compensation under Section 14.3, or
requires the Borrower to pay any Indemnified Taxes or additional amounts to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 14.4, then such Lender shall (at the request of Borrower) use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 14.3 or 14.4, as the case may be, in the future, and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender.  Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

 

14.6.2              In the event (a) any Lender (i) requests compensation
pursuant to Section 14.3 or (ii) requires Borrower to pay any Indemnified Taxes
or additional amounts to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 14.4 and, in each case of the
foregoing subsections (i) and (ii), such Lender has declined or is unable to
designate a different lending office in accordance with Section 14.6.1, (b) any
Lender delivers a notice described in Section 14.1, 14.3 or 14.4, (c) any Lender
refuses to consent to any amendment, waiver or other modification of any Loan
Document requested by any Borrower and which consent is required under this
Agreement for such amendment, waiver or other modification, or (d) any Lender is
a Defaulting Lender, Borrower may, at its sole expense and effort (including
with respect to the assignment fee referred to in Section 12.8.4), upon notice
to such Lender and Agent, require such Lender to transfer and assign, without
recourse (in accordance with and subject to the restrictions contained in
Section 12.8.2), all of its interests, rights and obligations under this
Agreement to an Eligible Assignee that shall assume such assigned obligations
(which Eligible Assignee may be another Lender, if a Lender accepts such
assignment); provided that (x) such assignment shall not conflict with any law,
rule or regulation or order of any court or other Governmental Authority having
jurisdiction, (y) Borrower shall have received the prior written consent of
Agent, which consent shall not unreasonably be withheld or delayed, and
(z) Borrower or such assignee shall have paid to the affected Lender in
immediately available funds an amount equal to the sum of the principal of and
interest accrued to the date of such payment on the outstanding Loans of such
Lender, respectively, affected by such assignment plus all fees and other
amounts accrued for the account of such Lender to the extent provided hereunder
(and, with respect to replacement of a Defaulting Lender, any

 

83

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

 

additional amounts required to be paid under Section 12.8.6; provided further
that, if prior to any such transfer and assignment the circumstances or event
that resulted in such Lender’s claim for compensation or notice, as referred to
above in (a) and (b) of this Section 14.6, as the case may be, cease to cause
such Lender to suffer increased costs or reductions in amounts received or
receivable or reduction in return on capital, or cease to have the consequences
specified in Section 14.1, 14.3 or 14.4, or cease to result in amounts being
payable under Section 14.1 or 14.2, as the case may be, or if such Lender shall
waive its right to claim or notice under Section 14.1, 14.3 or 14.4, as
applicable in respect of such circumstances or event or shall consent to the
proposed amendment, waiver, consent or other modification, as the case may be,
then such Lender shall not thereafter be required to make any such transfer and
assignment hereunder. Each Lender hereby grants to Agent an irrevocable power of
attorney (which power is coupled with an interest) to execute and deliver, on
behalf of such Lender as assignor, any Commitment Assignment and Acceptance
necessary to effectuate any assignment of such Lender’s interests hereunder in
the circumstances contemplated by this paragraph. Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such filing or assignment, delegation and transfer.

 

[SIGNATURE PAGES FOLLOW]

 

84

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

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.

 

 

DTS, INC.,

 

a Delaware corporation

 

 

 

 

 

 

By:

/s/ Melvin Flanigan

 

Name:

Melvin Flanigan

 

Title:

Chief Financial Officer

 

Signature Page to

Credit Agreement

 

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

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent, Swingline Lender, Fronting
Bank and Lender

 

 

 

 

 

 

 

By:

/s/ Greg Cohn

 

Name:

Greg Cohn

 

Title:

Senior Vice President

 

Signature Page to

Credit Agreement

 

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

 

Exhibit A

 

Form of Commitment Assignment and Acceptance

 

[TO BE APPENDED]

 

A-1

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

 

Exhibit B

 

Form of Compliance Certificate

 

[TO BE APPENDED]

 

B-1

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

 

Exhibit C

 

Form of Notice of Borrowing

 

[TO BE APPENDED]

 

C-1

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

 

Exhibit D

 

Form of Request for Conversion/Continuation

 

[TO BE APPENDED]

 

D-1

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

 

Schedule 1.1

 

Schedule of Documents

 

COLLATERAL DOCUMENTS

 

1.              Security Agreement

 

2.              Original stock certificate of Phorus, Inc. and original undated
stock power required to be delivered to Agent under Section 4.1(a) of the
Security Agreement

 

3.              Collateral Assignment

 

4.              UCC-1 Financing Statements on Borrower and Guarantors

 

5.              Pledge Agreement (BVI Sub)

 

6.              Original share certificates and original undated stock powers
executed in blank with respect to 65% of the voting equity interest and 100% of
the non-voting equity interest of BVI Sub

 

LOAN DOCUMENTS

 

7.              Credit Agreement

 

8.              Term Note

 

9.              Revolving Note

 

10.       Swingline Note

 

11.       Guaranty

 

12.       Fee Letter

 

13.       Closing Certificate

 

14.       Secretary’s Certificates and Resolutions for Borrower and Guarantors

 

15.       Opinion of Borrower’s and Guarantors’ Counsel

 

Schedule 1.1 - 1

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

 

Schedule 2.1

 

Commitments; Lenders; Pro Rata Shares

 

Term
Commitment

 

Revolving
Commitment

 

Lender

 

Pro Rata Share
of Term
Commitment

 

Pro Rata
Share of
Revolving
Commitment

 

$

25,000,000

 

$

25,000,000

 

Wells Fargo Bank, National Association

 

100

%

100

%

 

Schedule 2.1 - 1

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

 

Schedule 5.2

 

Locations of Offices, Collateral and Books and Records

 

Schedule 5.2 - 1

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

 

Schedule 5.5

 

Subsidiaries

 

Schedule 5.5 - 1

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

 

Schedule 5.9

 

Intellectual Property

 

Schedule 5.9 - 1

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

 

Schedule 5.10

 

Litigation

 

Schedule 5.10 - 1

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

 

Schedule 5.17

 

Hazardous Materials

 

Schedule 5.17 - 1

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

 

Schedule 5.19

 

Insurance

 

Schedule 5.19 - 1

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

 

Schedule 6.16

 

Post-Closing

 

1.              Within three (3) Business Days of the Closing Date, executed
Deposit Account Control Agreement by and between Borrower, Agent and Comerica
Bank, in form and substance reasonably satisfactory to Agent.

 

2.              Within three (3) Business Days of the Closing Date, executed
Termination Letter terminating the Deposit Account Control Agreement by and
between Borrower, Comerica Bank and Union Bank, N.A., as administrative agent,
regarding deposit account 1891677054, in form and substance reasonably
satisfactory to Agent.

 

3.              Within five (5) Business Days of the Closing Date, delivery of
loss payable endorsement to property insurance certificate, in form and
substance reasonably satisfactory to Agent.

 

Schedule 6.16 - 1

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

 

Schedule 7.7

 

Existing Liens

 

Schedule 7.7 - 1

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

 

Schedule 7.8

 

Existing Indebtedness

 

Schedule 7.8 - 1

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

 

Schedule 7.10

 

Existing Investments

 

Schedule 7.10 - 1

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