Exhibit 10.1
 
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
by and among
 
JAZZ SEMICONDUCTOR, INC.,
 
and
 
NEWPORT FAB, LLC,
as Borrowers,
 
JAZZ TECHNOLOGIES, INC.,
as Parent Guarantor,

WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN),
as Administrative Agent,
 
WACHOVIA CAPITAL MARKETS, LLC,
as Lead Arranger, Bookrunner and Syndication Agent

and

THE LENDERS FROM TIME TO TIME PARTY HERETO,
as Lenders

Dated as of: September 19, 2008
 

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TABLE OF CONTENTS

   
Page
     
SECTION 1.
DEFINITIONS
2
SECTION 2.
CREDIT FACILITIES
28
2.1
Loans
28
2.2
Letters of Credit
29
2.3
Commitments
32
SECTION 3.
INTEREST AND FEES
32
3.1
Interest
32
3.2
Fees
34
3.3
Changes in Laws and Increased Costs of Loans
35
SECTION 4.
CONDITIONS PRECEDENT
36
4.1
Conditions Precedent to Initial Loans and Letters of Credit
36
4.2
Conditions Precedent to All Loans and Letters of Credit
39
SECTION 5.
GRANT AND PERFECTION OF SECURITY INTEREST
40
5.1
Grant of Security Interest
40
5.2
Perfection of Security Interests
42
SECTION 6.
COLLECTION AND ADMINISTRATION
46
6.1
Borrowers’ Loan Accounts
46
6.2
Statements
46
6.3
Collection of Accounts
47
6.4
Payments
48
6.5
Authorization to Make Loans
50
6.6
Use of Proceeds
51
6.7
Pro Rata Treatment
51
6.8
Sharing of Payments, Etc.
51
6.9
Settlement Procedures
52
6.10
Obligations Several; Independent Nature of Lenders’ Rights
54
SECTION 7.
COLLATERAL REPORTING AND COVENANTS
55
7.1
Collateral Reporting
55
7.2
Accounts Covenants
55
7.3
Inventory Covenants
56

 
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TABLE OF CONTENTS
(continued)

   
Page
     
7.4
Equipment Covenants
57
7.5
Power of Attorney
58
7.6
Right to Cure
58
7.7
Access to Premises
59
SECTION 8.
REPRESENTATIONS AND WARRANTIES
59
8.1
Corporate Existence, Power and Authority
59
8.2
Name; State of Organization; Chief Executive Office; Collateral Locations
60
8.3
Financial Statements; No Material Adverse Change
60
8.4
Priority of Liens; Title to Properties
61
8.5
Tax Returns
61
8.6
Litigation
61
8.7
Compliance with Other Agreements and Applicable Laws
61
8.8
Environmental Compliance
62
8.9
Employee Benefits
63
8.10
Bank Accounts
63
8.11
Intellectual Property
64
8.12
Subsidiaries; Capitalization; Solvency
64
8.13
Labor Disputes
65
8.14
Restrictions on Credit Parties
65
8.15
Material Contracts
66
8.16
Payable Practices
66
8.17
Accuracy and Completeness of Information
66
8.18
Survival of Warranties; Cumulative
66
SECTION 9.
AFFIRMATIVE AND NEGATIVE COVENANTS
66
9.1
Maintenance of Existence
66
9.2
New Collateral Locations
67
9.3
Compliance with Laws, Regulations, Etc
67
9.4
Payment of Taxes and Claims
68
9.5
Insurance
69
9.6
Financial Statements and Other Information
69

 
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TABLE OF CONTENTS
(continued)

   
Page
     
9.7
Sale of Assets, Consolidation, Merger, Dissolution, Etc
71
9.8
Encumbrances
75
9.9
Indebtedness
77
9.10
Loans, Investments, Etc
80
9.11
Dividends and Redemptions
84
9.12
Transactions with Affiliates
85
9.13
Compliance with ERISA
86
9.14
End of Fiscal Years; Fiscal Quarters
86
9.15
Change in Business
86
9.16
Limitation of Restrictions Affecting Subsidiaries
87
9.17
Intentionally Omitted
87
9.18
Minimum Consolidated EBITDA
87
9.19
License Agreements
87
9.20
Foreign Assets Control Regulations, Etc
88
9.21
After Acquired Real Property
88
9.22
Costs and Expenses
89
9.23
Further Assurances
89
9.24
Permitted Transfers to Foreign Parent Nonguarantor and its Affiliates
90
SECTION 10.
EVENTS OF DEFAULT AND REMEDIES
91
10.1
Events of Default
91
10.2
Remedies
93
SECTION 11.
JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
97
11.1
Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver;
California Judicial Reference
97
11.2
Amendments and Waivers
98
11.3
Waiver of Counterclaims
100
11.4
Indemnification
101
SECTION 12.
JOINT AND SEVERAL LIABILITY; SURETYSHIP WAIVERS; ETC
101
12.1
Independent Obligations; Subrogation
101

 
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TABLE OF CONTENTS
(continued)

 
Page
     
12.2
Authority to Modify Obligations and Security
102
12.3
Waiver of Defenses
102
12.4
Exercise of Lender’s Rights
102
12.5
Additional Waivers
102
12.6
Additional Indebtedness
103
12.7
Waiver of Notices
103
12.8
Subordination
103
12.9
Revival
104
12.10
Understanding of Waivers
104
12.11
Appointment, Powers and Immunities
105
12.12
Reliance by Agent
105
12.13
Events of Default
105
12.14
Wachovia in its Individual Capacity
106
12.15
Indemnification
106
12.16
Non-Reliance on Agent and Other Lenders
106
12.17
Failure to Act
107
12.18
Additional Loans
107
12.19
Concerning the Collateral and the Related Financing Agreements
107
12.20
Field Audit, Examination Reports and other Information; Disclaimer by Lenders
107
12.21
Collateral Matters
108
12.22
Agency for Perfection
110
12.23
Successor Agent
110
12.24
Other Agent Designations
110
SECTION 13.
TERM OF AGREEMENT; MISCELLANEOUS
111
13.1
Term
111
13.2
Interpretative Provisions
112
13.3
Notices
113
13.4
Partial Invalidity
115
13.5
Confidentiality
115

 
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TABLE OF CONTENTS
(continued)

    Page      
13.6
Successors
116
13.7
Assignments; Participations
117
13.8
Entire Agreement
118
13.9
USA Patriot Act
119
13.10
Counterparts, Etc
119

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INDEX
TO
EXHIBITS AND SCHEDULES

Exhibit A
Assignment and Acceptance Agreement
   
Exhibit B
Information Certificate
   
Exhibit C
Form of Compliance Certificate
   
Exhibit D
Form of Borrowing Base Certificate
   
Exhibit E
Form of Non-U.S. Lender Statement
   
Exhibit F
Form of Agreement with Foreign Parent Nonguarantor
   
Schedule 1.49
Equipment Sublimit
   
Schedule 1.59
Existing Letters of Credit
   
Schedule 1.107
Permitted Holders
   
Schedule 1.113
Qualified Cash Accounts
   
Schedule 8.8
Environmental Compliance
   
Schedule 8.13
Labor Disputes
   
Schedule 8.15
Material Contracts
   
Schedule 9.9
Permitted Indebtedness
   
Schedule 9.10
Existing Loans and Advances

 

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SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
This Second Amended and Restated Loan and Security Agreement dated as of
September 19, 2008 (this “Agreement”) is entered into by and among Jazz
Semiconductor, Inc., a Delaware corporation (“Jazz” as hereinafter further
defined), Newport Fab, LLC (d/b/a Jazz Semiconductor Operating Company), a
Delaware limited liability company (“Operating Company” as hereinafter further
defined, and Operating Company together with Jazz, collectively, the “Borrowers”
and each of them individually, a “Borrower” as hereinafter further defined),
Jazz Technologies, Inc., formerly known as Acquicor Technology Inc., a Delaware
corporation (“Parent Guarantor” and together with its successors (whether by
merger or operation of law) and any other Person that at any time after the
Effective Date becomes a Guarantor, each individually a “Guarantor” and
collectively, “Guarantors” as hereinafter further defined), the parties hereto
from time to time as lenders, whether by execution of this Agreement or an
Assignment and Acceptance (each individually, a “Lender” and collectively,
“Lenders” as hereinafter further defined), Wachovia Capital Markets, LLC, as
lead arranger, bookrunner and syndication agent (“Syndication Agent”), and
Wachovia Capital Finance Corporation (Western), a California corporation
(“Agent” as hereinafter further defined).
 
W I T N E S S E T H:
 
WHEREAS, Wachovia (as defined below), Borrowers and Parent Guarantor previously
have entered into that certain Amended and Restated Loan and Security Agreement
dated as of February 28, 2007 (as amended, restated, supplemented or otherwise
modified from time to time, the “Existing Loan Agreement”), pursuant to which
Wachovia has provided certain loans and other financial accommodations to
Borrowers;
 
WHEREAS, Parent Guarantor has entered into that certain Agreement and Plan of
Merger (as defined below), pursuant to which all of the outstanding Capital
Stock (as defined below) of Parent Guarantor will be acquired by Foreign Parent
Nonguarantor (as defined below);
 
WHEREAS, the parties hereto have agreed to amend and restate in their entirety
the agreements contained in the Existing Loan Agreement as amongst themselves;
 
WHEREAS, each Lender is willing to agree (severally and not jointly) to make
loans and provide financial accommodations to Borrowers on a pro rata basis
according to its Commitment (as defined below) on the terms and conditions set
forth herein and Agent is willing to act as administrative agent for Lenders on
the terms and conditions set forth herein and in the other Financing Agreements
(as defined below); and
 
WHEREAS, each Borrower hereby restates, ratifies and reaffirms each and every
term and condition set forth in the Existing Loan Agreement, as amended and
restated hereby, and the other Financing Agreements effective as of the date
hereof;
 
NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto amend and
restate the Existing Loan Agreement and agree as follows:
 

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SECTION 1. DEFINITIONS
 
For purposes of this Agreement, the following terms shall have the respective
meanings given to them below:
 
1.1 “Accounts” shall mean, as to each Borrower and Guarantor, all present and
future rights of such Borrower and Guarantor to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (a) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, (b) for services rendered
or to be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit, charge or debit card or information
contained on or for use with such card.
 
1.2 “Accounts Sublimit” shall mean, at any time, the amount equal to
$25,000,000, as reduced by any reduction thereof pursuant to Section 2.1(c)
hereof.
 
1.3 “Act” shall have the meaning set forth in Section 13.9 hereof.
 
1.4 “Adjusted Eurodollar Rate” shall mean, with respect to each Interest Period
for any Eurodollar Rate Loan comprising part of the same borrowing (including
conversions, extensions and renewals), the rate per annum determined by dividing
(a) the London Interbank Offered Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, “Reserve Percentage” shall mean for any day, that percentage (expressed
as a decimal) which is in effect from time to time under Regulation D of the
Board of Governors of the Federal Reserve System (or any successor), as such
regulation may be amended from time to time or any successor regulation, as the
maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of Eurodollar Rate Loans is determined), whether or not any
Lender has any Eurocurrency liabilities subject to such reserve requirement at
that time. Eurodollar Rate Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
benefits of credits for proration, exceptions or offsets that may be available
from time to time to a Lender. The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Percentage.
 
1.5 “Affiliate” shall mean, with respect to a specified Person, any other Person
which directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such Person, and without limiting
the generality of the foregoing, includes (a) any Person which beneficially owns
or holds twenty percent (20%) or more of any class of Voting Stock of such
Person or other equity interests in such Person, (b) any Person of which such
Person beneficially owns or holds twenty percent (20%) or more of any class of
Voting Stock or in which such Person beneficially owns or holds twenty percent
(20%) or more of the equity interests and (c) any director or executive officer
of such Person. For the purposes of this definition, the term “control”
(including with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
 
2

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1.6 “Agent” shall mean Wachovia Capital Finance Corporation (Western), in its
capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
 
1.7 “Agent Payment Account” shall mean account no. 5000000030321 of Agent at
Wachovia Bank, National Association, or such other account of Agent as Agent may
from time to time designate to Borrowers as the Agent Payment Account for
purposes of this Agreement and the other Financing Agreements.
 
1.8 “Agreement and Plan of Merger” shall have the meaning set forth in Section
4.1(p) hereof.
 
1.9 “Armstrong” shall mean Armstrong Acquisition Corp., a Delaware corporation.
 
1.10 “Applicable Margin” shall mean, at any time, with respect to any Prime Rate
Loan or Eurodollar Rate Loan, the applicable rate per annum set forth below
under the caption “Prime Spread” or “Eurodollar Spread”, as the case may be,
based upon the Consolidated Fixed Charge Coverage Ratio of Parent Guarantor and
its Subsidiaries during the four (4) fiscal quarters ending on the most recent
determination date, provided that until the first day of the month immediately
following the delivery to Agent, pursuant to Section 9.6(a) hereof, of the
audited consolidated financial information for the fiscal year ending December
31, 2008, the “Applicable Margin” shall be the applicable rate per annum set
forth below in Tier I:

Level
 
Consolidated
Fixed Charge
Coverage Ratio
(“CFCCR”)
 
Prime Spread
 
Eurodollar
Spread
 
Unused Line Fee
 
Tier I
   
CFCCR<1.25 to 1.0
   
0.75
%
 
2.50
%
 
0.375
%
Tier II
   
CFCCR>1.25 to 1.0 and <1.50 to 1.0
   
0.50
%
 
2.25
%
 
0.250
%
Tier III
   
CFCCR>1.50 to 1.0
   
0.25
%
 
2.00
%
 
0.250
%

 
3

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provided, however, that, notwithstanding the foregoing, if the Excess
Availability on the date on which the “Applicable Margin” would otherwise be
adjusted pursuant to clause (b) below is less than $10,000,000, the “Applicable
Margin” shall be the applicable rate per annum set forth above in Tier I. For
purposes of the foregoing, (a) the Applicable Margin shall be determined as of
the end of each fiscal year or quarter of Parent Guarantor (commencing with the
fiscal year ending December 31, 2008) based upon the audited yearly or quarterly
financial statements delivered pursuant to Section 9.6(a), and (b) each change
in the Applicable Margin resulting from the Consolidated Fixed Charge Coverage
Ratio of Parent Guarantor and its Subsidiaries shall be effective during the
period commencing on and including the first day of the month immediately
following the date of delivery to Agent of such financial statements indicating
such change and ending on the date immediately preceding the effective date of
the next such change, provided that the Consolidated Fixed Charge Coverage Ratio
shall be deemed to be in Tier I at the option of Agent or at the request of the
Required Lenders if Parent Guarantor fails to deliver the audited yearly or
quarterly SEC filed financial statements required to be delivered by it pursuant
to Section 9.6(a) hereof, during the period from the expiration of the time for
delivery thereof until such financial statements are delivered. If any such
financial statements overstate the Consolidated Fixed Charge Coverage Ratio, and
if as a result of such overstatement, the interest and fees charged hereunder
are less than what would have been charged had such financial statements
accurately stated the Consolidated Fixed Charge Coverage Ratio, then Borrowers
shall be responsible for the difference between the interest and fees charged as
result of such overstatement and what would have been charged had such financial
statements accurately stated the Consolidated Fixed Charge Coverage Ratio, and
shall pay the amount of such difference to Agent upon its demand therefor.
 
1.11 “Assignment and Acceptance” shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender’s interest hereunder in accordance with the provisions of Section 13.7
hereof.
 
1.12 “Bank Products” shall mean any one or more of the following types of
services or facilities provided to Borrowers, Guarantors, or any of their
respective Subsidiaries upon Borrowers request by a Bank Product Provider,
including but not limited to: (a) stored value cards, (b) cash management or
related services, including (i) the automated clearinghouse transfer of funds
for the account of Borrowers, Guarantors, or any of their respective
Subsidiaries pursuant to agreement or overdraft for any accounts of Borrowers,
Guarantors, or any of their respective Subsidiaries maintained at Wachovia Bank,
National Association or any Bank Product Provider that are subject to the
control of Agent pursuant to any Deposit Account Control Agreement to which
Agent or such Bank Product Provider is a party, as applicable, and (ii)
controlled disbursement services, (c) Hedge Agreements if and to the extent
permitted hereunder, and (d) foreign exchange contracts.
 
1.13 “Bank Product Providers” shall mean Wachovia and any of its Affiliates.
 
1.14 “Bank Product Reserve” shall mean any and all reserves that Agent may
establish from time to time with Borrowers’ consent for the Bank Products
provided by any Bank Product Provider which are then outstanding.
 
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1.15 “Blocked Accounts” shall have the meaning set forth in Section 6.3 hereof.
 
1.16 “Borrowers” shall mean, collectively, the following (together with their
respective successors and assigns): (a) Jazz Semiconductor, Inc., a Delaware
corporation; (b) Newport Fab, LLC (d/b/a Jazz Semiconductor Operating Company),
a Delaware limited liability company; and (c) any other Person that at any time
after the date hereof becomes a Borrower; each sometimes being referred to
herein individually as a “Borrower”.
 
1.17 “Borrowing Base” shall mean, at any time, the sum of:
 
(a) the amount equal to the lesser of: (i) eighty-five percent (85%) of the
Eligible Accounts of Borrowers, minus Reserves relating to Accounts, or (ii) the
Accounts Sublimit; plus
 
(b) the amount equal to the lesser of: (i) (A) the product of (I) seventy
percent (70%) times (II) the “net orderly liquidation value” of the Eligible
Equipment of Borrowers determined in a “balanced market”, as such balanced
market, as of any date of determination, shall be defined in the most recent
appraisal of Equipment then received by Agent in accordance with Section 7.4
hereof, minus (B) Reserves relating to Equipment, or (ii) the Equipment
Sublimit; minus
 
(c) $5,000,000; minus
 
(d) Reserves other than those set forth in Sections 1.16(a) or (b) hereof and
actually applied.
 
1.18 “Borrowing Base Certificate” shall have the meaning given to such term in
Section 7.1(a)(ii) hereof.
 
1.19 “Business Day” shall mean any day other than a Saturday, Sunday, or other
day on which commercial banks are authorized or required to close under the laws
of the State of California, the State of New York or the State of North
Carolina, and a day on which the Reference Bank and Agent are open for the
transaction of business, except that if a determination of a Business Day shall
relate to any Eurodollar Rate Loans, the term Business Day shall also exclude
any day on which banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market.
 
1.20 “Capital Expenditures” shall mean, for any period, any expenditure of money
under a Capital Lease or for the lease, purchase, or other acquisition of any
capital asset (excluding consumables and spares), for the lease of any other
asset, whether payable currently or in the future, or for the purchase or
construction of assets, or for improvements or additions thereto, which are
capitalized on a Person’s balance sheet.
 
1.21 “Capital Leases” shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or
mixed) by such Person as lessee which in accordance with GAAP, is required to be
reflected as a capital lease on the balance sheet of such Person.
 
5

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1.22 “Capital Stock” shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock or partnership, limited liability company or other equity
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
 
1.23 “Cash Equivalents” shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$1,000,000,000; (c) commercial paper (including variable rate demand notes) with
a maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of any Borrower or Guarantor) organized under the laws of any State of
the United States of America or the District of Columbia and rated at least A-1
by Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies,
Inc. or at least P-1 by Moody's Investors Service, Inc.; (d) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) above entered into with any
financial institution having combined capital and surplus and undivided profits
of not less than $1,000,000,000; (e) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within ninety (90) days or less
from the date of acquisition; provided, that the terms of such agreements comply
with the guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; (f) investments in money market funds and
mutual funds which invest substantially all of their assets in securities of the
types described in clauses (a) through (e) above; and (g) investments in any
Borrower’s or Guarantor’s investment plan as in effect on the Effective Date or
as previously disclosed to and approved by Agent.
 
1.24 “Change of Control” shall mean (a) the transfer (in one transaction or a
series of transactions) of all or substantially all of the assets of any
Borrower or Guarantor to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act), other than as permitted in Section 9.7 hereof;
(b) the liquidation or dissolution of any Borrower or Guarantor or the adoption
of a plan by the stockholders of any Borrower or Guarantor relating to the
dissolution or liquidation of such Borrower or Guarantor, other than as
permitted in Section 9.7 hereof; (c) the acquisition by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act), except for one or
more Permitted Holders, of beneficial ownership, directly or indirectly, of
thirty-five percent (35%) of the voting power of the total outstanding Voting
Stock of any Borrower or Guarantor; (d) during any period of two (2) consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of any Borrower or Guarantor (together with any new directors who have
been appointed by any Permitted Holder, or whose nomination for election by the
stockholders of such Borrower or Guarantor, as the case may be, was approved by
a vote of at least sixty-six and two-thirds (66 2/3%) percent of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of any
Borrower or Guarantor then still in office; or (e) the failure of Parent
Guarantor to own directly or indirectly one hundred (100%) percent of the voting
power of the total outstanding Voting Stock of any other Borrower or Guarantor.
 
6

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1.25 “Code” shall mean the Internal Revenue Code of 1986, as the same now exists
or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
 
1.26 “Collateral” shall have the meaning set forth in Section 5.1 hereof.
 
1.27 “Collateral Access Agreement” shall mean an agreement in writing, in form
and substance reasonably satisfactory to Agent, from (a) any lessor of premises
located in the United States to any Borrower or Guarantor where Collateral with
a fair market value in excess of $2,500,000 in the aggregate is stored, or (b)
any other person (i) to whom any Collateral with a fair market value in excess
of $2,500,000 in the aggregate is consigned or (ii) who has custody, control or
possession of any such Collateral in the United States with a fair market value
in excess of $2,500,000 in the aggregate or (iii) is otherwise the owner or
operator of any premises located in the United States on which (A) any financial
books and records of any Borrower or Guarantor is located or (B) any Borrower or
Guarantor stores, manufactures or fabricates any of such Collateral with a fair
market value in excess of $2,000,000 in the aggregate (including, without
limitation, as of the Effective Date, the following location: 4321 Jamboree
Road, Newport Beach, California 92660), in favor of Agent with respect to such
Collateral at such premises or otherwise in the custody, control or possession
of such lessor, consignee or other person.
 
1.28 “Commitment” shall mean, at any time, as to each Lender, the principal
amount set forth below such Lender’s signature on the signatures pages hereto
designated as the Commitment or on Schedule 1 to the Assignment and Acceptance
Agreement pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of Section 13.7 hereof, as the same may be adjusted from
time to time in accordance with the terms hereof; sometimes being collectively
referred to herein as “Commitments”.
 
1.29 “Conexant” shall mean Conexant Systems, Inc., a Delaware corporation.
 
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1.30 “Consolidated EBITDA” shall mean, with respect to any Person for any
period, Consolidated Net Income of such Person and its Subsidiaries for such
period plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) Consolidated Net Interest Expense of such Person and its
Subsidiaries, amortization or write-off of debt discount and debt issuance costs
and commissions, discounts and other fees and charges associated with
Indebtedness (including unused line fees and administrative fees and charges
with respect to the Credit Facility), (c) depreciation and amortization expense
(excluding such expense (i) relating to consumables and spares, and (ii) to the
extent that the properties or assets being depreciated primarily benefit Foreign
Parent Nonguarantor), (d) amortization or impairment of intangibles (including,
but not limited to, goodwill) and organization costs, (e) any extraordinary,
unusual or non-recurring expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, losses on sales of assets outside of the ordinary course of
business), (f) any other non-cash charges, expenses or losses, including in
relation to earn-outs and similar obligations (except to the extent such
charges, expenses or losses represent an accrual of or reserve for cash expenses
in any future period or an amortization of a prepaid cash expense paid in a
prior period), (g) to the extent incurred after the Effective Date,
restructuring and integration costs related to any acquisition transaction or
Joint Venture permitted hereby (except to the extent such costs relate to the
acquisition of Parent Guarantor by Foreign Parent Nonguarantor), (h)
stock-option based compensation expenses, (i) to the extent such costs, fees and
expenses are incurred after the Effective Date, transaction costs, fees and
expenses related to a completed acquisition transaction or a Joint Venture
transaction permitted hereby (except to the extent such fees, costs or expenses
relate to the acquisition of Parent Guarantor by Foreign Parent Nonguarantor),
(j) the non-cash portion of straight-line rent expense, (k) proceeds from any
business interruption insurance (in the case of this clause (k) to the extent
not reflected as revenue or income in such statement of such Consolidated Net
Income), (l) losses recognized and expenses incurred in connection with the
effect of currency and exchange rate fluctuations on intercompany balances and
other balance sheet items, (m) cash expenses relating to earn-outs and similar
obligations, and (n) to the extent incurred prior to the Effective Date and
paid, and to the extent reasonably approved of by Agent, costs and expenses
incurred by Parent Guarantor and its Subsidiaries in connection with the
acquisition by Foreign Parent Nonguarantor of Parent Guarantor in an aggregate
amount not to exceed $2,500,000, and minus, to the extent included in the
statement of such Consolidated Net Income for such period, the sum of (i)
interest income (except to the extent deducted in determining Consolidated Net
Interest Expense), (ii) any extraordinary, unusual or non-recurring income or
gains (including, without limitation, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such period,
(1) gains on the sales of assets outside of the ordinary course of business, (2)
one-time settlement gains, and (3) gains on the sale of retired capital assets),
(iii) any other non-cash income or gains (other than the accrual of revenue in
the ordinary course), all as determined on a consolidated basis, (iv) cash
payments in connection with “straight-line” rent expense which exceed the amount
expensed in respect of such rent expense, (v) gains realized and income accrued
in connection with the effect of currency and exchange rate fluctuations on
intercompany balances and other balance sheet items and (vi) gains realized and
income accrued in connection with the redemption of the Senior Notes (for the
avoidance of doubt, any gains realized and income accrued in connection with the
redemption of the Senior Notes incurred prior to the Effective Date shall be
excluded from this calculation).
 
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1.31 “Consolidated Fixed Charge Coverage Ratio” shall mean, as of the last day
of each fiscal quarter of Parent Guarantor, and based on the financial statement
furnished in accordance with Section 9.6(a), the quotient (expressed as a ratio)
obtained by dividing (a) Consolidated EBITDA (computed for the trailing four
quarters then ending) of Parent Guarantor by (b) Consolidated Fixed Charges
(computed for the trailing four quarters then ending).
 
1.32 “Consolidated Fixed Charges” shall mean, with respect to any period, the
sum of, without duplication, (a) all Consolidated Net Interest Expense paid or
required to be paid in cash, plus (b) all regularly scheduled (as determined at
the beginning of such period) principal payments of Indebtedness (for the
avoidance of doubt, for purposes of this calculation only, any reductions in the
Equipment Sublimit shall be excluded from the calculation of “Consolidated Fixed
Charges”), plus (c) all scheduled fees payable to Agent or any Lender, plus (d)
all unfinanced Capital Expenditures, plus (e) all taxes paid or required to be
paid in cash, plus (f) cash dividends and other cash distributions (including
stock repurchases) to Foreign Parent Nonguarantor, plus (g) management fees,
plus (h) Senior Note repurchases made for cash (for the avoidance of doubt,
excluding any Senior Note repurchases made for cash prior to the Effective
Date).
 
1.33 “Consolidated Net Income” shall mean, with respect to any Person for any
period, the consolidated net income (or loss) of such Person and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP; provided, however, with respect to Parent Guarantor, Consolidated Net
Income shall not include the consolidated net income (or loss) of any Person in
which any other Person (other than any Borrower, any Guarantor, or any of their
respective wholly-owned Subsidiaries) has a joint interest, except to the extent
of the amount of dividends or other distributions actually paid to a Borrower,
Guarantor or any of their respective wholly-owned Subsidiaries by such Person
during such period.
 
1.34 “Consolidated Net Interest Expense” shall mean, with respect to any Person
for any period, (a) total cash interest expense (including that attributable to
capital lease obligations) of such Person and its Subsidiaries for such period
with respect to all outstanding Indebtedness of such Person and its
Subsidiaries, minus (b) total cash interest income of such Person and its
Subsidiaries for such period, in each case determined in accordance with GAAP.
 
1.35 “Credit Facility” shall mean the loans and letters of credit provided to or
for the benefit of any Borrower pursuant to Sections 2.1 and 2.2 hereof.
 
1.36 “Credit Parties Sales Percentage” shall have the meaning given to such term
in Section 9.24 hereof.
 
1.37 “Credit Party” shall mean, collectively, each Borrower, each Guarantor, and
each Subsidiary of any Borrower or Guarantor (other than any Foreign Subsidiary
of any Borrower or Guarantor, any Joint Venture, and Jazz WOFE). For the
avoidance of doubt, Foreign Parent Nonguarantor shall not be a Credit Party.
 
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1.38 “Customer Concession Reserve” shall mean a Reserve established for
concessions made or reasonably expected to be made by any Borrower to its
customers consisting of credits other than product returns, which Reserve shall
be calculated quarterly based on sales made during the twelve-month period prior
to, and ending on, any date of determination and the concessions actually made
during such period and to the extent reflected on such Borrower's books and
records consistent with its historical practices.
 
1.39 “Default” shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.
 
1.40 “Defaulting Lender” shall have the meaning set forth in Section 6.9 hereof.
 
1.41 “Deposit Account Control Agreement” shall mean an agreement in writing, in
form and substance reasonably satisfactory to Agent, by and among Agent, the
Borrower or Guarantor with a deposit account (other than any deposit account
specifically and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of any Borrower’s or Guarantor’s
salaried employees) at any bank and the bank at which such deposit account is at
any time maintained, which provides that such bank will comply with instructions
originated by Agent directing disposition of the funds in the deposit account
without further consent by such Borrower or Guarantor and has such other terms
and conditions as Agent may reasonably require.
 
1.42 “Domestic Subsidiary” shall mean, with respect to any Person, any
Subsidiary of such Person incorporated or organized under the laws of any
jurisdiction of any state or territory of the United States or the District of
Columbia.
 
1.43 “Effective Date” shall mean the date hereof.
 
1.44 “Eligible Accounts” shall mean Accounts created by each Borrower that in
each case satisfy the criteria set forth below as determined by Agent. Accounts
shall be Eligible Accounts if:
 
(a) such Accounts arise from the actual and bona fide sale and delivery of goods
by such Borrower or rendition of services by such Borrower in the ordinary
course of its business which transactions are completed in accordance with the
terms and provisions contained in any documents related thereto;
 
(b) such Accounts are not unpaid more than sixty (60) days past due or one
hundred twenty (120) days after the date of the original invoice for them;
 
(c) such Accounts comply with the terms and conditions contained in Section
7.2(b) of this Agreement;
 
(d) such Accounts do not arise from sales on consignment, guaranteed sale, sale
and return, sale on approval, or other terms under which payment by the account
debtor may be conditional or contingent;
 
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(e) the chief executive office of the account debtor with respect to such
Accounts is located in the United States of America or Canada (provided, that,
at any time promptly upon Agent's request, such Borrower shall either (A)
exclude Accounts of an account debtor with its chief executive office or
principal place of business in Canada unless any such Account is otherwise
reasonably acceptable to Agent (subject to such lending formula with respect
thereto as Agent may determine) or (B) execute and deliver, or cause to be
executed and delivered, such other agreements, documents and instruments as may
be required by Agent to perfect the security interests of Agent in those
Accounts of an account debtor with its chief executive office or principal place
of business in Canada in accordance with the applicable laws of the Province of
Canada in which such chief executive office or principal place of business is
located and take or cause to be taken such other and further actions as Agent
may reasonably request to enable Agent as secured party with respect thereto to
collect such Accounts under the applicable Federal or Provincial laws of
Canada), or if the chief executive office and principal place of business of the
account debtor with respect to such Accounts is located other than in the United
States of America or Canada, then if either: (i) the account debtor has
delivered to such Borrower an irrevocable letter of credit issued or confirmed
by a bank satisfactory to Agent and payable only in the United States of America
and in U.S. dollars, sufficient to cover such Account, in form and substance
satisfactory to Agent and if required by Agent, the original of such letter of
credit has been delivered to Agent or Agent's agent and the issuer thereof, and
such Borrower has complied with the terms of Section 5.2(f) hereof with respect
to the assignment of the proceeds of such letter of credit to Agent or naming
Agent as transferee beneficiary thereunder, as Agent may specify, (ii) such
Account is subject to credit insurance payable to Agent issued by an insurer and
on terms and in an amount reasonably acceptable to Agent, (iii) such Account is
guaranteed in form, manner and substance reasonably satisfactory to Agent by an
affiliated entity of such Account Debtor located in the U.S., or (iv) such
Account is otherwise reasonably acceptable to Agent (subject to such lending
formula with respect thereto as Agent may determine);
 
(f) such Accounts do not consist of progress billings (such that the obligation
of the account debtors with respect to such Accounts is conditioned upon such
Borrower's satisfactory completion of any further performance under the
agreement giving rise thereto), bill and hold invoices or retainage invoices,
except as to bill and hold invoices, if Agent shall have received an agreement
in writing from the account debtor, in form and substance reasonably
satisfactory to Agent, confirming the unconditional obligation of the account
debtor to take the goods related thereto and pay such invoice;
 
(g) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute, or such counterclaim, defense or dispute is
not otherwise reflected in such Borrower’s financial statements, or such account
debtor is not owed or does not claim to be owed any amounts that may give rise
to any right of setoff or recoupment against such Accounts (but the portion of
the Accounts of such account debtor in excess of the amount at any time and from
time to time owed by such Borrower to such account debtor or claimed owed by
such account debtor shall be deemed Eligible Accounts to the extent that such
portion would otherwise be eligible as "Eligible Accounts" pursuant to this
Section);
 
(h) there are no facts, events or occurrences which would materially impair the
validity, enforceability or collectability of such Accounts;
 
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(i) such Accounts are subject to the first priority, valid and perfected
security interest of Agent and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any liens except those permitted
in this Agreement;
 
(j) other than any Person that is an Affiliate of any Borrower because a
director or officer of such Person serves as a director of such Borrower,
neither the account debtor nor any officer or employee of the account debtor, as
applicable, with respect to such Accounts is an officer, employee, agent or
other Affiliate of any Borrower or Guarantor;
 
(k) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, unless, if the account debtor is
the United States of America, any State, political subdivision, department,
agency or instrumentality thereof, upon Agent's request, the Federal Assignment
of Claims Act of 1940, as amended or any similar State or local law, if
applicable, has been complied with in a manner reasonably satisfactory to Agent;
 
(l) there are no proceedings or actions which are pending against the account
debtors with respect to such Accounts which could reasonably be expected to
result in any material adverse change in any such account debtor's financial
condition (including, without limitation, any bankruptcy, dissolution,
liquidation, reorganization or similar proceeding);
 
(m) the aggregate amount of such Eligible Accounts owing by: (A) a single
account debtor (other than Conexant, Skyworks, RF Micro Devices and DRS
Technologies) does not constitute more than ten percent (10%) of the aggregate
amount of all otherwise Eligible Accounts; (B) Conexant does not constitute more
than twenty percent (20%) of the aggregate amount of all otherwise Eligible
Accounts; (C) Skyworks does not constitute more than thirty percent (30%) of the
aggregate amount of all otherwise Eligible Accounts; (D) RF Micro Devices does
not constitute more than thirty percent (30%) of the aggregate amount of all
otherwise Eligible Accounts; and (E) DRS Technologies does not constitute more
that twenty percent (20%) of the aggregate amount of all otherwise Eligible
Accounts (but the portion of the Accounts not in excess of the applicable
percentages shall be deemed Eligible Accounts to the extent that such portion
would otherwise be eligible as "Eligible Accounts" pursuant to this Section);
 
(n) such Accounts are not owed by an account debtor who has Accounts unpaid more
than sixty (60) days past due or one hundred twenty (120) days after the
original invoice date for them which constitute more than fifty (50%) percent of
the total Accounts of such account debtor;
 
(o) the account debtor is not located in a state requiring the filing of a
Notice of Business Activities Report or similar report in order to permit such
Borrower to seek judicial enforcement in such State of payment of such Account,
unless such Borrower has qualified to do business in such state or has filed a
Notice of Business Activities Report or equivalent report for the then current
year or such failure to file and inability to seek judicial enforcement is
capable of being remedied without any material delay or material cost;
 
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(p) such Accounts are not non-trade Accounts, including without limitation
billings for facility services and repairs;
 
(q) such Accounts are not Accounts that have been paid or otherwise satisfied by
customer deposits, except to the extent in excess of such deposits, maintained
by any Borrower;
 
(r) the account debtor has been billed for such Accounts; and
 
(s) such Accounts arise from the sale and delivery of goods substantially
manufactured by such Borrower or services substantially rendered by such
Borrower.
 
Any new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no notice thereof prior to
the date hereof, in either case under clause (i) or (ii) which materially
adversely affects or could reasonably be expected to materially adversely affect
the Eligible Accounts (for the avoidance of doubt, after the date hereof, Agent
may revise the applicable percentages set forth in clause (m) of this definition
based on any information it receives regarding the creditworthiness of any
account debtor). Any Accounts that are not Eligible Accounts shall nevertheless
be part of the Collateral. For the avoidance of doubt, any Accounts that arise
from the sale and delivery of goods substantially manufactured by Foreign Parent
Nonguarantor or any of its Affiliates (other than the Borrowers) or from
services substantially rendered by Foreign Parent Nonguarantor or any of its
Affiliates (other than the Borrowers) shall not be Eligible Accounts.
 
1.45 “Eligible Equipment” shall mean, as to each Borrower, Equipment of such
Borrower used in the ordinary course of such Borrower’s business, that in each
case satisfy the criteria set forth below as reasonably determined by Agent.
Eligible Equipment shall not include: (a) Equipment located outside the United
States; (b) items of Equipment that are or have become fixtures other than trade
fixtures which are readily removable from the premises on which they are
located; (c) leased Equipment; (d) Equipment subject to a lien or security
interest of any Person other than Agent except for non-consensual liens or
security interests that are permitted under Sections 9.8(b), (c) or (d) hereof;
(e) worn-out, obsolete or out-of-service Equipment; (f) Equipment acquired by
any Borrower after the date hereof located on or affixed to the Premises (as
defined in that certain Landlord Agreement dated on or about the Original
Closing Date, by and among Jazz, Conexant and Agent (the "Conexant Landlord
Agreement") with respect to which Equipment the parties to such Conexant
Landlord Agreement shall not have agreed upon and delivered a revised Exhibit B
to such Conexant Landlord Agreement pursuant to the terms thereof, which revised
Exhibit B shall designate such Equipment as added to or included within the
definition of "Personal Property" as set forth in the Conexant Landlord
Agreement; and (g) any individual items of Equipment with an original cost or
purchase price of less than $10,000. Any new criteria for Eligible Equipment may
only be established by Agent in good faith based on either: (i) an event,
condition or other circumstance arising after the date hereof, or (ii) an event,
condition or other circumstance existing on the date hereof to the extent Agent
has no notice thereof prior to the date hereof, in either case under clause (i)
or (ii) which materially adversely affects or could reasonably be expected to
materially adversely affect the Eligible Equipment in the good faith
determination of Agent. Any Equipment that is not Eligible Equipment shall
nevertheless be part of the Collateral.
 
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1.46 “Eligible Transferee” shall mean (a) any Lender; (b) the parent company of
any Lender and/or any Affiliate of such Lender which is at least fifty (50%)
percent owned by such Lender or its parent company; (c) any person (whether a
corporation, partnership, trust or otherwise) that is engaged in the business of
making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered
or managed by a Lender or with respect to any Lender that is a fund which
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) any other commercial
bank, financial institution or “accredited investor” (as defined in Regulation D
under the Securities Act of 1933) approved by Agent and, absent an Event of
Default, Borrowers (which approval by Borrowers shall not be unreasonably
withheld), provided, that, (i) neither any Borrower nor any Guarantor or any
Affiliate of any Borrower or Guarantor shall qualify as an Eligible Transferee
and (ii) no Person to whom any Indebtedness which is in any way subordinated in
right of payment to any other Indebtedness of any Borrower or Guarantor shall
qualify as an Eligible Transferee, except as Agent may otherwise specifically
agree.
 
1.47 “Environmental Laws” shall mean all foreign, Federal, State and local laws
(including common law), legislation, rules, codes, licenses, permits (including
any conditions imposed therein), authorizations, judicial or administrative
decisions, injunctions or agreements between any Borrower or Guarantor and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term “Environmental Laws” includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
 
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1.48 “Equipment” shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor’s now owned and hereafter acquired equipment, wherever
located, including machinery, data processing and computer equipment, computer
hardware, computer software (whether owned or licensed and including embedded
software), vehicles, tools, furniture, fixtures, all attachments, accessions and
property now or hereafter affixed thereto or used in connection therewith, and
substitutions and replacements thereof, wherever located.
 
1.49 “Equipment Sublimit” shall mean the amount set forth on Schedule 1.49 with
respect to the period set forth opposite such amount.
 
1.50 “ERISA” shall mean the Employee Retirement Income Security Act of 1974,
together with all rules, regulations and interpretations thereunder or related
thereto.
 
1.51 “ERISA Affiliate” shall mean any person required to be aggregated with any
Borrower, any Guarantor or any of their respective Subsidiaries under Sections
414(b), 414(c), 414(m) or 414(o) of the Code.
 
1.52 “ERISA Event” shall mean (a) any “reportable event”, as defined in Section
4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension
Plan, other than events as to which the requirement of notice has been waived in
regulations by the Pension Benefit Guaranty Corporation; (b) the adoption of any
amendment to a Pension Plan that would require the provision of security
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) a
complete or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate
from a Multiemployer Plan or a cessation of operations which is treated as such
a withdrawal or notification that a Multiemployer Plan is in reorganization; (d)
the filing of a notice of intent to terminate, the treatment of a Pension Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Pension Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan; (f) the imposition
of any liability under Title IV of ERISA, other than the Pension Benefit
Guaranty Corporation premiums due but not delinquent under Section 4007 of
ERISA, upon any Borrower or any other Credit Party in excess of $1,000,000 and
(g) any other event or condition with respect to a Plan including any Pension
Plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA
Affiliate that could reasonably be expected to result in liability of any
Borrower in excess of $1,000,000.
 
1.53 “Eurodollar Rate Loans” shall mean any Loans or portion thereof on which
interest is payable based on the Adjusted Eurodollar Rate in accordance with the
terms hereof.
 
1.54 “Event of Default” shall mean the occurrence or existence of any event or
condition described in Section 10.1 hereof.
 
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1.55 “Excess Availability” shall mean the amount calculated at any date, equal
to: (a) the lesser of: (i) the Borrowing Base, (ii) the Maximum Credit minus
$5,000,000 or (iii) the amount equal to (A) the Accounts Sublimit plus (B) the
Equipment Sublimit minus (C) $5,000,000, minus (b) the sum of: (i) the amount of
all then outstanding and unpaid Obligations of Borrowers plus (ii) the aggregate
amount of all then outstanding and unpaid trade payables and other obligations
of each Borrower which are outstanding more than sixty (60) days past due as of
the end of the immediately preceding month (other than trade payables or other
obligations being contested or disputed by such Borrower in good faith), plus
(iii) without duplication, the amount of checks issued by each Borrower to pay
trade payables and other obligations which are more than sixty (60) days past
due as of the end of the immediately preceding month (other than trade payables
or other obligations being contested or disputed by such Borrower in good
faith), but not yet sent.
 
1.56 “Exchange Act” shall mean the Securities Exchange Act of 1934, together
with all rules, regulations and interpretations thereunder or related thereto.
 
1.57 “Excluded Subsidiaries” shall mean a collective reference to any Subsidiary
of Parent Guarantor that: (a) is acquired or formed by Parent Guarantor or any
of Parent Guarantor’s Subsidiaries after the date hereof; and (b) is designated
as an Excluded Subsidiary by Parent Guarantor by written notice to Agent prior
to the date of such acquisition or formation. For the avoidance of doubt, any
Subsidiary that was a Subsidiary of Foreign Parent Nonguarantor prior to the
acquisition of Parent Guarantor by Foreign Parent Nonguarantor shall be an
Excluded Subsidiary.
 
1.58 “Executive Order” shall have the meaning given to such term in Section 9.20
hereof.
 
1.59 “Existing Letters of Credit” shall mean, collectively, the letters of
credit issued for the account of a Borrower or Guarantor or for which such
Borrower or Guarantor is otherwise liable listed on Schedule 1.59 hereto, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
 
1.60 “Fee Letter” shall mean the letter agreement, dated of even date herewith,
by and among Borrowers and Agent, setting forth certain fees payable by
Borrowers to Agent for the benefit of itself and Lenders, as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
 
1.61 “Financing Agreements” shall mean, collectively, this Agreement, the Fee
Letter and all notes, guarantees, security agreements, deposit account control
agreements, investment property control agreements, intercreditor agreements and
all other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by any Borrower, any Guarantor or any Guarantor in
connection with this Agreement.
 
1.62 “Foreign Assets Control Regulations” shall have the meaning given to such
term in Section 9.20 hereof.
 
1.63 “Foreign Parent Nonguarantor” shall mean Tower Semiconductor Ltd., an
Israel company, and its successors and assigns.
 
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1.64 “Foreign Subsidiary” shall mean, with respect to any Person, any Subsidiary
of such Person incorporated or organized under the laws of any jurisdiction
other than a state or territory of the United States or the District of
Columbia.
 
1.65 “Funding Bank” shall have the meaning given to such term in Section 3.3(a)
hereof.
 
1.66 “GAAP” shall mean generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied, except that, for purposes
of Section 9.18 hereof, GAAP shall be determined on the basis of such principles
in effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements delivered to Agent prior to the
date hereof.
 
1.67 “Guarantors” shall mean, collectively, the following (together with their
respective successors and assigns): (a) Parent Guarantor; and (b) any other
Person that at any time after the date hereof becomes a Guarantor; each
sometimes being referred to herein individually as a “Guarantor”. For the
avoidance of doubt, Foreign Parent Nonguarantor shall not be a Guarantor.
 
1.68 “Guaranty” shall mean a Guaranty executed by Parent Guarantor or a
Subsidiary (other than a Foreign Subsidiary) of any Borrower or Guarantor in
favor of Agent.
 
1.69 “Governmental Authority” shall mean any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, and any public entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
 
1.70 “Hazardous Materials” shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
 
1.71 “Hedging Transactions” shall mean (a) any and all rate swap transactions,
basis swaps, forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options, forward bond or forward bond price or
forward bond index transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transaction, currency
options or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether or
not any such transaction is governed by or subject to any master agreement, or
(b) any and all transactions of any kind, and the related confirmations, that
are subject to the terms or conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., or any other master agreement, as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, including but
not limited to, any such obligations or liabilities under any such agreement.
 
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1.72 “Indebtedness” shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (other than an account payable to a trade
creditor (whether or not an Affiliate) incurred in the ordinary course of
business of such Person and payable in accordance with customary trade
practices); (c) all obligations as lessee under leases which have been, or
should be, in accordance with GAAP recorded as Capital Leases; (d) any
contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person which obligations
become due prior to the maturity date hereof; (f) all reimbursement obligations
and other liabilities of such Person with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker's acceptances, drafts or
similar documents or instruments issued for such Person's account; (g) all
indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this
definition which is secured by any consensual lien, security interest,
collateral assignment, conditional sale, mortgage, deed of trust, or other
encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time, provided that if such indebtedness is not assumed
by such Person, the amount of such indebtedness shall be the lesser of the fair
market value of the property subject to such lien or encumbrance and the amount
of such indebtedness; (h) all obligations, liabilities and indebtedness of such
Person (marked to market) arising under swap agreements, cap agreements and
collar agreements and other agreements or arrangements designed to protect such
person against fluctuations in interest rates or currency or commodity values;
(i) indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer to the extent such Person is liable therefor
as a result of such Person’s ownership interest in such entity, except to the
extent that the terms of such indebtedness expressly provide that such Person is
not liable therefor or such Person has no liability therefor as a matter of law
and (j) the principal and interest portions of all rental obligations of such
Person under any synthetic lease or similar off-balance sheet financing where
such transaction is considered to be borrowed money for tax purposes but is
classified as an operating lease in accordance with GAAP.
 
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1.73 “Indemnitee” shall have the meaning given to such term in Section 11.4
hereof.
 
1.74 “Information Certificate” shall mean, collectively, the Information
Certificates of Borrowers and Guarantors constituting Exhibit B hereto
containing material information with respect to Borrowers and Guarantors, their
respective businesses and assets provided by or on behalf of Borrowers and
Guarantors to Agent in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
 
1.75 “Intellectual Property” shall mean, as to each Borrower and Guarantor, all
of such Borrower's or Guarantor’s now owned and hereafter arising or acquired:
patents, patent rights, patent applications, copyrights, works which are the
subject matter of copyrights, copyright applications, copyright registrations,
trademarks, servicemarks, trade names, trade styles, trademark and service mark
applications, and licenses and rights to use any of the foregoing and all
applications, registrations and recordings relating to any of the foregoing as
may be filed in the United States Copyright Office, the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, any political subdivision thereof or in any other country or
jurisdiction, together with all rights and privileges arising under applicable
law with respect to any Borrower’s or Guarantor’s use of any of the foregoing;
all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or servicemark, or the license of any trademark or
servicemark); customer and other lists in whatever form maintained; trade secret
rights, copyright rights, rights in works of authorship, domain names and domain
name registrations; software and contract rights relating to computer software
programs, in whatever form created or maintained.
 
1.76 “Interest Period” shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), three (3), or six (6) months duration as
Borrowers may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
Borrowers may not elect an Interest Period which will end after the last day of
the then-current term of this Agreement.
 
1.77 “Interest Rate” shall mean,
 
(a) as to Prime Rate Loans, a rate equal to the sum of the Applicable Margin
plus the Prime Rate,
 
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(b) as to Eurodollar Rate Loans, a rate equal to the sum of the Applicable
Margin plus the Adjusted Eurodollar Rate (based on the London Interbank Offered
Rate applicable for the Interest Period selected by Borrowers as in effect two
(2) Business Days prior to the commencement of the Interest Period, whether such
rate is higher or lower than any rate previously quoted to any Borrower).
 
(c) Notwithstanding anything to the contrary contained in clauses (a) and (b) of
this definition, the Interest Rate shall mean a rate two percent (2.0%) per
annum higher than the applicable rate set forth in such clauses (a) and (b), at
Agent’s option, without notice, (i) for the period from and after the date of
the occurrence of any Event of Default, and for so long as such Event of Default
is continuing as reasonably determined by Agent or (ii) on Loans and Letters of
Credit outstanding in excess of the Borrowing Base (whether or not such
excess(es) arise or are made with or without Agent’s or any Lender’s knowledge
or consent and whether made before or after an Event of Default).
 
1.78 “Inventory” shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor’s now owned and hereafter existing or acquired goods,
wherever located, which (a) are leased by such Borrower or Guarantor as lessor;
(b) are held by such Borrower or Guarantor for sale or lease or to be furnished
under a contract of service; (c) are furnished by such Borrower or Guarantor
under a contract of service; or (d) consist of raw materials, work in process,
finished goods or materials used or consumed in its business.
 
1.79 “Investment Property Control Agreement” shall mean an agreement in writing,
in form and substance reasonably satisfactory to Agent, by and among Agent, any
Borrower or Guarantor (as the case may be) and any securities intermediary,
commodity intermediary or other person who has custody, control or possession of
any investment property of such Borrower or Guarantor, acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that it
will comply with entitlement orders originated by Agent with respect to such
investment property, or other instructions of Agent, and has such other terms
and conditions as Agent may reasonably require.
 
1.80 “Jazz” shall mean Jazz Semiconductor, Inc., a Delaware corporation, and its
successors and assigns.
 
1.81 “Jazz WOFE” shall mean Jazz Semiconductor (Shanghai) Co., Ltd., a China
Wholly Owned Foreign Entity, organized and existing under the laws of China.
 
1.82 “Joint Venture” shall mean (a) Operating Company’s partnerships with
Advanced Semiconductor Manufacturing Corporation, a company organized and
existing under the laws of Shanghai PRC, and Hua Hong NEC Electronics Co., Ltd.,
a company organized and existing under the laws of Shanghai PRC, and (b)
following the date hereof, Operating Company’s other partnerships or joint
ventures with any Person that is not a wholly owned Subsidiary of any Borrower
or any Guarantor.
 
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1.83 “Lenders” shall mean, collectively, the financial institutions who are
signatories hereto as Lenders and other Persons made a party to this Agreement
as a lender in accordance with Section 13.7 hereof, and their respective
successors and permitted assigns; each sometimes being referred to herein
individually as a “Lender”.
 
1.84 “Letter of Credit Documents” shall mean, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk or (b) any collateral
security for such obligations.
 
1.85 “Letter of Credit Limit” shall mean $10,000,000.
 
1.86 “Letter of Credit Obligations” shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all Letters of Credit outstanding at such time, plus
(b) the aggregate amount of all drawings under Letters of Credit for which the
issuer thereof has not at such time been reimbursed, plus (c) without
duplication, the aggregate amount of all payments made by each Lender to the
issuer with respect to such Lender’s participation in Letters of Credit as
provided in Section 2.2 for which Borrowers have not at such time reimbursed the
Lenders, whether by way of a Loan or otherwise.
 
1.87 “Letters of Credit” shall mean all letters of credit (whether documentary
or stand-by and whether for the purchase of inventory, equipment or otherwise)
issued by an issuer for the account of Borrowers pursuant to this Agreement, and
all amendments, renewals, extensions or replacements thereof. The issuer of the
Letters of Credit shall be, and all references to such issuer herein shall mean,
Wachovia Bank, National Association and its successors and assigns or such other
bank as Agent may from time to time designate.
 
1.88 “License Agreement” and “License Agreements” shall have the meanings set
forth in Section 8.11 hereof.
 
1.89 “Loans” shall mean the loans now or hereafter made by or on behalf of Agent
and the Lenders on a revolving basis pursuant to the Credit Facility (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
 
1.90 “London Interbank Offered Rate” shall mean, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in U.S. Dollars at approximately 11:00 A.M. (London time) two (2)
Business Days prior to the first day of such Interest Period for a period of
one, two, three or six months, as selected by Borrowers; provided, that, if more
than one rate is specified on Telerate Page 3750, the applicable rate shall be
the arithmetic mean of all such rates. If, for any reason, such rate is not
available, the term “London Interbank Offered Rate” shall mean, with respect to
any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 A.M. (London time) two (2) Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates. For the avoidance of doubt, the Euro London interbank offered
rate or EURO LIBOR shall not be applicable to any interest rate in this
Agreement.
 
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1.91 “Material Adverse Effect” shall mean a material adverse effect on (a) the
financial condition, business, performance or results of operations of Borrowers
taken as a whole; (b) the legality, validity or enforceability of this Agreement
or any of the other Financing Agreements; (c) the legality, validity,
enforceability, perfection or priority of the security interests and liens of
Agent upon the Collateral; (d) the Collateral or its value; (e) the ability of
any Borrower to perform its obligations under this Agreement or any of the other
Financing Agreements as and when to be performed; or (f) the ability of Agent or
any Lender to enforce the Obligations or realize upon the Collateral or
otherwise with respect to the rights and remedies of Agent and Lenders under
this Agreement or any of the other Financing Agreements.
 
1.92 “Material Contract” shall mean any contract or other agreement (other than
the Financing Agreements), whether written or oral, to which any Borrower or
Guarantor is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto would have a Material Adverse Effect.
 
1.93 “Maturity Date” shall have the meaning set forth in Section 13.1 hereof.
 
1.94 “Maximum Credit” shall mean the amount equal to $55,000,000, as reduced by
any reduction thereof pursuant to Section 2.1(c) hereof.
 
1.95 “Multiemployer Plan” shall mean a “multi-employer plan” as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by any Borrower,
Guarantor or any ERISA Affiliate and with respect to which any Borrower,
Guarantor or any other Credit Party is reasonably expected to incur any material
liability.
 
1.96 “New Subsidiary” shall have the meaning given to such term in Section
9.10(i) hereof.
 
1.97 “Non-Excluded Taxes” shall have the meaning given to such term in Section
6.4(c) hereof.
 
1.98 “Non-U.S. Lender” shall have the meaning given to such term in Section
6.4(e) hereof.
 
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1.99 “Obligations” shall mean any and all Loans, Letter of Credit Obligations
and all other obligations, liabilities and indebtedness of every kind, nature
and description owing by any or all of the Borrowers to Agent or any Lender
and/or any of their Affiliates, including all obligations arising under or in
connection with Bank Products, in each case including principal, interest,
charges, fees, costs and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, in each case, arising under this
Agreement or any of the other Financing Agreements or on account of any Letter
of Credit and all other Letter of Credit Obligations, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to any Borrower under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would accrue
and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, or secured or unsecured.
 
1.100 “Operating Company” shall mean Newport Fab, LLC (doing business as Jazz
Semiconductor Operating Company), a Delaware limited liability company, and its
successors and assigns.
 
1.101 “Original Closing Date” shall mean January 6, 2006.
 
1.102 “Other Taxes” shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
 
1.103 “Parent Guarantor” shall mean Jazz Technologies, Inc., a Delaware
corporation, and its successors and assigns.
 
1.104 “Participant” shall mean any financial institution that acquires and holds
a participation in the interest of any Lender in any of the Loans and Letters of
Credit in conformity with the provisions of Section 13.7 of this Agreement
governing participations.
 
1.105 “Pension Plan” shall mean a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which any Borrower or Guarantor sponsors,
maintains, or to which any Borrower, Guarantor or any ERISA Affiliate makes, is
making, or is obligated to make contributions, other than a Multiemployer Plan
and with respect to which any Borrower, any Guarantor or any other Credit Party
is reasonably expected to incur any material liability.
 
1.106 “Permits” shall have the meaning given to such term in Section 8.7(b)
hereof.
 
1.107 “Permitted Holders” shall mean the persons listed on Schedule 1.107
hereto, Affiliates thereof and their respective successors and assigns.
 
1.108 “Person” or “person” shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
 
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1.109 “Plan” shall mean an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years and with respect to which any Borrower, any
Guarantor or any other Credit Party is reasonably expected to incur any material
liability.
 
1.110 “Prime Rate” shall mean the rate from time to time publicly announced by
Wachovia Bank, National Association, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
 
1.111 “Prime Rate Loans” shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
 
1.112 “Pro Rata Share” shall mean as to any Lender, the fraction (expressed as a
percentage) the numerator of which is such Lender's Commitment and the
denominator of which is the aggregate amount of all of the Commitments of
Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letters of Credit and the denominator shall be the aggregate amount of
all unpaid Loans and Letters of Credit.
 
1.113 “Qualified Cash” shall mean, as of any date of determination, the amount
of unrestricted cash and Cash Equivalents of Borrowers, Guarantors and their
respective Subsidiaries that is in deposit accounts or in securities accounts or
investment property accounts, or any combination thereof, and each of which
deposit accounts or securities accounts or investment property accounts is
subject to the first priority lien of Agent pursuant to a Deposit Account
Control Agreement or Investment Property Control Agreement, as applicable, and
not otherwise encumbered other than by the banker's lien or right of offset of
the bank or securities intermediary or commodity intermediary at which such
account is located, and is maintained by a branch office of the bank or
securities intermediary or commodity intermediary located within the United
States, and is set forth on Schedule 1.113 (as such Schedule may be updated from
time to time upon the opening of any such account in accordance with Section
5.2(d) or Section 5.2(e), as applicable); provided, that "Qualified Cash" shall
not include any such amount of unrestricted cash and Cash Equivalents that is
(a) in any such accounts or combination thereof (i) specifically and exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of any Borrower’s, any Guarantor’s or any such Subsidiary's
salaried employees, or (ii) that are operating, overnight or other accounts, the
amounts in which are subject to being debited in order to honor or otherwise
satisfy checks written or issued thereon, but only to the extent checks actually
have been written in respect of such amounts, and (b) in any Blocked Account to
the extent such amounts have been applied against the Loans pursuant to Section
6.3(b) hereof; and further provided, that "Qualified Cash" shall only include
such amounts of unrestricted cash and Cash Equivalents for which Borrowers or
Guarantors have provided evidence thereof with respect to such accounts to
Agent, which evidence shall be reasonably satisfactory to Agent.
 
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1.114 “Real Property” shall mean, as to any Borrower or Guarantor, all now owned
and hereafter acquired real property of such Borrower or such Guarantor,
including leasehold interests, together with all buildings, structures, and
other improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located.
 
1.115 “Receivables” shall mean all of the following now owned or hereafter
arising or acquired property of each Borrower and Guarantor: (a) all Accounts;
(b) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters
of credit, indemnities, guarantees, security or other deposits and proceeds
thereof issued payable to any Borrower or Guarantor or otherwise in favor of or
delivered to any Borrower or Guarantor in connection with any Account; or (e)
all other accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to any Borrower or Guarantor,
whether from the sale and lease of goods or other property, licensing of any
property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by any Borrower or Guarantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated
with any Accounts, Inventory or general intangibles of any Borrower or Guarantor
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to any Borrower or
Guarantor in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to any Borrower or Guarantor from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which any
Borrower or Guarantor is a beneficiary).
 
1.116 “Records” shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor’s present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to the Collateral or any account debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of any Borrower or Guarantor with respect to the foregoing
maintained with or by any other person).
 
1.117 “Reference Bank” shall mean Wachovia Bank, National Association, or such
other bank as Agent may from time to time designate.
 
1.118 “Register” shall have the meaning set forth in Section 13.7 hereof.
 
1.119 “Required Lenders” shall mean, at any time, those Lenders whose pro rata
share of the obligations to make Loans and/or issue Letters of Credit, as the
case may be, pursuant to Section 2 hereof aggregate at least fifty and one tenth
of one percent (50.1%) of all such obligations, or if such obligations shall
have been terminated or have otherwise expired, Lenders to whom at least fifty
and one tenth of one percent (50.1%) of the then outstanding Obligations are
owing.
 
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1.120 “Reserves” shall mean as of any date of determination, such amounts as
Agent may from time to time establish and revise in good faith reducing the
amount of Loans and Letters of Credit which would otherwise be available to
Borrowers under the lending formula(s) provided for herein: (a) to reflect
events, conditions, contingencies or risks which, as determined by Agent in good
faith, materially adversely affect, or would have a reasonable likelihood of
materially adversely affecting, (i) the Collateral constituting Accounts or
Equipment, its value or the amount that would reasonably be likely to be
received by Agent from the sale or other disposition or realization upon such
Collateral, or (ii) the security interests and other rights of Agent in the
Collateral constituting Accounts or Equipment (including the enforceability,
perfection and priority thereof) or (b) to reflect Agent's good faith belief
that any collateral report relating to Accounts or Equipment furnished by or on
behalf of any Borrower or any Guarantor to Agent is or may have been incomplete,
inaccurate or misleading in any material respect or (c) to reflect outstanding
Letters of Credit as provided in Section 2.2 hereof or (d) in respect of any
state of facts which Agent determines in good faith constitutes a Default or an
Event of Default. Without limiting the generality of the foregoing, Reserves
may, at Agent’s option, be established to reflect: (A) dilution with respect to
the Accounts (based on the ratio of the aggregate amount of non-cash reductions
in Accounts, other than reductions specifically reserved in Customer Concession
Reserves, for any period to the aggregate dollar amount of the sales of such
Borrower for such period) as calculated by Agent for any period is or is
reasonably anticipated to be greater than five percent (5%); (B) except as
provided in the Customer Concession Reserve, returns, discounts, claims, credits
and allowances of any nature that are not paid pursuant to the reduction of
Accounts; (C) amounts past due to owners and lessors of premises where any
Collateral is located, other than for those locations where Agent has received a
Collateral Access Agreement that Agent has accepted in writing; (D) the Customer
Concession Reserve; (E) the Sales Return Reserve; (F) the Bank Products Reserve;
and (G) any other Reserve, including without limitation any Reserve for deferred
revenue to the extent reserved by any Borrower on its books and records
consistent with its historical practices. The amount of any Reserve established
by Agent shall have a reasonable relationship to the event, condition, Event of
Default or other matter which is the basis for such reserve as determined by
Agent in good faith. To the extent Agent may revise the lending formulas used to
determine the Borrowing Base or establish new criteria (with respect to new
information, circumstances or facts) or revise existing criteria for Eligible
Accounts or Eligible Equipment so as to address any circumstances, condition,
event or contingency in a manner satisfactory to Agent, Agent shall not
establish a Reserve for the same purpose or a Reserve that is otherwise
duplicative of any other Reserve or change in criteria.
 
1.121 “Responsible Officer” shall mean, with respect to any Person, the chief
executive officer, president, chief financial officer, treasurer, or any
equivalent senior officer of such Person having the duties of any such officer.
 
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1.122 “Sales Return Reserve” shall mean a Reserve established for potential
future returned sale items to any Borrower, which Reserve shall be calculated
quarterly based on returns made during the twelve-month period prior to, and
ending on, any date of determination and to the extent reflected on such
Borrower's books and records consistent with its historical practices.
 
1.123 “Secured Parties” shall mean, collectively, (a) Agent, (b) Wachovia Bank,
National Association, (c) Lenders, and (d) Bank Product Providers (to the extent
approved by Agent).
 
1.124 “Senior Notes” shall mean the 8% Convertible Senior Notes due 2011, or
“Securities” as defined in the Senior Note Indenture.
 
1.125 “Senior Note Indenture” shall mean that certain Indenture, dated as of
December 19, 2006, by and among Parent Guarantor, certain Affiliates of Parent
Guarantor, and U.S. Bank National Association, as trustee.
 
1.126 “Skyworks” shall mean Skyworks Solutions, Inc., a Delaware corporation.
 
1.127 “Solvent” shall mean, at any time with respect to any Person, that at such
time such Person (a) is able to pay its debts as they mature and has (and has a
reasonable basis to believe it will continue to have) sufficient capital (and
not unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation (and including as assets for this purpose at a fair
valuation all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
 
1.128 “Special Agent Advances” shall have the meaning set forth in Section
12.21(a) hereof.
 
1.129 “Specialtysemi” shall mean Specialtysemi, Inc., a Delaware corporation
(now named "Jazz Semiconductor, Inc.").
 
1.130 “Subsidiary” or “subsidiary” shall mean, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other
limited or general partnership, trust, association or other business entity of
which an aggregate of at least a majority of the outstanding Capital Stock or
other interests entitled to vote in the election of the board of directors of
such corporation (irrespective of whether, at the time, Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest therein, of such
Person is, at the time, directly or indirectly, owned by such Person and/or one
or more subsidiaries of such Person.
 
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1.131 “Subsidiary Investment” shall have the meaning given to such term in
Section 9.10(i) hereof.
 
1.132 “Target” shall have the meaning given to such term in Section 9.10(i)
hereof.
 
1.133 “Trading With the Enemy Act” shall have the meaning given to such term in
Section 9.20 hereof.
 
1.134 “UCC” shall mean the Uniform Commercial Code as in effect in the State of
California, and any successor statute, as in effect from time to time (except
that terms used herein which are defined in the Uniform Commercial Code as in
effect in the State of California on the date hereof shall continue to have the
same meaning notwithstanding any replacement or amendment of such statute except
as Agent may otherwise determine).
 
1.135 “U.S.” or “United States” shall mean the United States of America.
 
1.136 “voidable transfers” shall have the meaning set forth in Section 12.9.
 
1.137 “Voting Stock” shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect at
least a majority of the board of directors, managers or trustees of such Person,
irrespective of whether at the time Capital Stock of any other class or classes
have or might have voting power by reason of the happening of any contingency,
and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.
 
1.138 “Wachovia” shall mean Wachovia Capital Finance Corporation (Western), a
California corporation, in its individual capacity, and its successors and
assigns.
 
SECTION 2. CREDIT FACILITIES
 
2.1 Loans.
 
(a) Subject to and upon the terms and conditions contained herein, each Lender
severally (and not jointly) agrees to make its Pro Rata Share of revolving loans
to Borrowers from time to time on any Business Day on or after the Effective
Date in amounts requested by Borrowers up to the aggregate amount outstanding
for all Lenders at any time equal to the lesser of: (i) the Borrowing Base, (ii)
an amount equal to the Maximum Credit minus $5,000,000, or (iii) an amount equal
to (A) the Accounts Sublimit plus (B) the Equipment Sublimit minus (C)
$5,000,000.
 
(b) Except in Agent's discretion, at no time shall, the aggregate amount of the
outstanding Loans and the Letter of Credit Obligations exceed an amount equal to
the lesser of: (i) the Borrowing Base, (ii) an amount equal to the Maximum
Credit minus $5,000,000, or (iii) an amount equal to (A) the Accounts Sublimit
plus (B) the Equipment Sublimit minus (C) $5,000,000. If the event set forth in
the preceding sentence of this Section 2.1(b) shall have occurred, such event
shall not limit, waive or otherwise affect any rights of Agent or Lenders in
such circumstances or on any future occasions, and Borrowers shall, upon demand
by Agent, which may be made at any time or from time to time, promptly repay to
Agent the entire amount of any such excess that results from the occurrence of
any such event for which payment is demanded.
 
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(c) By providing ten (10) Business Days' written notice to Agent, Borrowers may
request that the amount set forth in the definition of "Maximum Credit" hereof
be reduced in an amount or amounts which shall not cause such amount set forth
in such definition to be less than $30,000,000, which reduction shall be in
increments of no less than $5,000,000; provided, that no Default or Event of
Default shall have occurred and be continuing prior to or after giving effect to
any such reduction; and further provided, that Borrowers may not make any such
request more than two (2) times per year. Upon giving effect to such reduction,
the amounts set forth in the definitions of “Accounts Sublimit” and “Equipment
Sublimit” shall be reduced pro rata with such reduction.
 
2.2 Letters of Credit.
 
(a) Subject to and upon the terms and conditions contained herein and in the
Letter of Credit Documents, at the request of Borrowers, Agent agrees to provide
or arrange for the account of Borrowers one or more Letters of Credit, for the
ratable risk of each Lender according to its Pro Rata Share, containing terms
and conditions acceptable to Agent and the issuer thereof.
 
(b) Borrowers shall give Agent three (3) Business Days’ prior written notice of
its request for the issuance of a Letter of Credit. Such notice shall be
irrevocable and shall specify the original face amount of the Letter of Credit
requested, the effective date (which date shall be a Business Day and in no
event shall be a date less than ten (10) days prior to the end of the then
current term of this Agreement) of issuance of such requested Letter of Credit,
whether such Letter of Credit may be drawn in a single or in partial draws, the
date on which such requested Letter of Credit is to expire (which date shall be
a Business Day and shall not be more than one year from the date of issuance),
the purpose for which such Letter of Credit is to be issued, and the beneficiary
of the requested Letter of Credit. Borrowers shall attach to such notice the
proposed terms of the Letter of Credit. The renewal or extension of any Letter
of Credit shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
 
(c) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit shall be available unless each
of the following conditions precedent have been satisfied in a manner reasonably
satisfactory to Agent: (i) Borrowers shall have delivered to the proposed issuer
of such Letter of Credit at such times and in such manner as such proposed
issuer may require, an application, in form and substance reasonably
satisfactory to such proposed issuer and Agent, for the issuance of the Letter
of Credit and such other Letter of Credit Documents as may be required pursuant
to the terms thereof, and the form and terms of the proposed Letter of Credit
shall be reasonably satisfactory to Agent and such proposed issuer; (ii) as of
the date of issuance, no order of any court, arbitrator or other Governmental
Authority shall purport by its terms to enjoin or restrain money center banks
generally from issuing letters of credit of the type and in the amount of the
proposed Letter of Credit, and no law, rule or regulation applicable to money
center banks generally and no request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over money
center banks generally shall prohibit, or request that the proposed issuer of
such Letter of Credit refrain from, the issuance of letters of credit generally
or the issuance of such Letters of Credit; (iii) after giving effect to the
issuance of such Letter of Credit, the Letter of Credit Obligations shall not
exceed the Letter of Credit Limit; and (iv) the Excess Availability, prior to
giving effect to any Reserves with respect to such Letter of Credit, on the date
of the proposed issuance of any Letter of Credit, shall be equal to or greater
than an amount equal to one hundred percent (100%) of the Letter of Credit
Obligations with respect thereto. Effective on the issuance of each Letter of
Credit, a Reserve shall be established in the amount set forth in Section
2.2(c)(iv).
 
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(d) Except in Agent's discretion, the amount of all outstanding Letter of Credit
Obligations shall not at any time exceed the Letter of Credit Limit.
 
(e) Borrowers shall reimburse immediately the issuer of a Letter of Credit for
any draw under any Letter of Credit issued for the account of Borrowers by such
issuer and pay such issuer the amount of all other charges and fees payable to
such issuer in connection with any Letter of Credit issued for the account of
Borrowers immediately when due, irrespective of any claim, setoff, defense or
other right which Borrowers, or any of them, may have at any time against such
issuer or any other Person. Each drawing under any Letter of Credit or other
amount payable in connection therewith when due shall constitute a request by
Borrowers to Agent for a Prime Rate Loan in the amount of such drawing or other
amount then due and shall be made by Agent on behalf of Lenders as a Loan. The
date of such Loan shall be the date of the drawing or as to other amounts, the
due date therefor. Any payments made by or on behalf of Agent or any Lender to
an issuer and/or related parties in connection with any Letter of Credit shall
constitute additional Loans to Borrowers pursuant to this Section 2.
 
(f) Borrowers and Guarantors shall indemnify and hold Agent and Lenders harmless
from and against any and all losses, claims, damages, liabilities, costs and
expenses which Agent or any Lender may suffer or incur in connection with any
Letter of Credit and any documents, drafts or acceptances relating thereto,
including any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent with respect to any Letter of
Credit, except for such losses, claims, damages, liabilities, costs or expenses
that are a direct result of the gross negligence or willful misconduct of Agent
or any Lender. Each Borrower and Guarantor assumes all risks with respect to the
acts or omissions of the drawer under or beneficiary of any Letter of Credit and
for such purposes the drawer or beneficiary shall be deemed such Borrower's
agent. Each Borrower and Guarantor assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit or any documents, drafts or acceptances
thereunder. Each Borrower and Guarantor hereby releases and holds Agent and
Lenders harmless from and against any acts, waivers, errors, delays or
omissions, with respect to or relating to any Letter of Credit, except for the
gross negligence or willful misconduct of Agent or any Lender. The provisions of
this Section 2.2(f) shall survive the payment of Obligations and the termination
of this Agreement.
 
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(g) In connection with Inventory purchased pursuant to any Letter of Credit,
Borrowers and Guarantors shall, at Agent’s request, instruct all suppliers,
carriers, forwarders, customs brokers, warehouses or others receiving or holding
cash, checks, Inventory, documents or instruments in which Agent holds a
security interest that upon Agent’s request, such items are to be delivered to
Agent and/or subject to Agent’s order, and if they shall come into any
Borrower’s or Guarantor’s possession, to deliver them, upon Agent's request, to
Agent in their original form. Except as otherwise provided herein, Agent shall
not exercise such right to request such items so long as no Event of Default
shall exist or have occurred and be continuing. Except as Agent may otherwise
specify, Borrowers shall designate Agent or the issuer of the Letter of Credit
related thereto, as the consignee on all bills of lading and other negotiable
and non-negotiable documents.
 
(h) Each Borrower and Guarantor hereby irrevocably authorizes and directs any
issuer of a Letter of Credit to name such Borrower or Guarantor as the account
party therein and to deliver to Agent all instruments, documents and other
writings and property received by issuer pursuant to the Letter of Credit and to
accept and rely upon Agent’s instructions and agreements with respect to all
matters arising in connection with the Letter of Credit or the Letter of Credit
Documents with respect thereto. Nothing contained herein shall be deemed or
construed to grant any Borrower or Guarantor any right or authority to pledge
the credit of Agent or any Lender in any manner. Agent and Lenders shall have no
liability of any kind with respect to any Letter of Credit provided by an issuer
other than Agent unless Agent has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to such
Letter of Credit. Borrowers and Guarantors shall be bound by any reasonable
interpretation made in good faith by Agent, or any other issuer or correspondent
under or in connection with any Letter of Credit or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of any Borrower or Guarantor.
 
(i) Immediately upon the issuance or amendment of any Letter of Credit, each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received, without recourse or warranty, an undivided interest and participation
to the extent of such Lender’s Pro Rata Share of the liability with respect to
such Letter of Credit and the obligations of Borrowers with respect thereto
(including all Letter of Credit Obligations with respect thereto). Each Lender
shall absolutely, unconditionally and irrevocably assume, as primary obligor and
not as surety, and be obligated to pay to the issuer of any such Letter of
Credit therefor and discharge when due, its Pro Rata Share of all of such
obligations arising under such Letter of Credit. Without limiting the scope and
nature of each Lender’s participation in any Letter of Credit, to the extent
that the issuer has not been reimbursed or otherwise paid as required hereunder
or under any such Letter of Credit, each such Lender shall pay to the issuer its
Pro Rata Share of such unreimbursed drawing or other amounts then due to issuer
in connection therewith.
 
(j) The obligations of Borrowers to pay each Letter of Credit Obligations and
the obligations of Lenders to make payments to Agent for the account of any
issuer with respect to Letters of Credit shall be absolute, unconditional and
irrevocable and shall be performed strictly in accordance with the terms of this
Agreement under any and all circumstances, whatsoever, notwithstanding the
occurrence or continuance of any Default, Event of Default, the failure to
satisfy any other condition set forth in Section 4 or any other event or
circumstance. If such amount is not made available by a Lender when due, Agent
shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by any Borrower
in respect of Loans that are Prime Rate Loans. Any such reimbursement shall not
relieve or otherwise impair the obligation of Borrowers to reimburse the issuer
under any Letter of Credit or make any other payment in connection therewith.
 
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(k) So long as no Event of Default exists or has occurred and is continuing, any
Borrower may, after notice to Agent, (i) approve or resolve any questions of
non-compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (iv) with
Agent's consent, grant any extensions of the maturity of, time of payment for,
or time of presentation of, any drafts, acceptances, or documents, and agree to
any amendments, renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the Letter of Credit Documents.
 
(l) At any time an Event of Default exists or has occurred and is continuing,
Agent shall have the right and authority to, and none of the Borrowers shall,
without the prior written consent of Agent, (i) approve or resolve any questions
of non-compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, (iv) grant any
extensions of the maturity of, time of payments for, or time of presentation of,
any drafts, acceptances, or documents, and (v) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the Letter of Credit Documents. Agent may take
such actions either in its own name or in any Borrower's name.
 
(m) Any rights, remedies, duties or obligations granted or undertaken by any
Borrower to any issuer or correspondent in any application for any Letter of
Credit, or any other agreement in favor of any issuer or correspondent relating
to any Letter of Credit, shall be deemed to have been granted or undertaken by
such Borrower to Agent. Any duties or obligations undertaken by Agent to any
issuer or correspondent in any application for any Letter of Credit, or any
other agreement by Agent in favor of any issuer or correspondent relating to any
Letter of Credit, shall be deemed to have been undertaken by Borrowers to Agent
and to apply in all respects to Borrowers.
 
2.3 Commitments. The aggregate amount of each Lender’s Pro Rata Share of the
Loans and Letter of Credit Obligations shall not exceed the amount of such
Lender’s Commitment, as the same may from time to time be amended in accordance
with the provisions hereof.
 
SECTION 3. INTEREST AND FEES
 
3.1 Interest.
 
(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest on the
outstanding principal amount of the Loans at the Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default and during the
continuation thereof or termination hereof shall be payable on demand.
 
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(b) Borrowers may from time to time request Eurodollar Rate Loans or may request
that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period. Such request
from Borrowers shall be received at least three (3) Business Days prior to the
end of the applicable Interest Period and shall specify the amount of the
Eurodollar Rate Loans or the amount of the Prime Rate Loans to be converted to
Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be continued
(subject to the limits set forth below) and the Interest Period to be applicable
to such Eurodollar Rate Loans. Subject to the terms and conditions contained
herein, after receipt by Agent of such a request from Borrowers and after the
end of the applicable Interest Period, such Eurodollar Rate Loans shall be made
or Prime Rate Loans shall be converted to Eurodollar Rate Loans or such
Eurodollar Rate Loans shall continue, as the case may be, provided, that, (i) no
Default or Event of Default shall exist or have occurred and be continuing, (ii)
no party hereto shall have sent any notice of termination of this Agreement,
(iii) Borrowers shall have complied with such customary procedures as are
established by Agent and specified by Agent to Borrowers from time to time for
requests by Borrowers for Eurodollar Rate Loans, (iv) no more than four (4)
Interest Periods may be in effect at any one time, (v) the aggregate amount of
the Eurodollar Rate Loans must be in an amount not less than $3,000,000 or an
integral multiple of $250,000 in excess thereof, (vi) the maximum amount of the
Eurodollar Rate Loans in the aggregate at any time requested by Borrowers shall
not exceed the amount equal to the lowest principal amount of the Loans which it
is anticipated will be outstanding during the applicable Interest Period, in
each case as determined by Borrower in good faith, and (vii) Agent and each
Lender shall have determined that the Interest Period or Adjusted Eurodollar
Rate is available to Agent and such Lender through the Reference Bank and can be
readily determined as of the date of the request for such Eurodollar Rate Loan
by Borrowers. Any request by Borrowers for Eurodollar Rate Loans or to convert
Prime Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar
Rate Loans shall be irrevocable. Notwithstanding anything to the contrary
contained herein, Agent, Lenders and Reference Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the
provisions hereof shall be deemed to apply as if Agent, Lenders and Reference
Bank had purchased such deposits to fund the Eurodollar Rate Loans.
 
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans
upon the last day of the applicable Interest Period, unless Agent has received
and approved a request to continue such Eurodollar Rate Loan at least three (3)
Business Days prior to such last day in accordance with the terms hereof. Any
Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent to
Borrowers, be subsequently converted to Prime Rate Loans upon termination of
this Agreement. Borrowers shall pay to Agent, for the benefit of Lenders, upon
demand by Agent (or Agent may, at its option, charge any loan account of any
Borrower) any amounts required to compensate any Lender, the Reference Bank or
any Participant for any loss (including loss of anticipated profits), cost or
expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to any of the foregoing other than any
such conversion as set forth in the first sentence of this subsection (c).
 
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(d) Interest shall be payable by Borrowers to Agent, for the account of Lenders,
monthly in arrears not later than the first day of each calendar month
commencing on October 1, 2008 and shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the day any change in such Prime Rate is announced. In no event
shall charges constituting interest payable by Borrowers to Agent and Lenders
exceed the maximum amount or the rate permitted under any applicable law or
regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
 
3.2 Fees.
 
(a) Borrowers shall pay to Agent, for the account of Lenders, monthly, an unused
line fee at a rate per annum determined in accordance with the table in the
definition of “Applicable Margin”, calculated upon the amount by which (i) the
lesser of (A) the Maximum Credit minus $5,000,000, or (B) the sum of the
Accounts Sublimit plus the Equipment Sublimit minus $5,000,000, exceeds (ii) the
average daily principal balance of the outstanding Loans and Letters of Credit
during the immediately preceding month (or part thereof) while this Agreement is
in effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in arrears.
 
(b) In the case of letters of credit, Borrowers shall pay to Agent, for the
account of Lenders, a fee at a rate equal to one and one-quarter percent (1.25%)
per annum on the average daily maximum amount available to be drawn under all of
such Letters of Credit for the immediately preceding month (or part thereof),
payable in arrears as of the first day of each succeeding month, computed for
each day from the date of issuance to the date of expiration; except that
Borrowers shall pay, at Agent’s option, without notice, such fee at a rate two
percent (2%) greater than the otherwise applicable rate on such average daily
maximum amount for: (i) the period from and after the date of termination hereof
until Lenders have received full and final payment of all Obligations
(notwithstanding entry of a judgment against any Borrower or Guarantor) and (ii)
the period from and after the date of the occurrence of an Event of Default for
so long as such Event of Default is continuing as determined by Agent. Such
letter of credit fees shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed and the obligations of Borrowers to pay
such fee shall survive the termination of this Agreement. In addition to the
letter of credit fees provided above, Borrowers shall pay to the issuer of any
Letter of Credit a fronting fee at a rate equal to one-eighth of one percent
(0.125%) per annum on the undrawn face amount of such Letter of Credit, as well
as the customary charges from time to time of such issuer with respect to the
issuance, amendment, transfer, administration, cancellation and conversion of,
and drawings under, such Letters of Credit..
 
(c) Borrowers shall pay to Agent the other fees and amounts set forth in the Fee
Letter in the amounts and at the times specified therein. To the extent payment
in full of the applicable fee is received by Agent from Borrowers on or about
the date hereof, Agent shall pay to each Lender its share of such fees in
accordance with the terms of the arrangements of Agent with such Lender.
 
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3.3 Changes in Laws and Increased Costs of Loans.
 
(a) If after the date hereof, either (i) any change in, or in the interpretation
of, any law or regulation is introduced, including, without limitation, with
respect to reserve requirements, applicable to any Lender or any banking or
financial institution from whom any Lender borrows funds or obtains credit (a
“Funding Bank”), or (ii) a Funding Bank or any Lender complies with any future
guideline or request from any central bank or other Governmental Authority in
effect after the date hereof or (iii) a Funding Bank or any Lender determines
that the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, 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, in each case,
as in effect after the date hereof, has or would have the effect described
below, or a Funding Bank or any Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, in each case, as in effect after
the date hereof, and in the case of any event set forth in this clause (iii),
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any Lender’s capital as a consequence
of its obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
the Funding Bank’s or Lender’s policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, and the result of any of the
foregoing events described in clauses (i), (ii) or (iii) is or results in an
increase in the cost to any Lender of funding or maintaining the Loans, the
Letters of Credit or its Commitment, then Borrowers and Guarantors shall from
time to time within 30 days of receipt of a reasonably detailed written invoice
therefor pay to Agent additional amounts sufficient to indemnify such Lender
against such increased cost on an after-tax basis (after taking into account
applicable deductions and credits in respect of the amount indemnified). A
certificate as to the amount of such increased cost shall be submitted to
Borrowers by Agent and shall be presumptively correct, absent manifest error.
 
(b) If prior to the first day of any Interest Period, (i) Agent shall have
determined in good faith (which determination shall be presumptively correct)
that, by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Adjusted Eurodollar Rate for
such Interest Period, (ii) Agent determines that the Adjusted Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to Lenders of making or maintaining Eurodollar Rate
Loans during such Interest Period, or (iii) Dollar deposits in the principal
amounts of the Eurodollar Rate Loans to which such Interest Period is to be
applicable are not generally available in the London interbank market, Agent
shall give telecopy or telephonic notice thereof to Borrowers as soon as
practicable thereafter, and will also give prompt written notice to Borrowers
when such conditions no longer exist. If such notice is given (A) any Eurodollar
Rate Loans requested to be made on the first day of such Interest Period shall
be made as Prime Rate Loans, (B) any Loans that were to have been converted on
the first day of such Interest Period to or continued as Eurodollar Rate Loans
shall be converted to or continued as Prime Rate Loans and (C) each outstanding
Eurodollar Rate Loan shall be converted, on the last day of the then-current
Interest Period thereof, to Prime Rate Loans. Until such notice has been
withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued
as such, nor shall Borrowers have the right to convert Prime Rate Loans to
Eurodollar Rate Loans.
 
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(c) Notwithstanding any other provision herein, if the adoption of or any change
in any law, treaty, rule or regulation or final, non-appealable determination of
an arbitrator or a court or other Governmental Authority or in the
interpretation or application thereof, in each case, occurring after the date
hereof shall make it unlawful for Agent or any Lender to make or maintain
Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such
Lender shall promptly give written notice of such circumstances to Borrowers
(which notice shall be withdrawn whenever such circumstances no longer exist),
(ii) the commitment of such Lender hereunder to make Eurodollar Rate Loans,
continue Eurodollar Rate Loans as such and convert Prime Rate Loans to
Eurodollar Rate Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar Rate
Loans, such Lender shall then have a commitment only to make a Prime Rate Loan
when a Eurodollar Rate Loan is requested and (iii) such Lender’s Loans then
outstanding as Eurodollar Rate Loans, if any, shall be converted automatically
to Prime Rate Loans on the respective last days of the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a Eurodollar Rate Loan occurs on a day which is
not the last day of the then current Interest Period with respect thereto,
Borrowers and Guarantors shall pay to such Lender such amounts, if any, as may
be required pursuant to Section 3.3(d) below.
 
(d) Borrowers and Guarantors shall indemnify Agent and each Lender and to hold
Agent and each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur as a consequence of (i) default by Borrowers in
making a borrowing of, conversion into or extension of Eurodollar Rate Loans
after Borrowers have given a notice requesting the same in accordance with the
provisions of this Agreement, (ii) default by Borrowers in making any prepayment
of a Eurodollar Rate Loan after Borrowers have given a notice thereof in
accordance with the provisions of this Agreement, and (iii) the making of a
prepayment of Eurodollar Rate Loans on a day which is not the last day of an
Interest Period with respect thereto. With respect to Eurodollar Rate Loans,
such indemnification may include an amount equal to the excess, if any, of (A)
the amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or extend, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Rate Loans provided for herein over (B) the amount of interest (as determined by
Agent or such Lender) which would have accrued to Agent or such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank Eurodollar market. This covenant shall survive the
termination of this Agreement and the payment of the Obligations.
 
SECTION 4. CONDITIONS PRECEDENT
 
4.1 Conditions Precedent to Effectiveness of this Agreement. Each of the
following is a condition precedent to the effectiveness of this Agreement and to
this Agreement amending and restating the Existing Loan Agreement in its
entirety:
 
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(a) all requisite corporate or limited liability company action and proceedings
in connection with this Agreement and the other Financing Agreements shall be
reasonably satisfactory in form and substance to Agent, and Agent shall have
received records of requisite corporate or limited liability company action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by appropriate
corporate or limited liability company officers or Governmental Authority (and
including a copy of the certificate of incorporation or certificate of
formation, as the case may be, of each Borrower and Guarantor certified by the
Secretary of State (or equivalent Governmental Authority) which shall set forth
the same complete corporate or limited liability company name of such Borrower
or Guarantor as is set forth herein and such document as shall set forth the
organizational identification number of such Borrower or Guarantor, if one is
issued in its jurisdiction of incorporation or formation);
 
(b) Agent shall have received each of the following: (i) within thirty (30) days
of the date hereof, a written update to the March 2008 inventory appraisal by
Emerald Technology Valuations, LLC, satisfactory to Agent, which confirms there
is not a decline of more than ten percent (10%) in the balanced market values
since the March 2008 appraisal, and (ii) an updated field examination of the
business and collateral of Borrowers and Guarantors satisfactory to Agent and in
accordance with Agent’s customary procedures and practices and as otherwise
required by the nature of the businesses of Borrowers and Guarantors;
 
(c) to the extent not previously provided, Agent shall have received the
Collateral Access Agreements, duly executed and delivered by the parties
thereto;
 
(d) the sum of the Excess Availability as determined by Agent, as of the date
hereof, plus Qualified Cash shall be not less than $20,000,000 after giving
effect to (i) the initial Loans made or to be made and Letters of Credit issued
or to be issued in connection with the initial transactions hereunder and the
payment of all fees and expenses with respect thereto, and (ii) the payment of
the acquisition costs and all fees and expenses associated with the acquisition
of Parent Guarantor by Foreign Parent Nonguarantor, provided that, for purposes
of this Section 4.1(d) only, any severance payments, in a maximum aggregate
amount not to exceed $2,000,000, associated with such acquisition and made sixty
(60) or more days after the Effective Date shall not be included in this
calculation;
 
(e) to the extent not previously provided, Agent shall have received, in form
and substance satisfactory to Agent, Deposit Account Control Agreements by and
among Agent, each Borrower and Guarantor, as the case may be, and each bank
where such Borrower (or Guarantor) has a deposit account (other than any deposit
account specifically and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any Borrower’s or
Guarantor’s salaried employees), in each case, duly authorized, executed and
delivered by such bank and Borrower or Guarantor, as the case may be;
 
(f) Agent shall have received evidence, in form and substance satisfactory to
Agent, that Agent has a valid perfected first priority security interest in all
of the Collateral;
 
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(g) (i) Agent shall have received and reviewed lien and judgment search results
for the jurisdiction of organization of each Borrower and Guarantor, the
jurisdiction of the chief executive office of each Borrower and Guarantor and
all jurisdictions in which assets of each Borrower and Guarantor are located,
which search results shall be in form and substance satisfactory to Agent; and
(ii) Agent shall have received, in form and substance reasonably satisfactory to
Agent, all releases, terminations and such other documents as Agent may request
to evidence and effectuate the termination by all secured parties, with a lien
or security interest on any Collateral with priority over the security interest
of Agent granted hereby, of their respective financing arrangements with
Borrowers or any Borrower, as the case may be, and the termination and release
by it or them, as the case may be, of any interest in and to any assets and
properties of Borrowers or such Borrower and each Guarantor, duly authorized,
executed and delivered by it or each of them, including, but not limited to, (A)
UCC termination statements for all UCC financing statements previously filed by
it or any of them or their predecessors, as secured party and Borrowers, any
Borrower or any Guarantor, as the case may be, as debtor; and (B) satisfactions
and discharges of any mortgages, deeds of trust or deeds to secure debt by
Borrowers, any Borrower or any Guarantor, as the case may be, in favor of it or
any of them, in form acceptable for recording with the appropriate Governmental
Authority;
 
(h) to the extent not previously provided, Agent shall have received completed
background checks with respect to Borrowers’ and Guarantors’ prospective senior
management, the results of which are satisfactory to Agent;
 
(i) for verification purposes as part of the measures required by Agent pursuant
to the US Patriot Act, Agent shall have received all information that Agent
requests concerning each Borrower’s and each Guarantor’s identity, the results
of which are satisfactory to Agent;
 
(j) Agent shall have received all financial information, projections, budgets,
business plans, cash flows and such other information as Agent shall request
from time to time, including (i) projected quarterly balance sheets, income
statements, statements of cash flows and availability of Borrowers for the
period through the end of the 2009 fiscal year, (ii) projected annual balance
sheets, income statements, statements of cash flows and availability of
Borrowers and Guarantors through the end of the 2011 fiscal year, in each case
as to the projections described in clauses (i) and (ii), with the results and
assumptions set forth in all of such projections in form and substance
satisfactory to Agent, and an opening pro forma balance sheet for Borrowers and
Guarantors in form and substance reasonably satisfactory to Agent, (iii)
consolidating projected quarterly income statements and statements of cash flows
for Foreign Parent Nonguarantor and its Subsidiaries for the period through the
end of the 2009 fiscal year, (iv) consolidating projected annual income
statements and statement of cash flows for Foreign Parent Nonguarantor and its
Subsidiaries through the end of the 2011 fiscal year, (v) any updates or
modifications to the projected financial statements of Jazz and its subsidiaries
previously received by Agent, in each case in form and substance reasonably
satisfactory to Agent and (vi) current agings of receivables, current perpetual
inventory records and/or rollforwards of accounts and inventory through the
Effective Date, together with supporting documentation;
 
(k) Agent shall have received evidence of insurance and loss payee endorsements
required hereunder, in form and substance reasonably satisfactory to Agent, and
certificates of insurance policies and/or endorsements naming Agent as loss
payee;
 
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(l) Agent shall have received, in form and substance reasonably satisfactory to
Agent, such opinion letters of counsel to Borrowers and Guarantors with respect
to the Financing Agreements and such other matters as Agent may reasonably
request;
 
(m) Agent shall have received payment of the fees and commissions due under this
Agreement through the date of the initial Loans or Letters of Credit and, to the
extent invoiced, expenses incurred by Agent through such date and required to be
paid by the Borrowers under Section 9.22 hereof, including all legal expenses,
to the extent invoiced, incurred through the date of this Agreement;
 
(n) Agent shall have received an Investment Property Control Agreement with
respect to any investment account, securities account, commodity account or
other similar account existing on the date hereof held by or in the name of any
Borrower or Guarantor, duly executed and delivered by the parties thereto;
 
(o) Agent shall have received evidence, in form and substance satisfactory to
Agent, that Borrowers have obtained all necessary corporate governance,
regulatory and SEC approval in connection with the acquisition of Borrowers
which will be consummated substantially concurrently with the closing of the
Credit Facility;
 
(p) Agent shall have received and reviewed any amendments or modifications to
the Agreement and Plan of Merger and Reorganization, dated May 19, 2008 (the
“Agreement and Plan of Merger”), by and among Foreign Parent Nonguarantor,
Armstrong and Parent Guarantor, made after the date of execution of such
agreement, and such amendments or modifications shall be in form and substance
satisfactory to Agent;
 
(q) Agent shall have received evidence, in form and substance satisfactory to
Agent, that Armstrong has merged with and into Parent Guarantor;
 
(r) no Material Adverse Effect, and no material pending or threatened,
litigation, proceeding, bankruptcy or insolvency, injunction, order or unpaid
judgments with respect to Borrowers and Guarantors shall exist on the Effective
Date which would constitute a default or event of default, which has not been
cured or waived, under the Existing Loan Agreement; and
 
(s) this Agreement and the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Agent and shall be effective on or before October 31, 2008.
 
4.2 Conditions Precedent to All Loans and Letters of Credit. The obligation of
Lenders to make any of the Loans, including the initial Loans, or of Agent and
Lenders to arrange or provide for any Letter of Credit, including the initial
Letters of Credit, is subject to the further satisfaction of, or waiver of,
immediately prior to or concurrently with the making of each such Loan or the
issuance of such Letter of Credit of each of the following conditions precedent:
 
(a) all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct, in all material respects, with
the same effect as though such representations and warranties had been made on
and as of the date of the making of each such Loan or providing each such Letter
of Credit and after giving effect thereto, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and
accurate, in all material respects, on and as of such earlier date);
 
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(b) no law, regulation, order, judgment or decree of any Governmental Authority
shall exist, and no action, suit, investigation, litigation or proceeding shall
be pending or threatened in any court or before any arbitrator or Governmental
Authority, which (i) purports to enjoin, prohibit or restrain the making of the
Loans or providing the Letters of Credit;
 
(c) no event or condition shall exist or have occurred and be continuing since
March 14, 2008 that has a reasonable likelihood of creating or resulting in a
Material Adverse Effect; and
 
(d) no Default or Event of Default shall exist or have occurred and be
continuing since the Effective Date and on and as of the date of the making of
such Loan or providing each such Letter of Credit and after giving effect
thereto.
 
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
 
5.1 Grant of Security Interest. To secure payment and performance of all
Obligations, each Borrower and Guarantor hereby grants to Agent, for itself and
the benefit of the Secured Parties, a continuing security interest in, and a
lien upon, all personal property and fixtures, and interests in personal
property and fixtures, of such Borrower or Guarantor, whether now owned or
hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Agent or any Lender, collectively, the “Collateral”), including:
 
(a) all Accounts;
 
(b) all general intangibles, including, without limitation, all Intellectual
Property;
 
(c) all goods, including, without limitation, Inventory and Equipment;
 
(d) all fixtures;
 
(e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;
 
(f) all instruments, including, without limitation, all promissory notes;
 
(g) all documents;
 
(h) all deposit accounts (other than deposit accounts specifically and
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of any Borrower’s or Guarantor’s salaried
employees);
 
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(i) all letters of credit, banker’s acceptances and similar instruments and
including all letter-of-credit rights;
 
(j) all supporting obligations and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
 
(k) all (i) investment property (including securities, whether certificated or
uncertificated, securities accounts, security entitlements, commodity contracts
or commodity accounts); provided, that with respect to the Capital Stock of any
Foreign Subsidiary of such Borrower or such Guarantor, the amount of such
Capital Stock of such Foreign Subsidiary included as Collateral hereunder shall
be limited to 65% of the Capital Stock of such Subsidiary; and (ii) monies,
credit balances, deposits and other property of such Borrower or Guarantor now
or hereafter held or received by or in transit to Agent, any Lender or its
Affiliates or at any other depository or other institution from or for the
account of any Borrower or Guarantor, whether for safekeeping, pledge, custody,
transmission, collection or otherwise;
 
(l) all commercial tort claims, including, without limitation, those identified
in the Information Certificate;
 
(m) to the extent not otherwise described above, all Receivables;
 
(n) all Records; and
 
(o) all products and proceeds of the foregoing, in any form, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
 
Notwithstanding the foregoing, "Collateral" shall not include: (a) any lease,
license, permit, contract, property right or agreement to which any Borrower or
Guarantor is a party or under which any Borrower or Guarantor has any right or
interest (including any Intellectual Property or Equipment of such Borrower or
Guarantor that is the subject of such lease, license, permit, contract, property
right or agreement) if and only for so long as the grant of a security interest
hereunder shall constitute or result in a breach, termination or default under
any such lease, license, permit, contract, property right or agreement (other
than to the extent that any such term would be rendered ineffective under
Sections 9406, 9407, 9408 or 9409 of the UCC or any other applicable law or
principle of equity); provided, however, that such security interest shall
attach immediately to any portion of such lease, license, permit, contract,
property right or agreement that does not result in any of the consequences
specified above in this paragraph; and (b) any Capital Stock of any Excluded
Subsidiary.
 
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5.2 Perfection of Security Interests.
 
(a) Each Borrower and Guarantor irrevocably and unconditionally authorizes Agent
(or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Agent or its designee as the
secured party and such Borrower or Guarantor as debtor, as Agent may require,
and including any other information with respect to such Borrower or Guarantor
or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of
such jurisdiction as may be necessary to perfect the security interest granted
herein, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Each Borrower and Guarantor hereby ratifies and
approves all financing statements naming Agent or its designee as secured party
and such Borrower or Guarantor, as the case may be, as debtor with respect to
the Collateral (and any amendments with respect to such financing statements)
filed by or on behalf of Agent prior to the date hereof and ratifies and
confirms the authorization of Agent to file such financing statements (and
amendments, if any). Each Borrower and Guarantor hereby authorizes Agent to
adopt on behalf of such Borrower and Guarantor any symbol required for
authenticating any electronic filing. In the event that the description of the
collateral in any financing statement naming Agent or its designee as the
secured party and any Borrower or Guarantor as debtor includes assets and
properties of such Borrower or Guarantor that do not at any time constitute
Collateral, whether hereunder, under any of the other Financing Agreements or
otherwise, the filing of such financing statement shall nonetheless be deemed
authorized by such Borrower or Guarantor to the extent of the Collateral
included in such description and it shall not render the financing statement
ineffective as to any of the Collateral or otherwise affect the financing
statement as it applies to any of the Collateral, and each Borrower and
Guarantor authorizes Agent to file a financing statement with a collateral
description of "all assets" or "all personal property". Except as otherwise
provided in this Agreement with respect to Agent's obligations to provide
releases of Collateral or termination statements, in no event shall any Borrower
or Guarantor at any time file, or permit or cause to be filed, any correction
statement or termination statement with respect to any financing statement (or
amendment or continuation with respect thereto) naming Agent or its designee as
secured party and such Borrower or Guarantor as debtor.
 
(b) None of the Borrowers or Guarantors has any chattel paper (whether tangible
or electronic) or instruments as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower or Guarantor shall be
entitled to or shall receive any chattel paper or instrument after the date
hereof, Borrowers and Guarantors shall promptly notify Agent thereof in writing.
Promptly upon the receipt thereof by or on behalf of any Borrower or Guarantor
(including by any agent or representative), such Borrower or Guarantor shall
deliver, or cause to be delivered to Agent, all tangible chattel paper and
instruments that such Borrower or Guarantor has or may at any time acquire,
accompanied by such instruments of transfer or assignment duly executed in blank
as Agent may from time to time specify, in each case except as Agent may
otherwise agree; provided, that, so long as no Event of Default has occurred and
is continuing, Borrowers and Guarantors shall not be required to deliver to
Agent up to $1,000,000 in the aggregate of any such chattel paper or instruments
and instruments of transfer or assignment. At Agent’s option, each Borrower and
Guarantor shall, or Agent may at any time on behalf of any Borrower or
Guarantor, cause the original of any such instrument or chattel paper to be
conspicuously marked in a form and manner acceptable to Agent with the following
legend referring to chattel paper or instruments as applicable: “This [chattel
paper][instrument] is subject to the security interest of Wachovia Capital
Finance Corporation (Western) and any sale, transfer, assignment or encumbrance
of this [chattel paper][instrument] violates the rights of such secured party.”;
provided, that, so long as no Event of Default has occurred and is continuing,
Borrowers and Guarantors shall not be required to mark up to $1,000,000 in the
aggregate of any such chattel paper and instruments.
 
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(c) In the event that any Borrower or Guarantor shall at any time hold or
acquire an interest in any electronic chattel paper or any “transferable record”
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), such Borrower or
Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent’s
request, such Borrower or Guarantor shall take, or cause to be taken, such
actions as Agent may request to give Agent control of such electronic chattel
paper under Section 9105 of the UCC and control of such transferable record
under Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as in effect in such jurisdiction.
 
(d) None of the Borrowers or Guarantors has any deposit accounts as of the date
hereof, except as set forth in the Information Certificate. No Borrower or
Guarantor shall, directly or indirectly, after the date hereof open, establish
or maintain any deposit account unless each of the following conditions is
satisfied: (i) Agent shall have received not less than five (5) Business Days
prior written notice of the intention of such Borrower or Guarantor to open or
establish such account which notice shall specify in reasonable detail and
specificity reasonably acceptable to Agent the name of the account, the owner of
the account, the name and address of the bank at which such account is to be
opened or established, the individual at such bank with whom such Borrower or
Guarantor is dealing and the purpose of the account, (ii) the bank where such
account is opened or maintained shall be reasonably acceptable to Agent, and
(iii) on or before the opening of such deposit account, such Borrower or
Guarantor shall deliver to Agent a Deposit Account Control Agreement with
respect to such deposit account duly authorized, executed and delivered by such
Borrower or Guarantor and the bank at which such deposit account is opened and
maintained. The terms of this subsection (d) shall not apply to deposit accounts
specifically and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of any Borrower’s or Guarantor’s
salaried employees. Borrowers and Guarantors shall not maintain at any one time
an aggregate amount of more than One Million Dollars ($1,000,000) in deposit
accounts maintained at any location outside the United States, and Agent and
Lenders shall not require Borrowers and Guarantors to deliver to Agent any
Deposit Account Control Agreements otherwise required under the terms of this
subsection (d) with respect to such deposit accounts located outside of the
United States so long as Borrowers and Guarantors are in compliance with the
terms of this sentence.
 
(e) None of the Borrowers or Guarantors owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.
 
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(i) In the event that any Borrower or Guarantor shall be entitled to or shall at
any time after the date hereof hold or acquire any certificated securities, such
Borrower or Guarantor shall promptly endorse, assign and deliver the same to
Agent, accompanied by such instruments of transfer or assignment duly executed
in blank as Agent may from time to time specify. If any securities, now or
hereafter acquired by such Borrower or Guarantor are uncertificated and are
issued to such Borrower or Guarantor or its nominee directly by the issuer
thereof, such Borrower or Guarantor shall immediately notify Agent thereof and
shall (A) cause the issuer to agree to comply with instructions from Agent as to
such securities, without further consent of any Borrower or Guarantor or such
nominee, and (B) upon the occurrence and continuation of an Event of Default,
arrange for Lender to become the registered owner of the securities.
 
(ii) No Borrower or Guarantor shall, directly or indirectly, after the date
hereof open, establish or maintain any investment account, securities account,
commodity account or any other similar account (other than a deposit account)
with any securities intermediary or commodity intermediary unless each of the
following conditions is satisfied: (A) Agent shall have received not less than
five (5) Business Days prior written notice of the intention of such Borrower or
Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the account,
the owner of the account, the name and address of the securities intermediary or
commodity intermediary at which such account is to be opened or established, the
individual at such intermediary with whom such Borrower or Guarantor is dealing
and the purpose of the account, (B) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be acceptable to Agent, and (C) on or before the opening of such
investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, such Borrower or Guarantor
shall (i) execute and deliver, and cause to be executed and delivered to Agent,
an Investment Property Control Agreement with respect thereto duly authorized,
executed and delivered by such Borrower or Guarantor and such securities
intermediary or commodity intermediary, and (ii) upon the occurrence and
continuation of an Event of Default, arrange for Agent to become the entitlement
holder with respect to such investment property on terms and conditions
acceptable to Agent. The terms of this subsection (e)(ii) shall not apply to
deposit accounts specifically and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of any
Borrower’s or Guarantor’s salaried employees.
 
(f) None of the Borrowers or Guarantors is the beneficiary or otherwise entitled
to any right to payment under any letter of credit, banker’s acceptance or
similar instrument as of the date hereof, except as set forth in the Information
Certificate or on Schedule 1.59 hereof. In the event that any Borrower or
Guarantor shall be entitled to or shall receive any right to payment under any
letter of credit, banker’s acceptance or any similar instrument, whether as
beneficiary thereof or otherwise after the date hereof, such Borrower or
Guarantor shall promptly give written notice to Agent thereof; provided, that so
long as no Event of Default has occurred and is continuing, Borrowers and
Guarantors shall not be required to notify Agent in writing of up to $1,000,000
in the aggregate of all such letters of credit, banker’s acceptances or similar
instruments. Such Borrower or Guarantor shall immediately, as Agent may specify,
either: (i) prior to the occurrence of an Event of Default, use all commercially
reasonable efforts to deliver, or cause to be delivered to Agent, with respect
to any such letter of credit, banker’s acceptance or similar instrument with a
face value in excess of $1,000,000 in the aggregate for all such letters of
credit, banker’s acceptances or similar instruments, the written agreement of
the issuer and any other nominated person obligated to make any payment in
respect thereof (including any confirming or negotiating bank), in form and
substance reasonably satisfactory to Agent, consenting to the assignment of the
proceeds of the letter of credit to Agent by such Borrower or Guarantor and
agreeing to make all payments thereon directly to Agent or as Agent may
otherwise direct, provided, that, upon the occurrence and continuation of an
Event of Default, without regard to the face value of such letters of credit,
banker’s acceptances or instruments, all such written agreements of such issuer
and such other nominated person obligated to make any payment in respect thereof
shall be so delivered to Agent; or (ii) after an Event of Default has occurred
and is continuing, cause Agent to become, at Borrowers’ expense, the transferee
beneficiary of the letter of credit, banker’s acceptance or similar instrument
(as the case may be).
 
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(g) None of the Borrowers or Guarantors has any commercial tort claims in excess
of $1,000,000 as of the date hereof, except as set forth in the Information
Certificate. In the event that any Borrower or Guarantor shall at any time after
the date hereof have any commercial tort claims in excess of $1,000,000, such
Borrower or Guarantor shall promptly notify Agent thereof in writing, which
notice shall (i) set forth in reasonable detail the basis for and nature of such
commercial tort claim and (ii) include the express grant by such Borrower or
Guarantor to Agent of a security interest in such commercial tort claim (and the
proceeds thereof). In the event that such notice does not include such grant of
a security interest, the sending thereof by such Borrower or Guarantor to Agent
shall be deemed to constitute such grant to Agent. Upon the sending of such
notice, any commercial tort claim described therein shall constitute part of the
Collateral and shall be deemed included therein. Without limiting the
authorization of Agent provided in Section 5.2(a) hereof or otherwise arising by
the execution by such Borrower or Guarantor of this Agreement or any of the
other Financing Agreements, Agent is hereby irrevocably authorized from time to
time and at any time to file such financing statements naming Agent or its
designee as secured party and such Borrower or Guarantor as debtor, or any
amendments to any financing statements, covering any such commercial tort claim
as Collateral. In addition, each Borrower and Guarantor shall promptly upon
Agent’s request, execute and deliver, or cause to be executed and delivered, to
Agent such other agreements, documents and instruments as Agent may require in
connection with such commercial tort claim.
 
(h) None of the Borrowers or Guarantors has any goods, documents of title or
other Collateral in the custody, control or possession of a third party as of
the date hereof, except as set forth in the Information Certificate and except
for goods located in the United States in transit to a location of a Borrower or
Guarantor permitted herein in the ordinary course of business of such Borrower
or Guarantor in the possession of the carrier transporting such goods. In the
event that any goods, documents of title or other Collateral in excess of
$1,000,000 are at any time after the date hereof in the custody, control or
possession of any other person not referred to in the Information Certificate or
such carriers, Borrowers and Guarantors shall promptly notify Agent thereof in
writing. Promptly upon Agent’s request, Borrowers and Guarantors shall use
commercially reasonably efforts deliver to Agent a Collateral Access Agreement
duly authorized, executed and delivered by such person and the Borrower or
Guarantor that is the owner of such Collateral; provided, that in the absence of
such executed Collateral Access Agreement, Agent shall establish a Reserve in an
amount equal to two (2) months of monthly bailment, carrier or other similar
fees with respect to such location.
 
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(i) Each Borrower and Guarantor shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that any Borrower's or Guarantor’s signature thereon is required
therefor, (ii) causing Agent’s name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iii) complying with any
provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, (iv) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, upon
the occurrence and continuation of an Event of Default or to the extent
necessary to avoid the occurrence of a Material Adverse Effect, and taking all
actions required by any earlier versions of the UCC or by other law, as
applicable in any relevant jurisdiction.
 
SECTION 6. COLLECTION AND ADMINISTRATION
 
6.1 Borrowers’ Loan Accounts. Agent shall maintain one or more loan account(s)
on its books in which shall be recorded (a) all Loans, Letters of Credit and
other Obligations and the Collateral, (b) all payments made by or on behalf of
any Borrower or Guarantor and (c) all other appropriate debits and credits as
provided in this Agreement, including fees, charges, costs, expenses and
interest. All entries in the loan account(s) shall be made in accordance with
Agent's customary practices as in effect from time to time.
 
6.2 Statements. Agent shall render to Borrowers each month a statement setting
forth the balance in Borrowers’ loan account(s) maintained by Agent for
Borrowers pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be considered presumptively correct and, absent manifest errors or omissions,
deemed accepted by Borrowers and Guarantors and conclusively binding upon
Borrowers and Guarantors as an account stated except to the extent that Agent
receives a written notice from Borrowers of any specific exceptions of Borrowers
thereto within thirty (30) days after the date such statement has been mailed by
Agent. Until such time as Agent shall have rendered to Borrowers a written
statement as provided above, the balance in any Borrower's loan account(s) shall
be presumptive evidence of the amounts due and owing to Agent and Lenders by
Borrowers and Guarantors.
 
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6.3 Collection of Accounts.
 
(a) Subject to Section 6.3(d) below, Borrowers shall establish and maintain, at
their expense, blocked accounts or lockboxes and related blocked accounts (in
either case, “Blocked Accounts”), as Agent may specify, with such banks as are
reasonably acceptable to Agent into which Borrowers shall promptly deposit and
direct its account debtors to directly remit all payments on Receivables and all
payments constituting proceeds of Inventory or other Collateral in the identical
form in which such payments are made, whether by cash, check or other manner.
Borrowers shall deliver, or cause to be delivered to Agent a Deposit Account
Control Agreement duly authorized, executed and delivered by each bank where a
Blocked Account is maintained as provided in Section 5.2 hereof (which agreement
shall provide that upon notice from Agent (which shall be given upon the
occurrence of any event set forth in Sections 6.3(d)(i) or 6.3(d)(ii) below, as
applicable), such bank will send funds on a daily basis to the Agent Payment
Account and otherwise take instructions with respect to such Blocked Account
only from Agent), or at any time following the occurrence of any event set forth
in Sections 6.3(d)(i) or 6.3(d)(ii) below, Agent may become the bank’s customer
with respect to any of the Blocked Accounts and promptly upon Agent’s request,
Borrowers shall execute and deliver such agreements and documents as Agent may
require in connection therewith. Upon the occurrence of any event set forth in
Section 6.3(d) below, each Borrower and Guarantor agrees that all payments made
to such Blocked Accounts or other funds received and collected by Agent or any
Lender, whether in respect of the Receivables, as proceeds of Inventory or other
Collateral or otherwise shall be treated as payments to Agent and Lenders in
respect of the Obligations and therefore shall constitute the property of Agent
and Lenders to the extent of the then outstanding Obligations.
 
(b)  Upon the occurrence of any event set forth in Section 6.3(d) below, for
purposes of calculating the amount of the Loans available to each Borrower, such
payments will be applied (conditional upon final collection) to the Obligations
on the Business Day of receipt by Agent of immediately available funds in the
Agent Payment Account provided such payments and notice thereof are received in
accordance with Agent’s usual and customary practices as in effect from time to
time and within sufficient time to credit such Borrower's loan account on such
day, and if not, then on the next Business Day.
 
(c) Upon the occurrence of any event set forth in Section 6.3(d) below, each
Borrower and Guarantor and their respective employees, agents and Subsidiaries
shall, acting as trustee for Agent, receive, as the property of Agent, any
monies, checks, notes, drafts or any other payment relating to and/or proceeds
of Accounts or other Collateral which come into their possession or under their
control and immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Agent. In no event shall the same be commingled with any
Borrower's or Guarantor’s own funds. Borrowers agree, upon the occurrence of any
event set forth in Section 6.3(d) below, to reimburse Agent on demand for any
amounts owed or paid to any bank or other financial institution at which a
Blocked Account or any other deposit account or investment account is
established or any other bank, financial institution or other person involved in
the transfer of funds to or from the Blocked Accounts arising out of Agent 's
payments to or indemnification of such bank, financial institution or other
person. The obligation of Borrowers to reimburse Agent for such amounts pursuant
to this Section 6.3 shall survive the termination of this Agreement.
 
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(d) Notwithstanding the foregoing in this Section 6.3, Agent shall exercise
control over the Blocked Accounts and shall be entitled to receive payments on
and/or proceeds of Accounts only in the event that (i) the aggregate outstanding
amount of Loans and Letter of Credit Obligations shall be equal to or greater
than $30,000,000 for any period of three (3) consecutive Business Days, or (ii)
an Event of Default has occurred and is continuing. Following any exercise of
control by Agent over the Blocked Accounts pursuant to clause (i) of this
Section 6.3(d), Agent shall relinquish such control over the Blocked Accounts if
at all times during a period thereafter of ninety (90) calendar days, the
aggregate outstanding amount of Loans and Letter of Credit Obligations is less
than $30,000,000.
 
6.4 Payments.
 
(a) All Obligations shall be payable to the Agent Payment Account as provided in
Section 6.3 or such other place as Agent may designate from time to time.
Subject to the other terms and conditions contained herein, Agent shall apply
payments received or collected from any Borrower or Guarantor or for the account
of any Borrower or Guarantor (including the monetary proceeds of collections or
of realization upon any Collateral) as follows: first, to pay any fees,
indemnities or expense reimbursements then due to Agent and Lenders from any
Borrower or Guarantor and any Obligations due with respect to Bank Products to
the extent reserved from the Borrowing Base; second, to pay interest due in
respect of any Loans or Letter of Credit Obligations; third, to pay principal
due in respect of any Loans and Letter of Credit Obligations; fourth, to pay or
prepay any other Obligations whether or not then due, in such order and manner
as Agent determines and at any time an Event of Default exists or has occurred
and is continuing, to provide cash collateral for any Letter of Credit
Obligations; fifth, to pay any Obligations due with respect to Bank Products to
the extent not reserved from the Borrowing Base. Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by Borrowers, or unless
a Default or an Event of Default shall exist or have occurred and be continuing,
Agent shall not apply any payments which it receives to any Eurodollar Rate
Loans, except (A) on the expiration date of the Interest Period applicable to
any such Eurodollar Rate Loans or (B) in the event that there are no outstanding
Prime Rate Loans.
 
(b) At Agent 's option, all principal, interest, fees (except for payments of
fees and disbursements of counsel as may be limited by Section 9.22(g)), costs,
expenses and other charges provided for in this Agreement and then due and
payable or the other Financing Agreements may be charged directly to the loan
account(s) of any Borrower maintained by Agent. Borrowers shall make all
payments to Agent on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim or defense of any
kind. If after receipt of any payment of, or proceeds of Collateral applied to
the payment of, any of the Obligations, Agent or any Lender is required to
surrender or return such payment or proceeds to any Person for any reason, then
the Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Agent or such
Lender. Borrowers and Guarantors shall be liable to pay to Agent, and do hereby
indemnify and hold Agent and Lenders harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Agent or any Lender in
reliance upon such payment or proceeds. This Section 6.4 shall survive the
payment of the Obligations and the termination of this Agreement.
 
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(c) Except as otherwise required by applicable law or as provided in this
Agreement, each Borrower and Guarantor shall make all payments to each Lender on
the Obligations free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, charges, fees deductions
withholdings now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding net income taxes, net profits, capital
taxes and franchise taxes (imposed in lieu of income taxes) and any branch
profits taxes imposed by the United States or any similar tax imposed on any
Lender as a result of a present or former connection between such Lender and the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof (other than any such connection arising solely from such
Lender having executed, delivered and performed its obligations or received a
payment under, or enforced, this Agreement). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
(“Non-Excluded Taxes”) are required to be withheld from any amounts payable by
the relevant Borrower or Guarantor to a Lender hereunder, (i) the amounts so
payable to such Lender shall be increased to the extent necessary to yield to
such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, (ii) the Borrowers and Guarantors shall make such
deductions and (iii) the Borrowers and Guarantors shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law, provided, however, that no Borrower or Guarantor shall be required to
increase any amounts payable to a Lender with respect to any Non-Excluded Taxes,
and each Borrower and Guarantor shall be permitted to withhold any Non-Excluded
Taxes, (A) that are attributable to such Lender’s failure to comply with the
requirements of paragraphs (e) or (f) of this Section or (B) that are United
States withholding taxes that are in effect and apply to amounts payable to a
Lender at the time such Lender becomes a party to this Agreement. The Borrowers
and Guarantors shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.
 
(d) Whenever any Non-Excluded Taxes or Other Taxes are payable by a Borrower or
Guarantor to a Governmental Authority, as promptly as possible thereafter the
relevant Borrower or Guarantor shall send to each Lender a copy of an original
official receipt received by the Borrower or Guarantor showing payment thereof.
If such Borrower or Guarantor fails to pay any Non-Excluded Taxes or Other Taxes
when due to the appropriate taxing authority or fails to remit to each Lender
the required receipts or other required documentary evidence, the Borrowers and
Guarantors shall indemnify each Lender for any incremental taxes, interest or
penalties that become payable by the Lender as a result of such failure. The
determination of whether any Non-Excluded Taxes are due to be paid by a Borrower
or Guarantor shall be based on the forms that are provided to the Borrowers and
Guarantors pursuant to Sections 6.4(e) and (f) hereof and the Borrowers and
Guarantors shall not be obligated to indemnify any Lender for any amounts under
this Section if such forms are not properly completed and duly executed.
 
(e) Each Lender (including an assignee of a Lender) that is not a United States
person (as such term is defined in Section 7701(a)(3) of the Code (a “Non-U.S.
Lender”) shall deliver to the Borrowers, as provided below, (i) two accurate and
complete copies of IRS Form W-8ECI or W-8BEN, or, (ii) in the case of a Non-U.S.
Lender claiming exemption from United States federal withholding tax under
Sections 871(h) or 881(c) of the Code with respect to payments of “portfolio
interest”, a statement substantially in the form of Exhibit E hereof and two
accurate and complete copies of IRS Form W-8BEN, or any subsequent versions or
successors to such forms, in each case properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or a reduced rate of,
United States federal withholding tax on all Obligations. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement. In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. In addition, each Non-U.S. Lender agrees that it will
deliver to the Borrowers, within a reasonable time after a request therefor,
updated versions of the foregoing documentation and such other forms as may be
required to confirm or establish the entitlement of a Non-U.S. Lender to a
continued exemption from, or reduction in withholding tax. Each Non-U.S. Lender
shall promptly notify the Borrowers at any time it determines that it is no
longer in a position to provide any previously delivered certificate to the
Borrowers (or any other form of certification adopted by the United States
taxing authority for such purpose). Notwithstanding any other provision of this
paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this paragraph that such Non-U.S. Lender is not legally available to deliver.
 
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(f) Each Lender (including an assignee of a Lender) that is a United States
person as defined in Section 7701(a)(30) of the Code shall deliver to the
Borrowers, on or before such Lender becomes a party to this Agreement, two
accurate and complete copies of IRS Form W-9 (or successor form) establishing
that the Lender is a United States person and is not subject to backup
withholding. In addition, each Lender that is a United States person shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Lender. In addition, each Lender that is a United
States person agrees that it will deliver to the Borrowers, within a reasonable
time after a request therefor, updated versions of the foregoing documentation
and such other forms as may be required to confirm or establish the entitlement
of a Lender to a continued exemption from withholding tax.
 
(g) If a Lender determines in its reasonable judgment that it has received a
refund of any Non-Excluded Taxes, Other Taxes or other amounts as to which it
has been indemnified by the Borrowers or with respect to which the Borrowers
have paid additional amounts pursuant to this Section 6.4, it shall pay over
such refund to the relevant Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
6.4 with respect to Non-Excluded Taxes or Other Taxes giving rise to such
refund) net of all out-of-pocket expenses of the Lender and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided, that the Borrowers, upon the request of such
Lender, agree to repay the amount paid over the Borrowers to such Lender in the
event such Lender is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require any Lender to make
available its tax return (or any other information relating to its taxes which
it considers confidential) to the Borrowers.
 
6.5 Authorization to Make Loans. Agent and Lenders are authorized to make the
Loans based upon telephonic or other instructions received from anyone
purporting to be an officer of any Borrower or other authorized person or, at
the discretion of Agent, if such Loans are necessary to satisfy any Obligations
then due and payable (except for payments of fees and disbursements of counsel
as may be limited by Section 9.22(g)). All requests for Loans or Letters of
Credit hereunder shall specify the date on which the requested advance is to be
made (which day shall be a Business Day) and the amount of the requested Loan.
Requests received after 11:00 a.m. Pasadena, California time on any day shall be
deemed to have been made as of the opening of business on the immediately
following Business Day. All Loans and Letters of Credit under this Agreement
shall be conclusively presumed to have been made to, and at the request of and
for the benefit of, any Borrower or Guarantor when deposited to the credit of
any Borrower or Guarantor or otherwise disbursed or established in accordance
with the instructions of any Borrower or Guarantor or in accordance with the
terms and conditions of this Agreement.
 
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6.6 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans and
Letters of Credit hereunder only for: (a) payments to each of the persons listed
in the disbursement direction letter furnished by Borrowers to Agent on or about
the date hereof, (b) costs, expenses and fees in connection with the
preparation, negotiation, execution and delivery of this Agreement and the other
Financing Agreements, and (c) costs, expenses and fees in connection with the
acquisition of Parent Guarantor by Foreign Parent Nonguarantor. All other Loans
made or Letters of Credit provided by Agent and Lenders to or for the benefit of
any Borrower pursuant to the provisions hereof shall be used by such Borrower
only for general operating, working capital, capital expenditure and other
proper corporate purposes of Borrower not otherwise prohibited by the terms
hereof, including, without limitation, permitted investments and permitted
acquisitions. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a “purpose credit” within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended.
 
6.7 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement or as otherwise agreed by Lenders: (a) the making and conversion of
Loans shall be made among the Lenders based on their respective Pro Rata Shares
as to the Loans and (b) each payment on account of any Obligations to or for the
account of one or more of Lenders in respect of any Obligations due on a
particular day shall be allocated among the Lenders entitled to such payments
based on their respective Pro Rata Shares and shall be distributed accordingly.
 
6.8 Sharing of Payments, Etc.
 
(a) Each Borrower and Guarantor agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim Agent or any
Lender may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.13(b)
hereof), to offset balances held by it for the account of such Borrower or
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to such Borrower or Guarantor), in which
case it shall promptly notify the Borrowers and Agent thereof; provided, that,
such Lender's failure to give such notice shall not affect the validity thereof.
 
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(b) If any Lender (including Agent) shall obtain from any Borrower or Guarantor
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement or any of the other Financing Agreements
through the exercise of any right of setoff, banker's lien or counterclaim or
similar right or otherwise (other than from Agent as provided herein), and, as a
result of such payment, such Lender shall have received more than its Pro Rata
Share of the principal of the Loans or more than its share of such other amounts
then due hereunder or thereunder by any Borrower or Guarantor to such Lender
than the percentage thereof received by any other Lender, it shall promptly pay
to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the Loans or
such other amounts, respectively, owing to such other Lenders (or such interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all Lenders
shall share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) in
accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
 
(c) Each Borrower and Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
 
(d) Nothing contained herein shall require any Lender to exercise any right of
setoff, banker’s lien, counterclaims or similar rights or shall affect the right
of any Lender to exercise, and retain the benefits of exercising, any such right
with respect to any other Indebtedness or obligation of any Borrower or
Guarantor. If, under any applicable bankruptcy, insolvency or other similar law,
any Lender receives a secured claim in lieu of a setoff to which this Section
applies, such Lender shall, to the extent practicable, assign such rights to
Agent for the benefit of Lenders and, in any event, exercise its rights in
respect of such secured claim in a manner consistent with the rights of Lenders
entitled under this Section to share in the benefits of any recovery on such
secured claim.
 
6.9 Settlement Procedures.
 
(a) In order to administer the Credit Facility in an efficient manner and to
minimize the transfer of funds between Agent and Lenders, Agent may, at its
option, subject to the terms of this Section, make available, on behalf of
Lenders, the full amount of the Loans requested or charged to any Borrower's
loan account(s) or otherwise to be advanced by Lenders pursuant to the terms
hereof, without requirement of prior notice to Lenders of the proposed Loans.
 
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(b) With respect to all Loans made by Agent on behalf of Lenders as provided in
this Section, the amount of each Lender’s Pro Rata Share of the outstanding
Loans shall be computed weekly, and shall be adjusted upward or downward on the
basis of the amount of the outstanding Loans as of 5:00 p.m. Pasadena,
California time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a “Settlement Period”). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m.
Pasadena, California time, then such Lender shall make the settlement transfer
described in this Section by no later than 3:00 p.m. Pasadena, California time
on the same Business Day and if received by a Lender after 12:00 p.m. Pasadena,
California time, then such Lender shall make the settlement transfer by not
later than 3:00 p.m. Pasadena, California time on the next Business Day
following the date of receipt. If, as of the end of any Settlement Period, the
amount of a Lender's Pro Rata Share of the outstanding Loans is more than such
Lender's Pro Rata Share of the outstanding Loans as of the end of the previous
Settlement Period, then such Lender shall forthwith (but in no event later than
the time set forth in the preceding sentence) transfer to Agent by wire transfer
in immediately available funds the amount of the increase. Alternatively, if the
amount of a Lender's Pro Rata Share of the outstanding Loans in any Settlement
Period is less than the amount of such Lender's Pro Rata Share of the
outstanding Loans for the previous Settlement Period, Agent shall forthwith
transfer to such Lender by wire transfer in immediately available funds the
amount of the decrease. The obligation of each of the Lenders to transfer such
funds and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Agent and each Lender agrees to mark
its books and records at the end of each Settlement Period to show at all times
the dollar amount of its Pro Rata Share of the outstanding Loans and Letters of
Credit. Each Lender shall only be entitled to receive interest on its Pro Rata
Share of the Loans to the extent such Loans have been funded by such Lender.
Because the Agent on behalf of Lenders may be advancing and/or may be repaid
Loans prior to the time when Lenders will actually advance and/or be repaid such
Loans, interest with respect to Loans shall be allocated by Agent in accordance
with the amount of Loans actually advanced by and repaid to each Lender and the
Agent and shall accrue from and including the date such Loans are so advanced to
but excluding the date such Loans are either repaid by Borrowers or actually
settled with the applicable Lender as described in this Section.
 
(c) To the extent that Agent has made any such amounts available and the
settlement described above shall not yet have occurred, upon repayment of any
Loans by a Borrower, Agent may apply such amounts repaid directly to any amounts
made available by Agent pursuant to this Section. In lieu of weekly or more
frequent settlements, Agent may, at its option, at any time require each Lender
to provide Agent with immediately available funds representing its Pro Rata
Share of each Loan, prior to Agent's disbursement of such Loan to Borrower. In
such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender's obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender's obligation to make a Loan hereunder.
 
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(d) If Agent is not funding a particular Loan to a Borrower pursuant to Sections
6.9(a) and 6.9(b) above on any day, but is requiring each Lender to provide
Agent with immediately available funds on the date of such Loan as provided in
Section 6.9(c) above, Agent may assume that each Lender will make available to
Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of such
Borrower on such day. If Agent makes such corresponding amount available to a
Borrower 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 together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent’s option based on the arithmetic mean
determined by Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent’s demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans. During the period in which such Lender has not
paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Borrowers of such failure and Borrowers shall pay such corresponding amount to
Agent for its own account within five (5) Business Days of Borrowers’ receipt of
such notice. A Lender who fails to pay Agent its Pro Rata Share of any Loans
made available by the Agent on such Lender’s behalf, or any Lender who fails to
pay any other amount owing by it to Agent, is a “Defaulting Lender”. Agent shall
not be obligated to transfer to a Defaulting Lender any payments received by
Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder (including any principal,
interest or fees). Amounts payable to a Defaulting Lender shall instead be paid
to or retained by Agent. Agent may hold and, in its discretion, relend to a
Borrower the amount of all such payments received or retained by it for the
account of such Defaulting Lender. For purposes of voting or consenting to
matters with respect to this Agreement and the other Financing Agreements and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
“Lender” and such Lender's Commitment shall be deemed to be zero (0). This
Section shall remain effective with respect to a Defaulting Lender until such
default is cured. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, or relieve or excuse
the performance by any Borrower or Guarantor of their duties and obligations
hereunder.
 
(e) Nothing in this Section or elsewhere in this Agreement or the other
Financing Agreements shall be deemed to require Agent to advance funds on behalf
of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that any Borrower may have
against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
 
6.10 Obligations Several; Independent Nature of Lenders’ Rights. The obligation
of each Lender hereunder is several, and no Lender shall be responsible for the
obligation or commitment of any other Lender hereunder. Nothing contained in
this Agreement or any of the other Financing Agreements and no action taken by
the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders
to be a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and subject to Section 12.13 hereof, each Lender
shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
 
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SECTION 7. COLLATERAL REPORTING AND COVENANTS
 
7.1 Collateral Reporting.
 
(a) Borrowers shall provide Agent with the following documents in a form
reasonably satisfactory to Agent:
 
(i) on a monthly basis as required by Agent, schedules of sales made, credits
issued and cash received;
 
(ii) as soon as possible after the end of each calendar month (but in any event
within ten (10) Business Days after the end thereof), on a monthly basis, (A) a
completed borrowing base certificate pertaining to the fiscal month then ended
substantially in the form of Exhibit D hereto (each such certificate, a
"Borrowing Base Certificate"), which Borrowing Base Certificate shall not
include, in the case of Eligible Equipment, any items subject to capital leases
or similar arrangements, (B) agings of accounts receivable (together with a
reconciliation to the previous month’s aging and general ledger) and (C) agings
of accounts payable; and
 
(iii) upon Agent's reasonable request, but no more frequently than once a month,
(A) copies of customer statements, purchase orders, sales invoices, credit
memos, remittance advices and reports, and copies of deposit slips and bank
statements, (B) copies of shipping and delivery documents, and (C) copies of
purchase orders, invoices and delivery documents for Equipment acquired by any
Borrower or Guarantor.
 
(b) If any of any Borrower's or Guarantor’s records or reports of the Collateral
are prepared or maintained by an accounting service, contractor, shipper or
other agent, such Borrower and Guarantor hereby irrevocably authorizes such
service, contractor, shipper or agent to deliver such records, reports, and
related documents to Agent and to follow Agent's instructions with respect to
further services at any time that an Event of Default exists or has occurred and
is continuing.
 
7.2 Accounts Covenants.
 
(a) Borrowers shall notify Agent promptly of: (i) with respect to Eligible
Accounts, any material delay in any Borrower's performance of any of its
material obligations to any account debtor or the assertion of any material
claims, offsets, defenses or counterclaims by any account debtor, or any
material disputes with account debtors, or any material settlement, adjustment
or compromise thereof, (ii) with respect to Eligible Accounts, all material
adverse information known to any Borrower or Guarantor relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
the best of any Borrower's or Guarantor’s knowledge, would cause Agent to
consider any then existing Eligible Accounts as no longer constituting Eligible
Accounts. No credit, discount, allowance or extension or agreement for any of
the foregoing shall be granted to any account debtor without Agent's consent,
except in the ordinary course of a Borrower's or Guarantor’s business in
accordance with past practices and except as set forth in the schedules
delivered to Agent pursuant to Section 7.1(a) above. So long as no Event of
Default exists or has occurred and is continuing, Borrowers and Guarantors shall
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has occurred and
is continuing, Agent shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
 
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(b) With respect to each Account: (i) the amounts shown on any invoice delivered
to Agent or schedule thereof delivered to Agent shall be true and complete, (ii)
no payments shall be made thereon except payments immediately delivered to a
Blocked Account, (iii) no credit, discount, allowance or extension or agreement
for any of the foregoing shall be granted to any account debtor except as
reported to Agent in accordance with this Agreement and except for credits,
discounts, allowances or extensions made or given in the ordinary course of each
Borrower's business in accordance with past practices, (iv) none of the
transactions giving rise thereto will violate any applicable foreign, Federal,
State or local laws or regulations, all documentation relating thereto will be
legally sufficient under such laws and regulations and all such documentation
will be legally enforceable in accordance with its terms; and with respect to
Eligible Accounts, there shall be no setoffs, deductions, contras, defenses,
counterclaims or disputes existing or asserted with respect thereto except as
reported to Agent in accordance with the terms of this Agreement.
 
(c) Agent shall have the right, at any time or times, to verify the validity,
amount or any other matter relating to any Receivables or other Collateral, by
(i) mail, electronic mail or facsimile transmission with Borrowers initiating
the confirmation and Agent receiving such confirmation directly from the
relevant account debtor or other Person in connection with such Receivables or
holder of such Collateral, provided that Agent shall have the right to select
any such Receivable or Collateral that is the subject of such verification or
confirmation, or (ii) telephone, provided that one or more officers, employees
or other representatives of a Borrower initiates and conducts any telephone call
regarding any such verification while Agent is present on such call; provided,
that each Borrower shall make itself and one or more of its officers, employees
or other representatives reasonably available to be present on any such
telephone call; and further provided, that upon the failure of either of the
Borrowers to make itself and such officers, employees or representatives so
available or, in any event, upon the occurrence and continuation of an Event of
Default, Agent shall have right to verify any Receivables or other Collateral as
set forth above in this clause (c) by telephone without any Borrower's
participation in any such telephone call.
 
7.3 Inventory Covenants. With respect to the Inventory: (a) none of the
Borrowers or Guarantors shall remove any Inventory with a fair market value in
excess of $1,000,000 in the aggregate for all such Inventory of the Borrowers or
Guarantors from the locations set forth or permitted herein, without prior
notice to Agent, except for sales of Inventory in the ordinary course of its
business and except to move Inventory directly from one location set forth or
permitted herein to another such location and except for Inventory shipped from
the manufacturer thereof to a Borrower or Guarantor which is in transit to the
locations set forth or permitted herein; (b) each Borrower and Guarantor shall
produce, use, store and maintain the Inventory with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including the requirements of the Federal Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto); (c) none of the Inventory or other Collateral constitutes farm
products or the proceeds thereof; and (d) each Borrower and Guarantor assumes
all responsibility and liability arising from or relating to the production,
use, sale or other disposition of the Inventory.
 
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7.4 Equipment Covenants. With respect to the Equipment: (a) upon Agent’s
request, Borrowers and Guarantors shall, at their expense, no more than one (1)
time in any twelve (12) month period (except that, if the aggregate outstanding
amount of Loans and Letter of Credit Obligations shall be equal to or greater
than $30,000,000 for any period of three (3) consecutive Business Days, then, at
Agent’s option, no more than two (2) times in any twelve (12) month period), but
at any time or times as Agent may request on or after an Event of Default has
occurred and is continuing, deliver or cause to be delivered to Agent written
appraisals as to the Equipment, in form, scope and methodology reasonably
acceptable to Agent and by Emerald Technology Valuations, LLC or an appraiser
reasonably acceptable to Agent, addressed to Agent and upon which Agent is
expressly permitted to rely; without limiting in any way the foregoing in this
clause (a), Agent, at its expense, shall have the right to have such an
appraiser, at any time, perform such additional appraisals as to the Equipment;
(b) Borrowers and Guarantors shall keep the Equipment necessary in the conduct
of their business in good order, repair, running and marketable condition
(ordinary wear and tear excepted); (c) Borrowers and Guarantors shall use the
Equipment, with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity in all material respects
with all applicable laws; (d) the Equipment is and shall be used in the business
of Borrowers and Guarantors and not for personal, family, household or farming
use; (e) without prior notice to Agent, Borrowers and Guarantors shall not
remove (i) any Eligible Equipment or (ii) any other Equipment with a fair market
value in excess of $1,000,000 in the aggregate for all such Equipment of the
Borrowers or Guarantors from the locations set forth or permitted herein, except
to the extent necessary to have any Equipment repaired or maintained in the
ordinary course of its business or to move Equipment directly from one location
set forth or permitted herein to another such location and except for the
movement of motor vehicles used by or for the benefit of Borrowers or Guarantors
in the ordinary course of business; (f) the Equipment is now and shall remain
personal property and Borrowers and Guarantors shall not permit any of the
Equipment to be or become a part of or affixed to real property; and (g) each
Borrower and Guarantor assumes all responsibility and liability arising from the
use of the Equipment.
 
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7.5 Power of Attorney. Each Borrower and Guarantor hereby irrevocably designates
and appoints Agent (and all persons designated by Agent) as such Borrower's and
Guarantor’s true and lawful attorney-in-fact, and authorizes Agent, in such
Borrower's, Guarantor’s or Agent's name, to: (a) at any time an Event of Default
exists or has occurred and is continuing (i) demand payment on Receivables or
other Collateral, (ii) enforce payment of Receivables by legal proceedings or
otherwise, (iii) exercise all of such Borrower's or Guarantor’s rights and
remedies to collect any Receivable or other Collateral, (iv) sell or assign any
Receivable upon such terms, for such amount and at such time or times as Agent
deems advisable, (v) settle, adjust, compromise, extend or renew an Account,
(vi) discharge and release any Receivable, (vii) prepare, file and sign such
Borrower's or Guarantor’s name on any proof of claim in bankruptcy or other
similar document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such Borrower
or Guarantor and handle and store all mail relating to the Collateral, provided
that Agent shall return to such Borrower or Guarantor all other such mail not
related to the Collateral within a reasonable time after its receipt thereof,
and (ix) do all acts and things which are necessary, in Agent's determination,
to fulfill such Borrower's or Guarantor’s obligations under this Agreement and
the other Financing Agreements, (b) at any time after Agent is entitled to
exercise control over Blocked Accounts or to receive payments on and/or proceeds
of Accounts pursuant to Section 6.3(d), (i) take control in any manner of any
item of payment in respect of Receivables or constituting Collateral or
otherwise received in or for deposit in the Blocked Accounts or otherwise
received by Agent or any Lender, (ii) have access to any lockbox or postal box
into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, (iii) endorse
such Borrower's or Guarantor’s name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent or any
Lender and deposit the same in Agent's account for application to the
Obligations, (iv) endorse such Borrower's or Guarantor’s name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Receivable or any goods pertaining thereto or any other Collateral,
including any warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents, (v) clear Inventory the purchase of
which was financed with a Letter of Credit through U.S. Customs or foreign
export control authorities in such Borrower’s or Guarantor’s name, Agent’s name
or the name of Agent’s designee, and to sign and deliver to customs officials
powers of attorney in such Borrower’s or Guarantor’s name for such purpose, and
to complete in such Borrower’s or Guarantor’s or Agent’s name, any order, sale
or transaction, obtain the necessary documents in connection therewith and
collect the proceeds thereof, and (c) at any time, sign such Borrower's or
Guarantor’s name on any verification of Receivables and notices thereof to
account debtors or any secondary obligors or other obligors in respect thereof,
provided that, unless an Event of Default has occurred and is continuing, any
such notice shall be in form and substance reasonably satisfactory to Borrowers
and Agent. Each Borrower and Guarantor hereby releases Agent and Lenders and
their respective officers, employees and designees from any liabilities arising
from any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except as a result of Agent’s or any Lender’s
own gross negligence or willful misconduct or the gross negligence or willful
misconduct of Agent’s or any Lender's officers, employees or designees.
 
7.6 Right to Cure. (a) If an Event of Default has occurred and is continuing or
(i) if an Event of Default would occur as a result of Agent's failure to take
any of the actions listed in this clause (i), Agent may, at its option, upon
notice to Borrowers, cure any default by any Borrower or Guarantor under any
material agreement with a third party that would, or could reasonably be
expected to, have a Material Adverse Effect with respect to the Collateral, its
value or the ability of Agent to collect, sell or otherwise dispose of the
Collateral or the rights and remedies of Agent or any Lender therein or the
ability of any Borrower or Guarantor to perform its obligations hereunder or
under any of the other Financing Agreements, and (ii) if a Material Adverse
Effect or an Event of Default would occur as a result of Agent's failure to take
any of the actions listed in subclauses (A) or (B) of this clause (ii), Agent
may, at its option, upon notice to Borrowers, (A) pay or bond on appeal any
judgment entered against any Borrower or Guarantor, and (B) discharge taxes,
liens, security interests or other encumbrances at any time levied on or
existing with respect to the Collateral, except with respect to any such liens,
security interests or other encumbrances permitted pursuant to Section 9.8
hereof, and (b) in order to prevent the occurrence of a Material Adverse Effect
or an Event of Default, Agent may, at its option, upon notice to Borrowers, pay
any amount, incur any expense or perform any act which, in Agent's judgment, is
necessary or appropriate to preserve, protect, insure or maintain the Collateral
and the rights of Agent and Lenders with respect thereto. Agent may add any
amounts so expended to the Obligations and charge any Borrower's account
therefor, such amounts to be repayable by Borrowers on demand. Agent and Lenders
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of any
Borrower or Guarantor. Any payment made or other action taken by Agent or any
Lender under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
 
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7.7 Access to Premises. From time to time as requested by Agent, subject to the
provisions of Section 9.22 hereof, (a) Agent or its designee shall have complete
access to all of each Borrower's and Guarantor’s premises during normal business
hours and after notice to Borrowers, or at any time and without notice to
Borrowers if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
each Borrower's and Guarantor’s books and records, including the Records, and
(b) each Borrower and Guarantor shall promptly furnish to Agent such copies of
such reasonably available books and records or extracts therefrom as Agent may
request, and Agent or any Lender or Agent’s designee may use during normal
business hours any of such Borrower's and Guarantor’s personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing and if an
Event of Default exists or has occurred and is continuing for the collection of
Receivables and realization of other Collateral.
 
SECTION 8. REPRESENTATIONS AND WARRANTIES
 
Each Borrower and Guarantor hereby represents and warrants to Agent and Lenders
the following (which shall survive the execution and delivery of this
Agreement):
 
8.1 Corporate Existence, Power and Authority. Each Borrower and Guarantor is an
organization duly organized and in good standing under the laws of its
jurisdiction of organization and is duly qualified as a foreign entity and in
good standing in all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a material adverse effect on such Borrower's or
Guarantor’s financial condition, results of operation or business or the rights
of Agent in or to any of the Collateral. The execution, delivery and performance
of this Agreement, the other Financing Agreements and the transactions
contemplated hereunder and thereunder (a) are all within each Borrower's and
Guarantor’s organizational powers, (b) have been duly authorized, (c) are not in
contravention of law (except as could not reasonably be expected to have a
Material Adverse Effect) or the terms of any Borrower's or Guarantor’s
certificate of incorporation, certificate of formation, by-laws, operating or
limited liability company agreement or other organizational documentation, or
except as could not reasonably be expected to have a Material Adverse Effect,
any indenture, agreement or undertaking to which any Borrower or Guarantor is a
party or by which any Borrower or Guarantor or its property are bound and (d)
will not result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance
upon any property of any Borrower or Guarantor other than the liens, security
interests, charges or other encumbrances granted in favor of Agent pursuant to
this Agreement and the other Financing Documents. This Agreement and the other
Financing Agreements constitute legal, valid and binding obligations of each
Borrower and Guarantor enforceable in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally any by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
 
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8.2 Name; State of Organization; Chief Executive Office; Collateral Locations.
 
(a) As of the date hereof, the exact legal name of each Borrower and Guarantor
is as set forth on the signature page of this Agreement and in the Information
Certificate. No Borrower or Guarantor has, during the five years prior to the
date of this Agreement, been known by or used any other corporate or fictitious
name or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
or assets out of the ordinary course of business, except as set forth in the
Information Certificate.
 
(b) As of the date hereof, each Borrower and Guarantor is an organization of the
type and organized in the jurisdiction set forth in the Information Certificate.
As of the date hereof, the Information Certificate accurately sets forth the
organizational identification number of each Borrower and Guarantor or
accurately states that such Borrower or Guarantor has none and accurately sets
forth the federal employer identification number of each Borrower and Guarantor.
 
(c) As of the date hereof, the chief executive office and mailing address of
each Borrower and Guarantor and each Borrower's and Guarantor’s Records
concerning Accounts are located only at the address identified as such in
Sections 12 and 13 of the Information Certificate and its only other places of
business and the only other locations of Collateral, if any, are the addresses
set forth in Section 14 of the Information Certificate, subject to the right of
any Borrower or Guarantor to establish new locations in accordance with Section
9.2 below. As of the date hereof, the Information Certificate correctly
identifies any of such locations which are not owned by a Borrower or Guarantor
and sets forth the owners and/or operators thereof.
 
8.3 Financial Statements; No Material Adverse Change. All financial statements
relating to any Borrower or Guarantor which have been or may hereafter be
delivered by any Borrower or Guarantor to Agent and Lenders have been prepared
in accordance with GAAP (except as to any interim financial statements, to the
extent such statements are subject to normal year-end adjustments and do not
include any notes) and fairly present in all material respects the financial
condition and the results of operation of such Borrower and Guarantor as at the
dates and for the periods set forth therein. Except as disclosed in any interim
financial statements furnished by Borrowers and Guarantors to Agent prior to the
date of this Agreement, there has been no act, condition or event which has had
or is reasonably likely to have a Material Adverse Effect since the date of the
most recent audited financial statements of any Borrower or Guarantor furnished
by any Borrower or Guarantor to Agent prior to the date of this Agreement. The
quarterly projections through December 31, 2009 and annual projections through
December 2011 that have been delivered to Agent or any projections hereafter
delivered to Agent have been prepared in light of the past operations of the
businesses of Borrowers and Guarantors and are based upon estimates and
assumptions believed to be reasonable in light of the circumstances when made.
 
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8.4 Priority of Liens; Title to Properties. The security interests and liens
granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated in Section 23 of the
Information Certificate and the other liens permitted under Section 9.8 hereof.
Each Borrower and Guarantor has good, valid and merchantable title to all of its
properties and assets, which are shown of the most recent Borrowing Base
Certificate or are necessary in the conduct of such Borrower's or Guarantor’s
business as currently conducted, subject to no liens, mortgages, pledges,
security interests, encumbrances or charges of any kind, except those granted to
Agent and such others as are specifically listed in Section 23 of the
Information Certificate or permitted under Section 9.8 hereof.
 
8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be filed,
in a timely manner all material tax returns, reports and declarations which are
required to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
and Guarantor has paid or caused to be paid all material taxes due and payable
or claimed due and payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower or Guarantor and with respect
to which adequate reserves in accordance with GAAP have been set aside on its
books. Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or not yet
due and payable and whether or not disputed.
 
8.6 Litigation. Except as set forth in Section 22 of the Information
Certificate, (a) there is no investigation by any Governmental Authority
pending, or to the best of any Borrower's or Guarantor’s knowledge threatened,
against or affecting any Borrower, any other Credit Party or their respective
assets or business and (b) there is no action, suit, proceeding or claim by any
Person pending, or to the best of any Borrower's or any such other Credit
Party’s knowledge threatened, against such Borrower or such other Credit Party
or their respective assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, in each case in clauses (a) and (b) of this
Section 8.6, which could reasonably be expected to have a Material Adverse
Effect.
 
8.7 Compliance with Other Agreements and Applicable Laws.
 
(a) No Borrower and no other Credit Party is in default in any respect under, or
in violation in any respect of the terms of, any material agreement, contract,
instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound, except to the extent that such default or violation
could not reasonably be expected to have a Material Adverse Effect. Each
Borrower and each other Credit Party is in compliance with the requirements of
all applicable laws, rules, regulations and orders of any Governmental Authority
relating to its business, including, without limitation, those set forth in or
promulgated pursuant to the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, ERISA, the Code, as
amended, and the rules and regulations thereunder, and all Environmental Laws,
except to the extent that any failure of compliance therewith could not
reasonably be expected to have a Material Adverse Effect.
 
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(b) Each Borrower and each other Credit Party has obtained all material permits,
licenses, approvals, consents, certificates, orders or authorizations of any
Governmental Authority required for the lawful conduct of its business (the
“Permits”), except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect. All of the Permits are valid and
subsisting and in full force and effect except as could not reasonably be
expected to have a Material Adverse Effect. Except as could not reasonably be
expected to have a Material Adverse Effect, there are no actions, claims or
proceedings pending or to any Borrower’s or Guarantor’s knowledge, threatened
that seek the revocation, cancellation, suspension or modification of any of the
Permits.
 
8.8 Environmental Compliance.
 
(a) Except as set forth on Schedule 8.8 hereto or except as could not reasonably
be expected to have a Material Adverse Effect, neither any Borrower nor any
other Credit Party has generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates in any material respect any applicable Environmental Law or Permit, and
the operations of each Borrower and other Credit Party are in compliance with
all Environmental Laws and all Permits in all material respects except to the
extent that failure to be in compliance therewith could not reasonably be
expected to have a Material Adverse Effect.
 
(b) Except as set forth on Schedule 8.8 hereto or except as could not reasonably
be expected to have a Material Adverse Effect, there has been no investigation
by any Governmental Authority or any proceeding, complaint, order, directive,
claim, citation or notice by any Governmental Authority or any other person nor
is any pending or to any Borrower's or any other Credit Party’s knowledge
threatened, with respect to any non-compliance with or violation of the
requirements of any Environmental Law by any Borrower or any other Credit Party
or the release, spill or discharge, threatened or actual, of any Hazardous
Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which adversely affects or could
reasonably be expected to adversely affect in any material respect any Borrower,
any such other Credit Party or their respective businesses, operations or assets
or any properties at which such Borrower or any such other Credit Party has
transported, stored or disposed of any Hazardous Materials.
 
(c) Except as set forth on Schedule 8.8 hereto or except as could not reasonably
be expected to have a Material Adverse Effect, neither any Borrower nor any
other Credit Party has any material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
 
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(d) Each Borrower and each other Credit Party have all Permits required to be
obtained or filed in connection with the operations of such Borrower and such
other Credit Parties under any Environmental Law, except to the extent that any
failure to obtain or file such Permits could not reasonably be expected to have
a Material Adverse Effect, and all of such licenses, certificates, approvals or
similar authorizations and other Permits are valid and in full force and effect,
except to the extent that the invalidity, or failure to be in full force and
effect, thereof could not reasonably be expected to have a Material Adverse
Effect.
 
8.9 Employee Benefits.
 
(a) Except as could not reasonably be expected to have a Material Adverse
Effect, (i) each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law; (ii)
each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and
to the best of any Borrower's or Guarantor’s knowledge, nothing has occurred
which would cause the loss of such qualification; and (iii) each Borrower and
its ERISA Affiliates have made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.
 
(b) Except as could not reasonably be expected to have a Material Adverse
Effect, there are no pending, or to the best of any Borrower's or Guarantor’s
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan; and there has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan.
 
(c) Except as could not reasonably be expected to have a Material Adverse
Effect, (i) no ERISA Event has occurred or is reasonably expected to occur; (ii)
based on the latest valuation of each Pension Plan and on the actuarial methods
and assumptions employed for such valuation (determined in accordance with the
assumptions used for funding such Pension Plan pursuant to Section 412 of the
Code), the aggregate current value of accumulated benefit liabilities of such
Pension Plan under Section 4001(a)(16) of ERISA does not exceed the aggregate
current value of the assets of such Pension Plan; (iii) neither any Borrower,
Guarantor nor any of their ERISA Affiliates have incurred and none of them
reasonably expect to incur, any liability under Title IV of ERISA with respect
to any Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither any Borrower, Guarantor nor any of their ERISA Affiliates
have incurred and none of them reasonably expect to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Section 4201 or 4243 of ERISA with respect
to a Multiemployer Plan; and (v) neither any Borrower, Guarantor nor any of
their ERISA Affiliates have engaged in a transaction that would be subject to
Section 4069 or 4212(c) of ERISA.
 
8.10 Bank Accounts. As of the date hereof, all of the deposit accounts,
investment accounts or other accounts in the name of or used by any Borrower or
Guarantor maintained at any bank or other financial institution are set forth in
Section 27 of the Information Certificate, subject to the right of each Borrower
and Guarantor to establish new accounts in accordance with Section 5.2 hereof.
 
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8.11 Intellectual Property. Each Borrower and Guarantor owns or licenses or
otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted,
except to the extent that failure so own, license or have the right to use such
Intellectual Property could not reasonably be expected to have a Material
Adverse Effect. As of the date hereof, no Borrower or Guarantor has any material
Intellectual Property registered, or subject to pending applications, in the
United States Patent and Trademark Office or any similar office or agency in the
United States, any State thereof, any political subdivision thereof or in any
other country, other than those described in Section 25 of the Information
Certificate and has not granted any licenses with respect thereto other than as
set forth in Section 25 of the Information Certificate. Except as could not
reasonably be expected to have a Material Adverse Effect, no event has occurred
which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights. Except as could not
reasonably be expected to have a Material Adverse Effect, to any Borrower's and
Guarantor’s knowledge, no slogan or other advertising device, product, process,
method, substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by any
Borrower or Guarantor infringes any patent, trademark, servicemark, tradename,
copyright, license or other Intellectual Property owned by any other Person
presently and no claim or litigation is pending against or affecting any
Borrower or Guarantor contesting its right to sell or use any such Intellectual
Property. Section 25 of the Information Certificate sets forth all of the
agreements or other arrangements of each Borrower and Guarantor pursuant to
which such Borrower or Guarantor has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of such Borrower or
Guarantor as in effect on the date hereof (collectively, together with such
agreements or other arrangements as may be entered into by any Borrower or
Guarantor after the date hereof, collectively, the “License Agreements” and
individually, a “License Agreement”). No trademark, servicemark, copyright or
other Intellectual Property at any time used by any Borrower or Guarantor which
is owned by another person, or owned by such Borrower or Guarantor subject to
any security interest, lien, collateral assignment, pledge or other encumbrance
in favor of any person other than Agent, is affixed to any material Inventory,
except (a) to the extent permitted under the term of the license agreements
listed in Section 25 of the Information Certificate and (b) to the extent the
sale of Inventory to which such Intellectual Property is affixed is permitted to
be sold by such Borrower or Guarantor under applicable law (including the United
States Copyright Act of 1976).
 
8.12 Subsidiaries; Capitalization; Solvency.
 
(a) As of the date hereof, no Borrower or Guarantor has any direct or indirect
Subsidiaries and is not engaged in any joint venture or partnership except as
set forth in Section 17 of the Information Certificate.
 
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(b) As of the date hereof, each Borrower and Guarantor is the record and
beneficial owner of all of the issued and outstanding shares of Capital Stock of
each of the Subsidiaries listed in Section 17 of the Information Certificate as
being owned by such Borrower or Guarantor and there are no proxies, irrevocable
or otherwise, with respect to such shares and no equity securities of any of the
Subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature and
there are no contracts, commitments, understandings or arrangements by which any
Subsidiary is or may become bound to issue additional shares of it Capital Stock
or securities convertible into or exchangeable for such shares.
 
(c) As of the date hereof, the issued and outstanding shares of Capital Stock of
each Borrower and Guarantor are directly and beneficially owned and held by the
persons indicated in the Information Certificate, and in each case all of such
shares have been duly authorized and are fully paid and non-assessable, free and
clear of all claims, liens, pledges and encumbrances of any kind, except as
disclosed in writing to Agent prior to the date hereof.
 
(d) Each Borrower and Guarantor is Solvent and will continue to be Solvent after
the creation of the Obligations, the security interests of Agent and the other
transaction contemplated hereunder.
 
8.13 Labor Disputes.
 
(a) Set forth on Schedule 8.13 hereto is a list (including dates of termination)
of all material collective bargaining or similar agreements between or
applicable to each Borrower and Guarantor and any union, labor organization or
other bargaining agent in respect of the employees of any Borrower or Guarantor
on the date hereof.
 
(b) Except as could not reasonably be expected to have a Material Adverse
Effect, there is (i) no significant unfair labor practice complaint pending
against any Borrower or any other Credit Party or, to any Borrower's or any such
other Credit Party’s knowledge, threatened against it, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against any Borrower or any such other Credit Party
or, to any Borrower's or any such other Credit Party’s knowledge, threatened
against it, and (ii) no significant strike, labor dispute, slowdown or stoppage
is pending against any Borrower or any such other Credit Party or, to any
Borrower's or any such other Credit Party’s knowledge, threatened against any
Borrower or any such other Credit Party.
 
8.14 Restrictions on Credit Parties. As of the date hereof, except as could not
reasonably be expected to have a Material Adverse Effect and except for
restrictions contained in this Agreement or any other agreement with respect to
Indebtedness of any Borrower or Guarantor permitted hereunder as in effect on
the date hereof, there are no contractual or consensual restrictions on any
Borrower or any other Credit Party which prohibit or otherwise restrict (a) the
transfer of cash or other assets (i) between any Borrower and any other Credit
Party (other than another Borrower) or (ii) between any Credit Party (other than
any Borrower) or (b) the ability of any Borrower or any other Credit Party to
incur Indebtedness or grant security interests to Agent in the Collateral.
 
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8.15 Material Contracts. Schedule 8.15 hereto sets forth all Material Contracts
to which any Borrower or Guarantor is a party or is bound as of the date hereof.
 
8.16 Payable Practices. No Borrower or Guarantor has made any material change in
the historical accounts payable practices from those in effect immediately prior
to the date hereof.
 
8.17 Accuracy and Completeness of Information. All information furnished by or
on behalf of any Borrower or Guarantor in writing to Agent in connection with
this Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including all information on the Information
Certificate is true and correct in all material respects on the date as of which
such information is dated or certified and does not omit any material fact
necessary in order to make such information not materially misleading in light
of the circumstances in which such information was certified.
 
8.18 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Agent and Lenders on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Agent and Lenders regardless of any investigation made or
information possessed by Agent and Lenders. The representations and warranties
set forth herein shall be cumulative and in addition to any other
representations or warranties which any Borrower or Guarantor shall now or
hereafter give, or cause to be given, to Agent or any Lender.
 
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
 
9.1 Maintenance of Existence.
 
(a) Except as could not reasonably be expected to have a Material Adverse
Effect, each Borrower and Guarantor shall at all times preserve, renew and keep
in full force and effect its corporate existence and rights and franchises with
respect thereto and maintain in full force and effect all material licenses,
trademarks, tradenames, approvals, authorizations and Permits necessary to carry
on the business as presently conducted, except as permitted in Section 9.7
hereto.
 
(b) No Borrower or Guarantor shall change its name unless each of the following
conditions is satisfied: (i) Agent shall have received not less than thirty (30)
days prior written notice from Borrowers of such proposed change in its
corporate or limited liability company name, which notice shall accurately set
forth the new name; and (ii) Agent shall have received a copy of the amendment
to the certificate of incorporation or certificate of formation, as the case may
be, of such Borrower or Guarantor providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation, formation or
organization of such Borrower or Guarantor as soon as it is available.
 
(c) No Borrower or Guarantor shall change its chief executive office or its
mailing address or organizational identification number (or if it does not have
one, shall not acquire one) unless Agent shall have received not less than ten
(10) days’ prior written notice from Borrowers of such proposed change, which
notice shall set forth such information with respect thereto as Agent may
reasonably require and Agent shall have received such agreements as Agent may
reasonably require in connection therewith. No Borrower or Guarantor shall
change its type of organization, jurisdiction of organization or other legal
structure.
 
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9.2 New Collateral Locations. Each Borrower and Guarantor may only open any new
location within the continental United States provided that with respect to any
such location where such Borrower's or Guarantor’s financial books and records
are, or Collateral with a fair market value in excess of $1,000,000 is, located,
stored, fabricated or manufactured, (a) such Borrower or Guarantor gives Agent
ten (10) days prior written notice of the intended opening of any such new
location and (b) either (i) prior to or concurrently with such opening, such
Borrower or Guarantor executes and delivers, or causes to be executed and
delivered, to Agent a Collateral Access Agreement with respect to such location
and such agreements, documents, and instruments related thereto as Agent may
deem reasonably necessary or desirable to protect its interests in the
Collateral at such location, or (ii) Agent has established a Reserve in an
amount equal to two (2) months rent with respect to such location.
 
9.3 Compliance with Laws, Regulations, Etc.
 
(a) Except as could not reasonably be expected to have a Material Adverse
Effect, each Borrower and Guarantor shall, and shall cause each other Credit
Party (other than another Borrower) to, at all times, comply in all material
respects with all laws, rules, regulations, licenses, approvals, orders and
other Permits applicable to it and duly observe in all material respects all
requirements of any foreign, Federal, State or local Governmental Authority
applicable to it.
 
(b) Borrowers and Guarantors shall give written notice to Agent promptly (but in
any event within two Business Days) upon receipt by a Responsible Officer of any
Borrower or Guarantor of any notice of, or upon any Borrower or Guarantor
otherwise obtaining knowledge of, (i) the occurrence of any event involving the
release, spill or discharge, threatened or actual, of any Hazardous Material
which is reasonably likely to have a Material Adverse Effect, or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by any Borrower or any other Credit Party or (B) the release,
spill or discharge, threatened or actual, of any Hazardous Material other than
in the ordinary course of business and other than as permitted under any
applicable Environmental Law, in each case which is reasonably likely to have a
Material Adverse Effect. Copies of all material environmental surveys, audits,
assessments, feasibility studies and results of remedial investigations shall be
promptly furnished, or caused to be furnished, by such Borrower or Guarantor to
Agent. Each Borrower and Guarantor shall take prompt action to respond to any
material non-compliance by such Borrower or any other Credit Party (other than
another Borrower) with any of the Environmental Laws and shall regularly report
to Agent on such response.
 
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(c) Without limiting the generality of the foregoing, in the event that an Event
of Default shall have occurred and be continuing, whenever Agent reasonably
determines that there is non-compliance, or any condition which requires any
action by or on behalf of any Borrower or Guarantor in order to avoid any
non-compliance, with any Environmental Law, Borrowers shall, at Agent's request
and Borrowers’ expense: (i) cause an independent environmental engineer
reasonably acceptable to Agent to conduct such tests of the site where
non-compliance or alleged non compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof, and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's or
Guarantor’s response thereto or the estimated costs thereof, shall change in any
material respect.
 
(d) Each Borrower and Guarantor shall indemnify and hold harmless Agent and
Lenders and their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower or
any other Credit Party and the preparation and implementation of any closure,
remedial or other required plans, other than any losses, costs or expenses
caused by the gross negligence or willful misconduct of Lender, its directors,
officers, employees, agents, representative, successors or assigns. All
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination of this
Agreement.
 
9.4 Payment of Taxes and Claims. Except as could not reasonably be expected to
have a Material Adverse Effect, each Borrower and Guarantor shall, and shall
cause each other Credit Party (other than another Borrower) to, duly pay and
discharge all taxes, assessments, contributions and governmental charges upon or
against it or its properties or assets, except for taxes the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower or such other Credit Party, as the case may be,
and with respect to which adequate reserves as required by GAAP have been set
aside on its books. Subject to Sections 6.4(c), (d), (e), (f) and (g) hereof,
each Borrower and Guarantor shall be liable for any tax or penalties imposed on
Agent or any Lender as a result of the financing arrangements provided for
herein and each Borrower and Guarantor agrees to indemnify and hold Agent and
each Lender harmless with respect to the foregoing, and to repay to Agent and
each Lender on demand the amount thereof, and until paid by Borrowers such
amount shall be added and deemed part of the Loans, provided, that, nothing
contained herein shall be construed to require Borrowers or Guarantors to pay
any income or franchise taxes attributable to the income of Agent or any Lender
from any amounts charged or paid hereunder to Agent or any Lender. The foregoing
indemnity shall survive the payment of the Obligations and the termination of
this Agreement
 
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9.5 Insurance. Each Borrower and Guarantor shall, and shall cause each of their
respective Subsidiaries to, at all times, maintain with financially sound and
reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily
insured against or carried by corporations of established reputation engaged in
the same or similar businesses and similarly situated. Said policies of
insurance shall be reasonably satisfactory to Agent as to form, amount and
insurer. Borrowers and Guarantors shall furnish certificates, policies or
endorsements to Agent as Agent shall reasonably require as proof of such
insurance, and, if any Borrower or Guarantor fails to do so, Agent is
authorized, but not required, to obtain such insurance at the expense of
Borrowers. All policies shall provide for at least thirty (30) days prior
written notice to Agent of any cancellation or reduction of coverage and that
Agent may act as attorney for each Borrower and Guarantor in obtaining, and at
any time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. Borrowers and
Guarantors shall cause Agent to be named as a loss payee and an additional
insured (but without any liability for any premiums) under such insurance
policies and Borrowers and Guarantors shall obtain non-contributory lender’s
loss payable endorsements to all insurance policies in form and substance
satisfactory to Agent. Such lender’s loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Agent as its interests
may appear and further specify that Agent and Lenders shall be paid regardless
of any act or omission by any Borrower, Guarantor or any of its or their
Affiliates. Without limiting any other rights of Agent or Lenders, any insurance
proceeds received by Agent at any time may be applied to payment of the
Obligations, whether or not then due, in any order and in such manner as Agent
may determine. Upon application of such proceeds to the Loans, Loans may be
available subject and pursuant to the terms hereof to be used for the costs of
repair or replacement of the Collateral lost or damages resulting in the payment
of such insurance proceeds.
 
9.6 Financial Statements and Other Information.
 
(a) Each Borrower and Guarantor shall, and shall cause each other Credit Party
to, keep proper books and records in which complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
such Borrower and each other Credit Party in accordance with GAAP. Borrowers and
Guarantors shall promptly furnish to Agent and Lenders all such financial and
other information as Agent shall reasonably request relating to the Collateral
and the assets, business and operations of Borrowers and Guarantors, and
Borrowers shall notify the auditors and accountants of Borrowers and Guarantors
that Agent is authorized to obtain such information directly from them. Without
limiting the foregoing, Borrowers shall furnish or cause to be furnished to
Agent, the following:
 
(i) within forty-five (45) days after the end of each fiscal quarter, quarterly
unaudited consolidated financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders' equity), all in reasonable detail, fairly presenting in all
material respects the financial position and the results of the operations of
Parent Guarantor and its Subsidiaries (showing Excluded Subsidiaries, if any,
separately) as of the end of and through such fiscal quarter, certified to be
correct by the chief financial officer of Parent Guarantor, subject to normal
year-end adjustments and the absence of footnote disclosures and accompanied by
a compliance certificate substantially in the form of Exhibit C hereto, along
with a schedule in a form reasonably satisfactory to Agent of the calculations
used in determining, as of the end of such quarter, whether Borrowers and
Guarantors were in compliance with the covenants set forth in Sections 9.18 and
9.24 of this Agreement for such quarter, and
 
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(ii) within one hundred twenty (120) days after the end of each fiscal year,
audited consolidated financial statements of Parent Guarantor and its
Subsidiaries (showing Excluded Subsidiaries, if any, separately) (including in
each case balance sheets, statements of income and loss, statements of cash
flow, and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting in all material respects
the financial position and the results of the operations of Parent Guarantor and
its Subsidiaries (showing Excluded Subsidiaries, if any, separately) as of the
end of and for such fiscal year, (A) together with the unqualified opinion of
independent certified public accountants with respect to the audited
consolidated financial statements, which accountants shall be Ernst & Young LLP
or an independent accounting firm selected by Parent Guarantor and reasonably
acceptable to Agent, that such audited consolidated financial statements have
been prepared in accordance with GAAP, and present fairly in all material
respects the results of operations and financial condition of Parent Guarantor
and its Subsidiaries as of the end of and for the fiscal year then ended, and
(B) certified to be correct by the chief financial officer of Parent Guarantor,
and accompanied by a compliance certificate substantially in the form of Exhibit
C hereto, along with a schedule in a form reasonably satisfactory to Agent of
the calculations used in determining, as of the end of such quarter ending
December 31 of such fiscal year, whether Borrowers and Guarantors were in
compliance with the covenants set forth in Sections 9.18 and 9.24 of this
Agreement for such quarter, and
 
(iii) at such time as available, but in no event later than thirty (30) days
after the end of each fiscal year, projected consolidated financial statements
(including in each case, forecasted balance sheets and statements of income and
loss, statements of cash flow, and statements of shareholders’ equity) of Parent
Guarantor and its Subsidiaries (showing Excluded Subsidiaries, if any,
separately) for such fiscal year, all in reasonable detail, and in a format
consistent with the projections delivered by Borrowers to Agent prior to the
date hereof, together with such supporting information as Agent may reasonably
request. Such projected financial statements shall be prepared on a quarterly
basis for such year. Such projections shall represent the reasonable estimate by
Borrowers and Guarantors of the future financial performance of Parent Guarantor
and its Subsidiaries (showing Excluded Subsidiaries, if any, separately) for the
periods set forth therein and shall have been prepared on the basis of the
assumptions set forth therein which Borrowers and Guarantors believe are fair
and reasonable as of the date of preparation in light of current and reasonably
foreseeable business conditions (it being understood that actual results may
differ from those set forth in such projected financial statements).
 
(b) Borrowers and Guarantors shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $2,500,000 or which if
would result in any material adverse change in any Borrower's or Guarantor’s
business, properties, assets, goodwill or financial condition, (ii) any Material
Contract being terminated or amended or any new Material Contract entered into
(in which event Borrowers and Guarantors shall provide Agent with a copy of such
Material Contract upon Agent’s request), (iii) any order, judgment or decree in
excess of $2,500,000 shall have been entered against any Borrower or Guarantor
any of their properties or assets, (iv) any notification of a material violation
of laws or regulations received by any Borrower or Guarantor, (v) any ERISA
Event, and (vi) the occurrence of any Default or Event of Default.
 
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(c) Promptly after the sending or filing thereof, Borrowers shall send to Agent
copies of (i) all reports which Parent Guarantor or any of its Subsidiaries
sends to its public security holders and debt security holders generally, (ii)
all reports and registration statements which Parent Guarantor or any of its
Subsidiaries files with the Securities Exchange Commission, any national or
foreign securities exchange or the National Association of Securities Dealers,
Inc., and such other reports as Agent may hereafter specifically identify to
Borrowers that Agent will reasonably require be provided to Agent, (iii) all
press releases and (iv) all other statements concerning material changes or
developments in the business of any Borrower or Guarantor made available by any
Borrower or Guarantor to the public.
 
(d) Agent is hereby authorized to deliver a copy of any financial statement or
any other information relating to the business of any Borrower or Guarantor to
any court or other Governmental Authority or, subject to the confidentiality
provisions set forth in Section 13.5 hereof, to any Affiliate of any Lender or
to any participant or assignee or prospective participant or assignee. Each
Borrower and Guarantor hereby authorizes and directs all accountants or auditors
to deliver to Agent during the term of this Agreement, at Borrowers’ expense,
copies of the financial statements of each Borrower and Guarantor and any
reports or management letters prepared by such accountants or auditors on behalf
of such Borrower or Guarantor and to disclose to Agent and Lenders such
information as they may have regarding the business of any Borrower and
Guarantor. Any documents, schedules, invoices or other papers delivered to Agent
or any Lender may be destroyed or otherwise disposed of by Agent or such Lender
one (1) year after the same are delivered to Agent or such Lender, except as
otherwise designated by Borrowers to Agent or such Lender in writing.
 
Documents required to be delivered pursuant to this Section 9.6 (to the extent
any such documents are included in materials otherwise filed with the SEC) may
be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which any Borrower or Guarantor posts such
documents, or provides a link thereto on such Borrower’s or Guarantor’s website
on the Internet or (ii) on which such documents are posted on such Borrower’s or
Guarantor’s behalf on an Internet or intranet website, if any, to which each
Lender and Agent have access (whether a commercial, third-party website or
whether sponsored by the Agent); provided that, Borrowers or Guarantors shall
notify Agent of the posting of any such documents and provide to Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
 
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower and
Guarantor shall not, and shall not permit any other Credit Party (other than any
Excluded Subsidiary) to, directly or indirectly,
 
(a) merge into or with or consolidate with any other Person or permit any other
Person to merge into or with or consolidate with it, except that
 
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(i) a Domestic Subsidiary of any Borrower (other than another Borrower, a
Guarantor, or an Excluded Subsidiary) may merge with and into such Borrower with
such Borrower being the surviving entity, provided, that following the
consummation of any such merger, the assets owned by such Domestic Subsidiary
prior to such merger shall not be deemed (I) Eligible Accounts unless the
criteria set forth in Sections 9.10(i)(x), (xi) and (xii) hereof shall have been
fully satisfied with respect to such assets and such Credit Party (in place of
any subject Target or New Subsidiary as referred to in such Sections), as
applicable, and such assets shall meet the criteria set forth in the definition
of "Eligible Accounts" or (II) Eligible Equipment, unless, with respect to such
assets, Agent shall have completed a field examination and appraisals and other
examinations similar in scope to those performed on the Collateral prior to the
date thereof by Agent with results reasonably satisfactory to Agent (and Agent
shall have established additional eligibility criteria, availability reserves
and percentage advance rates in its commercially reasonable discretion in light
of the foregoing appraisals and field examination), and such assets shall meet
the criteria set forth in the definition of "Eligible Equipment";
 
(ii) a Domestic Subsidiary of any Guarantor (other than another Guarantor, a
Borrower, or an Excluded Subsidiary) may merge with and into such Guarantor with
such Guarantor being the surviving entity,
 
(iii) any Domestic Subsidiary of any Borrower or any Guarantor that is not a
Guarantor, a Borrower or an Excluded Subsidiary may merge with or into or
consolidate with any other Domestic Subsidiary of any Borrower or any Guarantor
that is not a Guarantor, a Borrower or an Excluded Subsidiary,
 
(iv) any Borrower may merge with and into another Borrower,
 
(v) any Guarantor may merge with and into another Guarantor, so long as Parent
Guarantor is the surviving entity to the extent Parent Guarantor is a party to
such merger;
 
provided, that, in connection with any merger or consolidation permitted
pursuant to clauses (i) through (v) of this Section 9.7(a), each of the
following conditions is satisfied as determined by Agent in good faith: (I)
Agent shall have received not less than ten (10) Business Days' prior written
notice of the intention of such Persons to so merge or consolidate, which notice
shall set forth in reasonable detail satisfactory to Agent, the Persons that are
merging or consolidating, which Person will be the surviving entity, the
locations of the assets of the Persons that are merging or consolidating, and
the material agreements and documents relating to such merger or consolidation,
(II) Agent shall have received such other information with respect to such
merger or consolidation as Agent may reasonably request, (III) as of the
effective date of the merger or consolidation and after giving effect thereto,
no Default or Event of Default shall exist or have occurred and be continuing,
(IV) as of the effective date of the merger or consolidation and after giving
effect thereto, Borrowers’ Excess Availability plus Qualified Cash shall be
equal to or greater than $10,000,000, (V) Agent shall have received, true,
correct and complete copies of all agreements, documents and instruments
relating to such merger or consolidation, including, but not limited to, the
certificate or certificates of merger to be filed with each appropriate
Secretary of State (with a copy as filed promptly after such filing), and (VI)
the surviving corporation shall expressly confirm, ratify and assume the
Obligations and the Financing Agreements to which it is a party in writing, in
form and substance reasonably satisfactory to Agent, and Borrowers and
Guarantors shall execute and deliver such other agreements, documents and
instruments as Agent may reasonably request in connection therewith;
 
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(b) sell, issue, assign, lease, license, transfer title to, abandon or otherwise
dispose of any Capital Stock to any other Person or any of its assets to any
other Person, except as set forth in Section 9.24 hereof and except for
 
(i) sales of Inventory in the ordinary course of business,
 
(ii) the sale or other disposition of worn-out, surplus or obsolete Equipment or
Equipment no longer used or useful in the business of any Borrower or any
Guarantor so long as (A) before and after giving effect to any such sale or
disposition, no Default or Event of Default has occurred and is continuing, (B)
the proceeds of any such sale or disposition are paid to Agent for application
to the Obligations as set forth herein, and (C) such Equipment is sold for at
least the appraised value thereof as set forth on the most recent appraisal of
Equipment then received by Agent in accordance with Section 7.4 hereof,
 
(iii) the sale or other disposition of Equipment (excluding worn-out, surplus
and obsolete Equipment and Equipment no longer used or useful in the business of
any Borrower or Guarantor) so long as (A) such sales or other dispositions do
not involve such Equipment having an aggregate fair market value in excess of
$5,000,000 for all such Equipment disposed of by all of the Borrowers and
Guarantors in any fiscal year of Borrowers or as Agent may otherwise agree, (B)
before and after giving effect to any such sale or disposition, no Default or
Event of Default has occurred and is continuing, (C) the proceeds of any such
sale or disposition are paid to Agent for application to the Obligations as set
forth herein, and (D) such Equipment is sold for at least the appraised value
thereof as set forth on the most recent appraisal of Equipment then received by
Agent in accordance with Section 7.4 hereof, and
 
(iv) the issuance of Capital Stock of any Borrower or Guarantor consisting of
common stock pursuant to an employee stock option or grant or similar equity
plan or 401(k) plans of any Borrower or Guarantor for the benefit of employees,
directors and consultants of such Borrower or any other Credit Party, provided,
that, in no event shall such Borrower or Guarantor be required to issue, or
shall such Borrower or Guarantor issue, Capital Stock pursuant to such stock
plans or 401(k) plans which would result in a Change of Control or other Event
of Default,
 
(v) the transfer, sale, lease or licensing of all or part of such Borrower's or
Guarantor’s Intellectual Property or any items of Equipment (other than Eligible
Equipment) with a fair market value not to exceed $10,000,000 in the aggregate
for all such Equipment of the Borrowers or Guarantors to a Domestic Subsidiary
(other than an Excluded Subsidiary) of such Borrower or Guarantor or to any
other Borrower or Guarantor; provided, that: (A) immediately prior to and as a
result of such transfer, sale, lease or licensing, no Default or Event of
Default shall have occurred and be continuing; and (B) to the extent such
transfer, sale, lease or licensing is to a Domestic Subsidiary which is not a
Borrower or Guarantor, (1) prior to such transfer, sale, lease or licensing to
such Domestic Subsidiary, Agent shall have had a reasonable opportunity to
conduct customary and other business, legal, and collateral due diligence with
respect to such Domestic Subsidiary, including, but not limited to, ordering, in
form and substance reasonably satisfactory to Agent, and reviewing to its
satisfaction, UCC, tax lien, litigation, bankruptcy and intellectual property
searches from all offices that Agent deems reasonably appropriate in its sole
discretion, certificates of status with respect to such Domestic Subsidiary, in
form and substance satisfactory to Agent, which certificates shall be issued by
the appropriate officer of the jurisdiction of organization of such Domestic
Subsidiary and by the appropriate officers of each other jurisdiction in which
such Domestic Subsidiary is qualified to do business, which certificates shall
indicate that such Domestic Subsidiary is in good standing in such
jurisdictions; and (2) such Domestic Subsidiary shall have executed and
delivered a Guaranty, a joinder to this Agreement, and such other documents
(including but not limited to a non-restrictive license to use) as Agent may
reasonably request to protect and perfect its interest in such Collateral each
in form and substance reasonably satisfactory to Agent in its sole discretion,
 
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(vi) the transfer, sale, lease or licensing of such Borrower's or Guarantor’s
Intellectual Property in the ordinary course of such Borrower's or Guarantor’s
business (such as licenses of design kits or other Intellectual Property to
customers or potential customers to facilitate design work; licenses and
cross-licenses of patents or patent portfolios; technology development,
collaboration or license agreements with customers or collaborators; sales of an
individual patent or a group of patents with or without a license-back; licenses
or cross-licenses of technology to other semiconductor foundries; and similar
transactions) to any Person other than a Subsidiary of such Borrower or
Guarantor and other than to Foreign Parent Nonguarantor or any of its Affiliates
that is not a Credit Party (except as set forth in clauses (viii) and (xv)
below), provided that such transfer, sale, lease or licensing does not include
all or substantially all of such Borrower’s or Guarantor’s Intellectual
Property,
 
(vii) the consignment of Inventory by the Credit Parties in the ordinary course
of business so long as the fair market value of all such consigned Inventory for
all Credit Parties (other than Excluded Subsidiaries) at any one time does not
exceed $500,000 in the aggregate,
 
(viii) the transfer or sale of assets to any Joint Venture (other than any Joint
Venture involving Foreign Parent Nonguarantor or any of its Affiliates), Foreign
Subsidiary of any Borrower or Guarantor, Excluded Subsidiary or to Jazz WOFE in
connection with any investment or other transaction permitted by Section
9.10(h); provided, that all transfers or sales of items of Equipment of any
Credit Party (other than an Excluded Subsidiary) to any Joint Venture (other
than any Joint Venture involving Foreign Parent Nonguarantor or any of its
Affiliates), Foreign Subsidiary of any Borrower or Guarantor, or Excluded
Subsidiary shall be limited to Equipment with a fair market value not to exceed
$2,500,000 in the aggregate for all such Equipment of the Credit Parties (other
than Excluded Subsidiaries) and for all such transfers and sales and shall be
only permitted to the extent that any such transfer or sale is in the ordinary
course of the applicable Credit Parties’ business; and further provided, that
immediately prior to and after giving effect to such transfer or sale, no
Default or Event of Default shall have occurred and be continuing,
 
(ix) the issuance of stock options of Parent Guarantor to directors or employees
of any Credit Party, provided that any such issuance does not constitute, cause,
or otherwise result in a Change of Control or is not otherwise prohibited by
this Agreement,
 
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(x) the issuance of Capital Stock of Parent Guarantor provided that any such
issuance does not constitute, cause, or otherwise result in a Change of Control
or is not otherwise prohibited by this Agreement,
 
(xi) in order to resolve disputes that occur in the ordinary course of business,
the discount (or other compromise for less than face value thereof) of notes or
Accounts, provided, that no Default or Event of Default shall have occurred and
be continuing,
 
(xii) the transfers of condemned property to the respective Governmental
Authority or agency that has condemned the same (whether by deed in lieu of
condemnation or otherwise), and transfers of properties that have been subject
to a casualty to the respective insurer of such property or its designee as part
of an insurance settlement,
 
(xiii) the dispositions of Cash Equivalents,
 
(xiv) other dispositions which do not in the aggregate exceed $1,000,000 per
fiscal year, and
 
(xv) subject to Section 9.12(a) hereof, the lease or licensing of all or any
part of such Borrower’s or Guarantor’s Intellectual Property or any items of
Equipment to Foreign Parent Nonguarantor or any of its Affiliates that is not a
Credit Party provided that Foreign Parent Nonguarantor has executed an agreement
with Agent substantially in the form of Exhibit F hereto;
 
(c) wind up, liquidate or dissolve, except as permitted by clause (a) of this
Section; or
 
(d) agree to do any of the foregoing unless such agreement is conditioned upon
Agent's consent thereto or if all outstanding Obligations (other than contingent
indemnification Obligations) shall be indefeasibly paid in full as a result of
the consummation of the transactions contemplated thereby.
 
9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not permit
any other Credit Party (other than any Excluded Subsidiary) to, create, incur,
assume or suffer to exist any security interest, mortgage, pledge, lien, charge
or other encumbrance of any nature whatsoever on any of its assets or
properties, including the Collateral, or file or permit the filing of, or permit
to remain in effect, any financing statement or other similar notice of any
security interest or lien with respect to any such assets or properties, except:
 
(a) the security interests and liens of Agent for itself and the benefit of the
Secured Parties;
 
(b) liens securing the payment of taxes, assessments or other governmental
charges or levies either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower or such other Credit Party, as the case may be and
with respect to which adequate reserves have been set aside on its books;
 
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(c) non-consensual statutory liens (other than liens securing the payment of
taxes), landlord liens, carriers liens, materialmen liens, laborers liens,
suppliers liens, mechanics liens or other like liens, in each case, arising in
the ordinary course of such Credit Party's business to the extent (i) such liens
secure Indebtedness which is not overdue, or (ii) such liens secure Indebtedness
relating to claims or liabilities which are fully insured and being defended at
the sole cost and expense and at the sole risk of the insurer or being contested
in good faith by appropriate proceedings diligently pursued and available to
such Credit Party, in each case prior to the commencement of foreclosure or
other similar proceedings and with respect to which adequate reserves as
required by GAAP have been set aside on its books;
 
(d) zoning restrictions, easements, licenses, covenants and other restrictions
affecting the use of Real Property which do not interfere in any material
respect with the use of such Real Property or ordinary conduct of the business
of such Credit Party as presently conducted thereon or materially impair the
value of the Real Property which may be subject thereto;
 
(e) purchase money security interests in Equipment (including Capital Leases) to
secure Indebtedness permitted under Section 9.9(b) hereof;
 
(f) pledges and deposits of cash by any Credit Party after the date hereof in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security benefits consistent
with the current practices of such Credit Party as of the date hereof;
 
(g) pledges and deposits of cash by any Credit Party after the date hereof to
secure the performance of tenders, bids, leases, trade contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations in each case in the ordinary course of business consistent with the
current practices of such Credit Party as of the date hereof; provided, that in
connection with any performance bonds issued by a surety or other person, the
issuer of such bond shall have waived in writing any rights in or to, or other
interest in, any of the Collateral in an agreement, in form and substance
reasonably satisfactory to Agent;
 
(h) liens arising from (i) operating leases and the precautionary UCC financing
statement filings in respect thereof and (ii) equipment or other materials which
are not owned by any Credit Party located on the premises of such Credit Party
(but not in connection with, or as part of, the financing thereof) from time to
time in the ordinary course of business of such Credit Party and the
precautionary UCC financing statement filings in respect thereof;
 
(i) judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto;
 
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(j) any such security interest, lien or other encumbrance created or incurred in
connection with the cash collateralization of such Borrower's Existing Letters
of Credit or any other letter of credit issued as permitted by this Agreement;
 
(k) any such subordinate security interest, lien or other encumbrance created or
incurred in connection with the financing by such Credit Party of any premiums
of insurance required to be maintained hereunder;
 
(l) any other security interest, lien or other encumbrance (other than any
security interest, lien or other encumbrance that would encumber any Accounts,
Inventory or Eligible Equipment) created or incurred in connection with any
Indebtedness not to exceed $1,000,000 in the aggregate at any one time
outstanding for all Credit Parties (other than Excluded Subsidiaries);
 
(m) security interests and liens created or incurred in connection with the
incurrence of Indebtedness consisting of the financing of insurance premiums
permitted by Section 9.9(l) hereof;
 
(n) liens on any asset (other than any lien that encumbers any Accounts,
Inventory or Eligible Equipment) existing at the time of acquisition of such
asset by any Credit Party so long as (i) the lien shall apply only to the asset
so acquired and the proceeds thereof, and (ii) the Indebtedness secured by such
lien is otherwise permitted hereunder;
 
(o) leases, sublicenses, leases or subleases, granted in the ordinary course of
business so long as any such lease, sublicense, lease or sublease does not (i)
interfere with the business of the applicable Credit Party, or (ii) impair
Agent’s or any Lender’s security interest in the Collateral or any rights and
remedies of Agent or any Lender appurtenant thereto;
 
(p) liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of custom duties in connection with the imposition of goods
provided, that, Agent may establish a Reserve with respect thereto; and
 
(q) the security interests and liens set forth in Section 23 of the Information
Certificate.
 
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not permit
any other Credit Party (other than any Excluded Subsidiary) to, incur, create,
assume, become or be liable in any manner with respect to, or permit to exist,
any Indebtedness, or guarantee, assume, endorse, or otherwise become responsible
for (directly or indirectly), the Indebtedness, performance, obligations or
dividends of any other Person, except:
 
(a) the Obligations;
 
(b) purchase money Indebtedness (including Capital Leases) arising after the
date hereof to the extent secured by purchase money security interests in
Equipment (including Capital Leases) not to exceed $7,500,000 in the aggregate
incurred by all Credit Parties (other than Excluded Subsidiaries) at any time
outstanding so long as such security interests and mortgages do not apply to any
property of the applicable Credit Party other than the Equipment so acquired and
proceeds thereof, and the Indebtedness secured thereby does not exceed the cost
of the Equipment so acquired, as the case may be;
 
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(c) guarantees by any Credit Party of the Obligations, or guarantees by any
Borrower of the Obligations of any other Borrower, in favor of Agent for the
benefit of Lenders and the other Secured Parties;
 
(d) unsecured Indebtedness of any Credit Party arising after the date hereof to
any third person (but not to any other Credit Party), provided, that, each of
the following conditions is satisfied: (i) such Indebtedness shall be on terms
and conditions reasonably acceptable to Agent and shall be subject and
subordinate in right of payment to the right of Agent and Lenders to receive the
prior indefeasible payment and satisfaction in full payment of all of the
Obligations pursuant to the terms of an intercreditor agreement between Agent
and such third party, in form and substance reasonably satisfactory to Agent,
(ii) Agent shall have received not less than ten (10) days prior written notice
of the intention of such Credit Party to incur such Indebtedness, which notice
shall set forth in reasonable detail reasonably satisfactory to Agent the amount
of such Indebtedness, the person or persons to whom such Indebtedness will be
owed, the interest rate, the schedule of repayments and maturity date with
respect thereto and such other information as Agent may request with respect
thereto, (iii) Agent shall have received true, correct and complete copies of
all agreements, documents and instruments evidencing or otherwise related to
such Indebtedness, (iv) in no event shall the aggregate principal amount of such
Indebtedness incurred during the term of this Agreement exceed $75,000,000
(inclusive of the aggregate of such Indebtedness incurred, created, or assumed
by each other Credit Party or for which each other Credit Party shall have
become liable), (v) as of the date of incurring such Indebtedness and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing, (vi) such Credit Party shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or
any agreement, document or instrument related thereto in a manner adverse to
Agent or any Lender in any material respect, except, that, such Credit Party may
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith or
otherwise make any covenant less restrictive or waive any Event of Default
thereunder, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness (except pursuant to regularly scheduled payments permitted herein
or as permitted under the applicable subordination agreement), or set aside or
otherwise deposit or invest any sums for such purpose, and (vii) Borrowers and
Guarantors shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by any Credit Party or on its behalf promptly after
the receipt thereof, or sent by any Credit Party or on its behalf concurrently
with the sending thereof, as the case may be;
 
(e) Indebtedness with respect to any Hedging Transactions; provided, that such
arrangements are: (i) with any Bank Product Provider and (ii) were entered into
for the purpose of protecting such Borrower or such other Credit Party against
fluctuations in interest rates and not for speculative purposes;
 
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(f) the Indebtedness set forth on Schedule 9.9 hereto and any refinancings,
renewals, or extensions of such Indebtedness so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not, in Agent’s
reasonable judgment, materially impair the prospects of repayment of the
Obligations by Borrowers or materially impair Borrowers’ creditworthiness, (ii)
such refinancings, renewals, or extensions do not result in an increase in the
principal amount of the Indebtedness so refinanced, renewed, or extended, (iii)
such refinancings, renewals, or extensions do not result in an increase in the
interest rate with respect to the Indebtedness so refinanced, renewed, or
extended, (iv) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions that, taken as a
whole, are materially more burdensome or restrictive to Borrowers, (v) if the
Indebtedness that is refinanced, renewed, or extended was subordinated in right
of payment to the Obligations, then the terms and conditions of the refinancing,
renewal, or extension must include subordination terms and conditions that are
at least as favorable to Agent and the Lenders as those that were applicable to
the refinanced, renewed, or extended Indebtedness, and (vi) the Indebtedness
that is refinanced, renewed, or extended is not recourse to any Person that is
liable on account of the Obligations other than those Persons which were
obligated with respect to the Indebtedness that was refinanced, renewed, or
extended;
 
(g) Indebtedness incurred or created in connection with Existing Letters of
Credit or any letter of credit (other than any Letter of Credit) issued to any
Credit Party in the ordinary course of its business by any issuer other than
Wachovia Bank, National Association or its successors and assigns;
 
(h) Guaranties by such Borrower or such Credit Party of any obligations of any
other Borrower or Credit Party to the extent permitted hereunder;
 
(i) Guaranties by such Borrower or such Credit Party of any obligations of any
Joint Venture (other than any Joint Venture involving Foreign Parent
Nonguarantor or any of its Affiliates), Foreign Subsidiary of any Borrower or
Guarantor, or of Jazz WOFE; provided, that, (A) such Borrower or such Credit
Party shall be permitted to make investments in such Joint Venture, Foreign
Subsidiary or Jazz WOFE pursuant to the terms of Section 9.10(h) in the amount
of such guaranty, and (B) immediately prior to and after giving effect to the
execution or incurrence of any such guaranty, no Default or Event of Default
shall have occurred and be continuing, and Borrowers' Excess Availability plus
Qualified Cash shall be equal to or greater than $10,000,000;
 
(j) Indebtedness arising from agreements entered into by such Credit Party in
the ordinary course of business, providing for indemnification, purchase price
adjustments, non-compete, consulting, deferred compensation, earn-outs or
similar obligations, provided that the incurrence or creation thereof would not,
or could not reasonably be expected to, have a Material Adverse Effect;
 
(k) Indebtedness incurred by such Credit Party in the ordinary course of
business in respect to netting services and otherwise in connection with deposit
accounts, or in connection with endorsements for deposit or overdraft accounts;
 
(l) Indebtedness consisting of the financing of insurance premiums;
 
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(m) Indebtedness arising under the original issuance of the Senior Notes,
provided, that (i) Credit Parties shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto in any manner adverse to Agent or any
Lender, except, that, the Credit Parties may amend, modify, alter or change the
terms thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith or otherwise make any covenant
less restrictive or waive any Event of Default thereunder, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, provided, that Parent
Guarantor may repurchase such Indebtedness to the extent permitted under Section
9.11(g) hereof, and (ii) Borrowers and Guarantors shall furnish to Agent all
material notices or demands in connection with such Indebtedness either received
by any Credit Party or on its behalf promptly after the receipt thereof, or sent
by any Credit Party or on its behalf concurrently with the sending thereof, as
the case may be;
 
(n) Guaranties by Parent Guarantor’s Domestic Subsidiaries of Parent Guarantor’s
obligations under the Senior Notes;
 
(o) Indebtedness of any Person existing at the time such Person became a
Subsidiary of a Credit Party so long as (i) such Indebtedness was not created or
incurred in contemplation of such Person becoming a Subsidiary of a Credit
Party, and (ii) the amount of all such Indebtedness for all such Persons does
not exceed $20,000,000 in the aggregate;
 
(p) so long as the aggregate amount thereof does not exceed $1,000,000 at any
time, Indebtedness of the Credit Parties (other than Excluded Subsidiaries) in
respect of performance, bid, surety, indemnity, appeal bonds, completion
guarantees and other obligations of like nature and guarantees and/or
obligations as an account party in respect of the face amount of letters of
credit in respect thereof, in each case securing obligations not constituting
Indebtedness for borrowed money (including worker’s compensation claims,
environmental remediation and other environmental matters and obligations in
connection with self-insurance or similar requirements) provided in the ordinary
course of business; and
 
(q) any other unsecured Indebtedness of any Credit Party not to exceed
$2,500,000 in the aggregate for all Credit Parties (other than Excluded
Subsidiaries).
 
9.10 Loans, Investments, Etc. Each Borrower and Guarantor shall not, and shall
not permit any other Credit Party (other than any Excluded Subsidiary) to,
directly or indirectly, make any loans or advance money or property to any
person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the Capital Stock or Indebtedness or all or a substantial
part of the assets or property of any person, or form or acquire any
Subsidiaries, except:
 
(a) the endorsement of instruments for collection or deposits in the ordinary
course of business;
 
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(b) investments in cash or Cash Equivalents, provided, that if Agent is
exercising control over the Blocked Accounts pursuant to Section 6.3(d) hereof,
no Loans shall be outstanding and the terms and conditions of Section 5.2 hereof
shall have been satisfied with respect to the deposit account, investment
account or other account in which such cash or Cash Equivalents are held;
 
(c) the existing equity investments of each Credit Party as of the date hereof
in its Subsidiaries;
 
(d) loans and advances by any Credit Party to its employees not to exceed the
principal amount of $2,000,000 in the aggregate for all Credit Parties (other
than Excluded Subsidiaries) at any time outstanding for: (i) reasonably and
necessary work-related travel or other ordinary business expenses to be incurred
by such employee in connection with their work for such Credit Party and (ii)
reasonable and necessary relocation expenses of such employees (including home
mortgage financing for relocated employees);
 
(e) stock or obligations issued to any Credit Party by any Person (or the
representative of such Person) in respect of Indebtedness of such Person owing
to such Credit Party in connection with the insolvency, bankruptcy, receivership
or reorganization of such Person or a composition or readjustment of the debts
of such Person; provided, that the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Agent, upon Agent's
request, together with such stock power, assignment or endorsement by such
Credit Party as Agent may request;
 
(f) obligations of account debtors to any Credit Party arising from Accounts
which are past due evidenced by a promissory note or notes, as the case may be,
made by such account debtor payable to such Credit Party; provided, that
promptly upon the receipt by such Credit Party of the original of any such
promissory note or notes, such promissory note or notes shall be endorsed to the
order of Agent by such Credit Party and promptly delivered to Agent; provided,
further that, so long as no Default or Event of Default has occurred and is
continuing, Credit Parties shall not be required to endorse such notes to the
order of Agent or deliver such notes to the Agent to the extent the aggregate
outstanding amount of all such notes for all Credit Parties (other than Excluded
Subsidiaries) does not exceed $1,000,000;
 
(g) the investments, loans and advances set forth on Schedule 9.10 hereto;
 
(h) (i) investments in the Joint Ventures as in effect on the Effective Date and
future investments in (A) the Joint Ventures (other than any Joint Venture
involving Foreign Parent Nonguarantor or any of its Affiliates), (B) Foreign
Subsidiaries of any Borrower or Guarantor, or (C) any Credit Party (other than
as permitted in clause (iii) of this Section 9.10(h)), including, without
limitation, the acquisition of Foreign Subsidiaries and Excluded Subsidiaries
and the formation of, and investment in, Foreign Subsidiaries and Excluded
Subsidiaries, and (ii) investments in Jazz WOFE pursuant to Operating Company’s
equity ownership in such entity as in effect on the Effective Date and future
investments in Jazz WOFE during the term of this Agreement, and (iii)
investments by any Borrower or any Guarantor in any other Borrower or Guarantor;
provided, that, after giving effect to any such future investments permitted in
clauses (i) and (ii) of this Section 9.10(h), no Default or Event of Default
shall have occurred and be continuing and Borrowers’ Excess Availability plus
Qualified Cash shall be equal to or greater than $10,000,000; and
further provided, that the aggregate amount of all such investments permitted by
clauses (i) and (ii) of this Section 9.10(h) shall not exceed $15,000,000; and
further provided, that with respect to any investment by such Borrower or such
Guarantor (as permitted in clause (i) of this Section 9.10(h)) in any Credit
Party that is a Subsidiary of such Borrower or such Guarantor (other than a
Foreign Subsidiary of any Borrower or Guarantor, a Joint Venture or an Excluded
Subsidiary), such Subsidiary shall have executed and delivered a Guaranty, a
joinder to this Agreement, and such other documents as Agent may reasonably
request, each in form and substance satisfactory to Agent in its sole
discretion;
 
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(i) without otherwise limiting any of the foregoing, any Credit Party may
acquire all of the issued and outstanding capital stock of another Person, or
all or substantially all of the assets of another Person or of a division of
another Person (each, a “Target”) and may form a new wholly-owned Domestic
Subsidiary (a “New Subsidiary”) and make investments in such New Subsidiary
(“Subsidiary Investments”), subject to the satisfaction in full of the following
conditions precedent, as applicable:
 
(i) the subject Target shall be incorporated or organized under the laws of any
jurisdiction of any state of the United States or the District of Columbia and
the subject Target and subject New Subsidiary, as applicable, shall (A) be in
the same, substantially related or complimentary type of business as any Credit
Party (including any reasonable extension, development or expansion), and (B)
not be deemed an Excluded Subsidiary;
 
(ii) the aggregate cash portion of the purchase price for the subject Target and
any related Targets (excluding any earn-outs and similar contingent payments,
any obligations or indebtedness of the Targets that are assumed (as permitted by
Section 9.9 hereof), or any other non-cash consideration) shall not exceed
$25,000,000;
 
(iii) as of the date of the Subsidiary Investment or acquisition of the subject
Target and any related Targets, as applicable, and after giving effect thereto,
Borrowers’ Excess Availability plus Qualified Cash shall not be less than
$30,000,000 and Borrowers’ Excess Availability plus Qualified Cash shall be
projected, to the Agent’s reasonable satisfaction, to be $30,000,000 or more for
90 consecutive days following the consummation of such Subsidiary Investment or
such acquisition, as applicable;
 
(iv) the subject Target shall be acquired in accordance with applicable laws
free and clear of any security interest, mortgage, pledge, lien, charge or other
encumbrance except as permitted in Section 9.8 hereof, and free and clear of any
obligations or indebtedness except as permitted in Section 9.9 hereof;
 
(v) the subject Target and the Person acquiring the subject Target or the
subject New Subsidiary, as applicable, shall guaranty the Obligations, and the
assets of the subject Target and such Person or the subject New Subsidiary, as
applicable, shall be pledged to Agent, all pursuant to a Guaranty and joinder to
this Agreement executed by such Target, Person or New Subsidiary, as applicable,
and such other documents as Agent may reasonably request, each in form and
substance reasonably satisfactory to Agent;
 
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(vi) no Default or Event of Default shall have occurred and be continuing or
would result from the acquisition of the subject Target or the making of the
subject Subsidiary Investments (as applicable);
 
(vii) Borrowers shall give prior written notice to Agent of the acquisition of
the subject Target or the making of the subject Subsidiary Investments as soon
as reasonably practicable, but in no event less than ten (10) calendar days
prior to the closing thereof;
 
(viii) Agent shall have received true, correct and complete copies of the
acquisition agreement(s) for the subject Target and all exhibits, schedules,
documents and other agreements relating thereto, together with such financial
and other reasonably available information concerning the subject Target as
Agent may reasonably request; and
 
(ix) Agent shall have received such further agreements, documents and
instruments, and such further acts shall have been completed, with respect to
the subject Target or New Subsidiary (as applicable), as required by Section
9.23 hereof;
 
at Borrowers’ request, the subject Target or the Person acquiring the subject
Target or the subject New Subsidiary (as applicable) may be added as a borrower
hereunder, but only at the election of Agent; regardless of whether the subject
Target or the Person acquiring the subject Target or the subject New Subsidiary
(as applicable) is or becomes a Borrower hereunder, and regardless of whether
the Accounts (which term shall mean Accounts as applied to the subject Target or
New Subsidiary for the purposes of this Section) of the subject Target or New
Subsidiary qualify under the definition of “Eligible Accounts”, or whether the
Equipment (which term shall mean Equipment as applied to the subject Target or
New Subsidiary for the purposes of this Section) of the subject Target or New
Subsidiary qualify under the definition of “Eligible Equipment”, the inclusion
of such Accounts in Eligible Accounts or Equipment in Eligible Equipment shall
be subject to:
 
(x) the completion of a field examination and appraisals and other examinations
similar in scope to those performed on the Collateral prior to the date thereof
by Agent of the subject Target or New Subsidiary with results reasonably
satisfactory to Agent;
 
(xi) such additional eligibility criteria, availability reserves and percentage
advance rates as Agent shall establish in its commercially reasonable discretion
in light of the foregoing appraisals and field examination; and
 
(xii) the chief executive office of the subject Target or New Subsidiary (as
applicable) shall be in the United States, and in any event, only those Accounts
generated and invoiced from the United States or in Canada may be deemed
Eligible Accounts.
 
(j) loans by a Borrower to any other Borrower or Guarantor after the date
hereof, provided, that, as to all of such loans, (i) within thirty (30) days
after the end of each fiscal year, Borrowers shall provide to Agent a report in
form and substance reasonably satisfactory to Agent of the outstanding amount of
such loans as of the last day of the immediately preceding year and indicating
any loans made and payments received during the immediately preceding year, (ii)
the Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Agent may reasonably require, (iii) as of the date
of any such loan and after giving effect thereto, the Borrower making such loan
shall be Solvent, and (iv) as of the date of any such loan and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing;
 
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(k) loans by a Guarantor to a Borrower or another Guarantor, provided, that, as
to all of such loans, (i) the Indebtedness arising pursuant to such loan shall
be subject to, and subordinate in right of payment to, the right of Agent and
Lenders to receive the prior final payment and satisfaction in full of all of
the Obligations on terms and conditions acceptable to Agent, (ii) promptly upon
Agent’s request, Agent shall have received a subordination agreement, in form
and substance satisfactory to Agent, providing for the terms of the
subordination in right of payment of such Indebtedness of such Borrower or
Guarantor to the prior final payment and satisfaction in full of all of the
Obligations, duly authorized, executed and delivered by such Guarantor and such
Borrower or Guarantor, and (iii) such Borrower or Guarantor shall not, directly
or indirectly make, or be required to make, any payments in respect of such
Indebtedness prior to the end of the then current term of this Agreement;
 
(l) investments made prior to the consummation of any acquisition permitted
hereunder consisting of reasonable earnest money deposits, working fees or other
similar prepaid consideration or similar amounts that would be applied toward
consideration upon consummation of such acquisition;
 
(m) investments consisting of Capital Expenditures; and
 
(n) investments consisting of the conversion of any of any Borrower’s or Parent
Guarantor’s convertible securities into other securities not constituting
Indebtedness pursuant to the terms of such convertible securities or otherwise
in exchange therefor (including the Senior Notes).
 
9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not, and shall
not permit any other Credit Party (other than any Excluded Subsidiary) to,
directly or indirectly, declare or pay any dividends on account of any shares of
any class of any Capital Stock of such Credit Party now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of Capital Stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration or apply or set apart any sum, or make
any other distribution (by reduction of capital or otherwise) in respect of any
such shares or agree to do any of the foregoing, except that:
 
(a) any Credit Party may declare and pay such dividends or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
for consideration in the form of shares of common stock (so long as after giving
effect thereto no Change of Control or other Default or Event of Default shall
exist or occur and be continuing);
 
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(b) any Credit Party may pay dividends to the extent permitted in Section 9.12
below;
 
(c) any Credit Party may repurchase Capital Stock consisting of common stock
held by employees pursuant to any employee stock ownership plan, restricted
stock or incentive stock plan or other similar plan thereof upon the
termination, retirement or death of any such employee in accordance with the
provisions of such plan, provided, that, as to any such repurchase, each of the
following conditions is satisfied: (i) as of the date of the payment for such
repurchase and after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing, (ii) such repurchase shall be paid
with funds legally available therefor, (iii) such repurchase shall not violate
any law or regulation or the terms of any indenture, agreement or undertaking to
which any Credit Party is a party or by which any Credit Party or its property
is bound, and (iv) the aggregate amount of all payments for such repurchases in
any calendar year shall not exceed $5,000,000;
 
(d) any Credit Party may make any redemption of securities with the proceeds
received from a substantially concurrent issue of new shares of Capital Stock;
 
(e) any Credit Party may repurchase Capital Stock deemed to occur upon the
exercise of options or warrants if such Capital Stock represents all of the
exercise price thereof;
 
(f) subject to the conditions set forth in Section 9.24 hereof, any Credit Party
may make payments of cash in lieu of issuance of fractional shares upon the
exercise of warrants or upon the conversion or exchange of, or issuance of
Capital Stock in lieu of cash dividends on any Capital Stock; and
 
(g) Parent Guarantor may repurchase any of its Indebtedness arising under the
Senior Notes; provided, that at the time of such repurchase and after giving
effect thereto, (A) no Default or Event of Default shall have occurred and be
continuing, (B) Borrowers’ Excess Availability plus Qualified Cash shall not be
less than $30,000,000; (C) Borrowers’ Excess Availability plus Qualified Cash
shall be projected, to the Agent’s reasonable satisfaction, to be $30,000,000 or
more for 60 consecutive days following the consummation of such repurchase, and
(D) the aggregate amount of all such repurchases made after the Effective Date
and permitted by this Section 9.11(g) shall not exceed $20,000,000.
 
9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not, and
shall not permit any other Credit Party to, directly or indirectly:
 
(a) purchase, acquire or lease any property from, or sell, transfer, license or
lease any property to, any Affiliate of such Borrower or Guarantor, except as
otherwise permitted in this Agreement (including without limitation clauses (b)
and (c) of this Section 9.12) and except in the ordinary course of and pursuant
to the reasonable requirements of such Borrower 's or Guarantor’s business and
upon fair and reasonable terms no less favorable to such Borrower or Guarantor
than such Borrower or Guarantor would obtain in a comparable arm's length
transaction with an unaffiliated person;
 
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(b) make any payments (whether by dividend, loan or otherwise) of management,
consulting or other fees for management or similar services to any Affiliate of
such Borrower or Guarantor, except as otherwise permitted in this Agreement
(including without limitation clauses (a) and (c) of this Section 9.12 and
Section 9.24 hereof) and except (i) reasonable compensation to officers,
employees and directors and indemnification arrangements, and (ii) tax sharing
arrangements to discharge consolidated tax liabilities of Parent Guarantor and
its Subsidiaries or payments pursuant thereto;
 
(c) enter into or permit to exist any transaction with any Affiliate of such
Borrower, except as permitted by clauses (a) and (b) of this Section 9.12 and
except for such transactions that are in connection with investments, asset
transfers and guaranties with respect to the Joint Ventures, Foreign
Subsidiaries of any Credit Party, Excluded Subsidiaries, Credit Parties or Jazz
WOFE that are permitted under this Agreement.
 
9.13 Compliance with ERISA. Except as could not reasonably be expected to have a
Material Adverse Effect, each Borrower and Guarantor shall, and shall cause each
other Credit Party to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) not terminate any Pension Plan so as to
incur any material liability to the Pension Benefit Guaranty Corporation; (d)
not allow or suffer to exist any prohibited transaction involving any Plan or
any trust created thereunder which would subject such Borrower or such Credit
Party to a material tax or other liability on prohibited transactions imposed
under Section 4975 of the Code or ERISA; (e) make all required contributions to
any Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of
the Code or the terms of such Plan; (f) not allow or suffer to exist any
accumulated funding deficiency, whether or not waived, with respect to any such
Pension Plan; (g) not engage in a transaction that could be subject to Section
4069 or 4212(c) of ERISA; or (h) not allow or suffer to exist any occurrence of
a reportable event or any other event or condition which presents a material
risk of termination by the Pension Benefit Guaranty Corporation of any Plan that
is a single employer plan, which termination could result in any material
liability to the Pension Benefit Guaranty Corporation.
 
9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor shall,
for financial reporting purposes, cause its, and each of its Subsidiaries’
(other than Excluded Subsidiaries), (a) fiscal years to end on the Friday
immediately prior to December 31 of each year and (b) fiscal quarters to end on
the last Friday in March, June, September, and December of each year.
 
9.15 Change in Business. Each Borrower and Guarantor shall not, and shall not
permit any of their respective Subsidiaries to, engage in any business other
than the business of such Borrower, Guarantor or Subsidiary on the date hereof
and any business reasonably related, ancillary or complimentary to the business
in which such Borrower, Guarantor or Subsidiary is engaged on the date hereof
(including any reasonable extension, development or expansion of such business).
 
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9.16 Limitation of Restrictions Affecting Subsidiaries. Each Borrower and
Guarantor shall not, directly, or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Subsidiary of such Borrower or Guarantor (other than any Excluded
Subsidiaries) to (a) pay dividends or make other distributions or pay any
Indebtedness owed to such Borrower or Guarantor or any Subsidiary of such
Borrower or Guarantor; (b) make loans or advances to such Borrower or Guarantor
or any Subsidiary of such Borrower or Guarantor, (c) transfer any of its
properties or assets to such Borrower or Guarantor or any Subsidiary of such
Borrower or Guarantor, or (d) create, incur, assume or suffer to exist any lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, other than encumbrances and restrictions arising under (i) applicable
law, (ii) this Agreement, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor, (iv) customary
restrictions on dispositions of real property interests found in reciprocal
easement agreements of such Borrower or Guarantor or any Subsidiary of such
Borrower or Guarantor, (v) any agreement relating to permitted Indebtedness
incurred by a Subsidiary of such Borrower or Guarantor prior to the date on
which such Subsidiary was acquired by such Borrower or such Guarantor and
outstanding on such acquisition date, (vi) customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
(vii) customary restrictions imposed on the transfer of copyrighted or patented
materials or other intellectual property and customary provisions in agreements
that restrict the assignment of such agreements or any rights thereunder, (viii)
restrictions contained in the organizational documents of any joint venture
applicable to the interest of any Subsidiary in such joint venture or the assets
of such joint venture, (ix) the extension or continuation of contractual
obligations in existence on the date hereof, and (x) restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement; provided, that any such encumbrances or restrictions contained in
such extension or continuation are no less favorable to Agent and Lenders than
those encumbrances and restrictions under or pursuant to the contractual
obligations so extended or continued.
 
9.17 Intentionally Omitted.
 
9.18 Minimum Consolidated EBITDA. If the sum of Excess Availability plus
Qualified Cash is at any time during any fiscal quarter (beginning with the
fiscal quarter ending September 30, 2008) less than $10,000,000, Parent
Guarantor and its Subsidiaries (other than any Excluded Subsidiaries) shall
earn, on a consolidated basis and determined as of the last day of such fiscal
quarter, Consolidated EBITDA of not less than $25,000,000 during the four (4)
fiscal quarters then ended.
 
9.19 License Agreements.
 
(a) To the extent necessary to avoid the occurrence of a Material Adverse
Effect, each Borrower and Guarantor shall (i) promptly and faithfully observe
and perform all of the material terms, covenants, conditions and provisions of
the material License Agreements to which it is a party to be observed and
performed by it, at the times set forth therein, if any, (ii) not do, permit,
suffer or refrain from doing anything that could reasonably be expected to
result in a default under or breach of any of the terms of any material License
Agreement, (iii) not cancel, surrender, modify, amend, waive or release any
material License Agreement in any material respect or any term, provision or
right of the licensee thereunder in any material respect, or consent to or
permit to occur any of the foregoing; except, that, subject to Section 9.19(b)
below, such Borrower or Guarantor may cancel, surrender or release any material
License Agreement in the ordinary course of the business of such Borrower or
such Guarantor.
 
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(b) To the extent necessary to avoid the occurrence of a Material Adverse
Effect, each Borrower and Guarantor will either exercise any option to renew or
extend the term of each material License Agreement to which it is a party in
such manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option.
 
9.20 Foreign Assets Control Regulations, Etc. None of the requesting or
borrowing of the Loans or the requesting or issuance, extension or renewal of
any Letter of Credit or the use of the proceeds of any thereof will violate the
Trading With the Enemy Act (50 USC §1 et seq., as amended) (the “Trading With
the Enemy Act”) or any of the foreign assets control regulations of the United
States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the
“Foreign Assets Control Regulations”) or any enabling legislation or executive
order relating thereto (including, but not limited to (a) Executive order 13224
of September 21, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)) (the “Executive Order”) and (b) the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Public Law 107-56). None of the Borrowers or any of their Subsidiaries or
other Affiliates is or will become a “blocked person” as described in the
Executive Order, the Trading with the Enemy Act or the Foreign Assets Control
Regulations or engages or will engage in any dealings or transactions, or be
otherwise associated, with any such “blocked person”.
 
9.21 After Acquired Real Property. If any Borrower or Guarantor hereafter
acquires any owned Real Property, fixtures or any other property and such Real
Property, fixtures or other property is adjacent to, contiguous with or
necessary or related to or used in connection with any Real Property then
subject to a mortgage, deed of trust or deed to secure debt, in favor of Lender
pursuant to the terms hereof, or if such Real Property is not adjacent to,
contiguous with or related to or used in connection with such Real Property,
then if such owned Real Property, fixtures or other property at any location (or
series of adjacent, contiguous or related locations, and regardless of the
number of parcels) has a fair market value in an amount equal to or greater than
$5,000,000 (or if an Event of Default exists and Agent so requests, then
regardless of the fair market value of such assets), without limiting any other
rights of Agent or any Lender, or duties or obligations of any Borrower or
Guarantor, promptly upon Agent’s request, such Borrower or Guarantor shall
execute and deliver to Agent a mortgage, deed of trust or deed to secure debt,
as Agent may determine, in form and substance, and as to any provisions relating
to specific state laws, reasonably satisfactory to Agent and in form appropriate
for recording in the real estate records of the jurisdiction in which such Real
Property or other property is located granting to Agent a first and only lien
and mortgage on and security interest in such Real Property, fixtures or other
property (except as such Borrower or Guarantor would otherwise be permitted to
incur hereunder or as otherwise consented to in writing by Agent) and such other
agreements, documents and instruments as Agent may reasonably require in
connection therewith.
 
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9.22 Costs and Expenses. Borrowers and Guarantors shall pay to Agent on demand
(except as limited by clause (g) of this Section 9.22) all reasonable
out-of-pocket costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
syndication, administration, collection, liquidation, enforcement and defense of
the Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all reasonable out-of-pocket costs and expenses of
filing or recording (including Uniform Commercial Code financing statement
filing taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees, if applicable); (b) reasonable, out-of-pocket costs
and expenses and fees for (i) insurance premiums, environmental audits, title
insurance premiums, surveys, assessments, engineering reports and inspections if
an Event of Default shall have occurred and be continuing, and (ii) appraisal
fees and search fees, background checks, reasonable, out-of-pocket costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Agent's customary charges and fees with respect thereto; (c) charges, fees or
expenses charged by any bank or issuer in connection with any Letter of Credit;
(d) if an Event of Default has occurred and is continuing, reasonable,
out-of-pocket costs and expenses of preserving and protecting the Collateral;
(e) out-of-pocket costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and liens
of Agent, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Agent or any Lender arising out
of the transactions contemplated hereby and thereby (including preparations for
and consultations concerning any such matters); (f) (i) all out-of-pocket
expenses and costs heretofore and from time to time hereafter incurred by Agent
during the course of periodic field examinations of the Collateral and each
Borrower's or Guarantor’s operations, which field examinations shall be
conducted no more than two (2) times in any twelve (12) month period, except
that, if the aggregate outstanding amount of Loans and Letter of Credit
Obligations shall be equal to or greater than $30,000,000 at any time, then such
field examinations shall be conducted no more than three (3) times in any twelve
(12) month period, and except that, on or after the occurrence and continuation
of an Event of Default, such field examinations shall be conducted at any time
or times as Agent may require, plus (ii) a per diem charge at Agent’s then
standard rate for Agent's examiners in the field and office (which rate as of
the date hereof is $850.00 per person per day); and (g) the reasonable,
out-of-pocket fees and disbursements of counsel (including legal assistants) to
Agent in connection with any of the foregoing, which fees and disbursements of
counsel (i) shall be payable by Borrowers within thirty (30) days after receipt
of an invoice therefor, and (ii) if not paid within such period or if Agent
shall not have received within such period a written notice from Borrowers of
any specific exceptions thereto and such exceptions are not resolved within
thirty (30) days thereafter, shall be charged directly to the loan account(s) of
any Borrower pursuant to Section 6.4(b) hereof.
 
9.23 Further Assurances. At the request of Agent at any time and from time to
time, each Borrower and Guarantor shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Agent may at any time and from time to time request a certificate
from an officer of each Borrower and Guarantor representing that all conditions
precedent to the making of Loans and providing Letters of Credit contained in
Section 4.2 hereof are satisfied. In the event of such request by Agent, Agent
and Lenders may, at Agent’s option, cease to make any further Loans or provide
any further Letters of Credit until Agent has received such certificate and, in
addition, Agent has determined that such conditions are satisfied.
 
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9.24 Permitted Transfers to Foreign Parent Nonguarantor and its Affiliates.
Notwithstanding anything to the contrary contained herein, the Credit Parties
may:
 
(a) make any payments, in arrears, for (i) bona fide sales, marketing or R&D
services provided to such Credit Party by Foreign Parent Nonguarantor or any of
its Affiliates that is not a Credit Party, or (ii) assets sold and delivered to
such Credit Party by Foreign Parent Nonguarantor or any of its Affiliates that
is not a Credit Party, provided that (1) such services are rendered, or such
assets are sold, pursuant to the reasonable requirements of such Credit Party’s
business and upon fair and reasonable terms no less favorable to such Credit
Party than such Credit Party would obtain in a comparable arms’ length
transaction with an unaffiliated person, (2) in the case of payments for sold
assets, (A) such assets shall constitute Collateral, and (B) the maximum
aggregate amount of all such payments for such assets shall not exceed
$2,500,000 during the term of this Agreement, and (3) in the case of payments
for sales and marketing services (including any payments for bonuses or
incentive compensation made to the employees providing such services), in any
quarter, the amount of all such payments (whether to Foreign Parent
Nonguarantor, specific employees of any Credit Party or otherwise) shall not
exceed an amount equal to the product of (x) for the immediately preceding four
(4) fiscal quarters, the quotient of actual sales of the Credit Parties divided
by the total combined actual sales of Foreign Parent Nonguarantor and all of its
Subsidiaries (including the Credit Parties) (the “Credit Parties Sales
Percentage”), multiplied by (y) the total combined sales and marketing expenses
(excluding general and administrative expenses, but including any expenses
related to bonuses or incentive compensation provided to the sales and marketing
employees) incurred by Foreign Parent Nonguarantor and all of its Subsidiaries
(including the Credit Parties) during such quarter;
 
(b) make any payments for (i) bona fide legal and human resources services
provided to such Credit Party by Foreign Parent Nonguarantor or any of its
Affiliates that is not a Credit Party (excluding (1) any IT allocations and (2)
any fees and disbursements of outside professionals incurred in doing work for
the Credit Parties), provided that the maximum aggregate amount of all such
payments made by the Credit Parties (whether to Foreign Parent Nonguarantor,
specific employees of any Credit Party or otherwise) for legal and human
resources services shall not exceed $1,830,000 in any calendar year; (ii) bona
fide IT services provided to such Credit Party by Foreign Parent Nonguarantor or
any of its Affiliates that is not a Credit Party, provided that the maximum
aggregate amount of all such payments made by the Credit Parties (whether to
Foreign Parent Nonguarantor, specific employees of any Credit Party or
otherwise) for IT services shall not exceed $6,150,000 in any calendar year; and
(iii) bona fide finance services provided to such Credit Party by Foreign Parent
Nonguarantor or any of its Affiliates that is not a Credit Party (excluding (1)
any IT allocations and (2) any fees and disbursements of outside professionals
incurred in doing work for the Credit Parties), provided that the maximum
aggregate amount of all such payments made by the Credit Parties (whether to
Foreign Parent Nonguarantor, specific employees of any Credit Party or
otherwise) for finance services shall not exceed $1,940,000 in any calendar
year, and provided further that any payments for bonuses or other incentive
compensation made to the employees providing the services referred to in clauses
(i), (ii) or (iii) of this Section 9.24(b) shall (A) be excluded from the
payment caps contained in such clauses above, and (B) not exceed an amount equal
to the product of (x) the Credit Parties Sales Percentage, multiplied by (y) the
amount of the bonus or incentive compensation to be paid to such employee;
 
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(c) make any payments for compensation (including base salary, bonuses and other
incentive compensation, benefits and travel and entertainment expenses related
to business), of the Chief Executive Officer, Chief Financial Officer and Senior
Vice President of Product Lines and Worldwide Sales (collectively, the “Shared
Executives”), provided that, the amount of any such payment made by the Credit
Parties (whether to Foreign Parent Nonguarantor, directly to the individual
serving in such position at the time of such payment or otherwise) for
compensation of any Shared Executive shall not exceed an amount equal to the
product of (x) the Credit Parties Sales Percentage, multiplied by (y) the amount
of such compensation to be paid to such Shared Executive;
 
(d) make payments to third party vendors for assets purchased by, or services
rendered to, Foreign Parent Nonguarantor or any of its Affiliates that is not a
Credit Party, provided that (i) no Default or Event of Default has occurred and
is continuing or would occur as a result of such vendor payment, (ii) the Excess
Availability, after giving effect to such vendor payment, shall be equal to or
greater than $10,000,000, (iii) the maximum aggregate amount of all such vendor
payments, at any one time, made by the Credit Parties net of any cash
reimbursements therefor received by the Credit Parties from Foreign Parent
Nonguarantor, or any of its Affiliates that is not a Credit Party, shall not
exceed $2,000,000 during the term of this Agreement, and (iv) the Credit Parties
shall receive such cash reimbursements within 45 calendar days of the date such
vendor payment was originally made by a Credit Party to a third party vendor:
and
 
(e) to the extent incurred prior to the Effective Date and not yet paid, and to
the extent reasonably approved of by Agent, make payments directly to third
party vendors, on behalf of Foreign Parent Nonguarantor or any of its Affiliates
that is not a Credit Party, for costs and expenses incurred in connection with
the acquisition of Parent Guarantor by Foreign Parent Nonguarantor in an
aggregate amount not to exceed $2,000,000, provided that such payments are
reimbursed in full, in cash, to such Credit Party within ninety (90) days after
the Effective Date, and provided further that the amount of any costs and
expenses paid by a Credit Party pursuant to this Subsection (e) and not yet
repaid in full in cash will reduce the amount of any payments permitted to be
made under Subsection (d) above.
 
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
 
10.1 Events of Default. The occurrence or existence of any one or more of the
following events are referred to herein individually as an “Event of Default”,
and collectively as “Events of Default”:
 
(a) (i) any Borrower fails to pay any of the Obligations when due and such
failure shall continue for two (2) Business Days, or (ii) any Borrower or
Guarantor fails to perform any of the covenants contained in Sections 7.2, 7.3,
7.4, 9.1(b), 9.1(c), 9.2, 9.3, 9.4, 9.6, 9.13, 9.14, 9.15, 9.16, 9.19 and 9.21
of this Agreement or in any other Financing Agreement and such failure shall
continue for thirty (30) days; provided, that such thirty (30) day period shall
not apply in the case of: (A) any failure to observe any such covenant which is
not capable of being cured at all or within such thirty (30) day period or which
has been the subject of two (2) prior failures within a twelve (12) month period
or (B) a willful breach by any Borrower or Guarantor of Section 7.2 hereof, or
(iii) any Borrower or Guarantor fails to perform any of the terms, covenants,
conditions or provisions contained in this Agreement other than those described
in Sections 10.1(a)(i) and 10.1(a)(ii) above;
 
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(b) any representation, warranty or statement of fact made by any Borrower or
any Guarantor to Agent in this Agreement, the other Financing Agreements or any
other written agreement, schedule, Borrowing Base Certificate or otherwise shall
when made or deemed made be false or misleading in any material respect;
 
(c) any Guarantor revokes or terminates, or purports to revoke or terminate, or
fails to perform any of the terms, covenants, conditions or provisions of, any
guarantee of the Obligations, endorsement or other agreement of such party in
favor of Agent or any Lender
 
(d) any judgment for the payment of money is rendered against any Borrower or
any Guarantor in excess of $2,500,000 in any one case or in excess of $5,000,000
in the aggregate (to the extent not covered by insurance) and shall remain
undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower, any Guarantor or any of the
Collateral having a value in excess of $2,500,000;
 
(e) Operating Company dissolves or suspends or discontinues doing business such
that such dissolution, suspension or discontinuation would, or would reasonably
be likely to, have a Material Adverse Effect;
 
(f) any Borrower or any Guarantor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;
 
(g) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against any Borrower, any Guarantor or all or a substantial part of its
properties and such petition or application is not dismissed within sixty (60)
days after the date of its filing or any Borrower or any Guarantor shall file
any answer admitting or not contesting such petition or application or indicates
its consent to, acquiescence in or approval of, any such action or proceeding or
the relief requested is granted sooner;
 
(h) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed (i) by any Borrower or any Guarantor seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to its debts,
or (ii) against all or any part of the Collateral constituting Accounts,
Equipment, deposit accounts and proceeds thereof; provided that, notwithstanding
anything to the contrary in this clause (h), any such case or proceeding filed
by any Borrower or Guarantor as set forth in subclause (i) above shall
constitute an Event of Default;
 
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(i) any default in respect of any Indebtedness for borrowed money of any
Borrower or any Guarantor (other than Indebtedness owing to Agent and Lenders
hereunder), in any case in an amount in excess of $10,000,000, which default
continues for more than the applicable cure period, if any, with respect thereto
and/or is not waived in writing by the other parties thereto;
 
(j) any material provision hereof or of any of the other Financing Agreements
shall for any reason cease to be valid, binding and enforceable with respect to
any party hereto or thereto (other than Agent) in accordance with its terms, or
any Borrower or other Credit Party shall challenge the enforceability hereof or
thereof, or shall assert in writing, or take any action or fail to take any
action based on the assertion that any material provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein);
 
(k) an ERISA Event shall occur which results in or could reasonably be expected
to result in a Material Adverse Effect;
 
(l) any Change of Control;
 
(m) the indictment by any Governmental Authority of any Borrower or any
Guarantor of which any Borrower, any Guarantor or Agent receives notice, as to
which there is a reasonable possibility of an adverse determination under any
criminal statute or commencement of criminal or civil proceedings against such
Borrower, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $1,000,000 or (ii) any other property of any Borrower which
is necessary or material to the conduct of its business; or
 
(n) there shall be an event of default under any of the other Financing
Agreements.
 
10.2 Remedies.
 
(a) At any time an Event of Default exists or has occurred and is continuing,
Agent and Lenders shall have all rights and remedies provided in this Agreement,
the other Financing Agreements, the UCC and other applicable law, all of which
rights and remedies may be exercised without notice to or consent by any
Borrower or any Guarantor, except as such notice or consent is expressly
provided for hereunder or required by applicable law. All rights, remedies and
powers granted to Agent and Lenders hereunder, under any of the other Financing
Agreements, the UCC or other applicable law, are cumulative, not exclusive and
enforceable, in Agent's discretion, alternatively, successively, or concurrently
on any one or more occasions, and shall include, without limitation, the right
to apply to a court of equity for an injunction to restrain a breach or
threatened breach by any Borrower or Guarantor of this Agreement or any of the
other Financing Agreements. Agent may, at any time or times, proceed directly
against any Borrower or any Guarantor to collect the Obligations without prior
recourse to any Guarantor or any of the Collateral.
 
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(b) Without limiting the generality of the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent may upon notice to
Borrowers, accelerate the payment of all Obligations and demand immediate
payment thereof to Agent for itself and the benefit of Lenders (provided, that,
upon the occurrence and continuation of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable).
 
(c) Without limiting the foregoing, at any time an Event of Default exists or
has occurred and is continuing, Agent may (i) with or without judicial process
or the aid or assistance of others, enter upon any premises on or in which any
of the Collateral may be located and take possession of the Collateral or
complete processing, manufacturing and repair of all or any portion of the
Collateral, (ii) require any Borrower or Guarantor, at Borrowers’ expense, to
assemble and make available to Agent any part or all of the Collateral at any
place and time designated by Agent, (iii) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (iv) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (v) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker's board,
at any office of Agent or elsewhere) at such prices or terms as Agent may deem
reasonable, for cash, upon credit or for future delivery, with Agent having the
right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
any Borrower or Guarantor, which right or equity of redemption is hereby
expressly waived and released by each Borrower and Guarantor and/or (vi)
terminate this Agreement. If any of the Collateral is sold or leased by Agent
upon credit terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by Agent. If
notice of disposition of Collateral is required by law, ten (10) days prior
notice by Agent to Borrowers designating the time and place of any public sale
or the time after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice thereof and
each Borrower and Guarantor waives any other notice. In the event Agent
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, each Borrower and Guarantor waives the
posting of any bond which might otherwise be required. At any time an Event of
Default exists or has occurred and is continuing, upon Agent’s request,
Borrowers shall furnish cash collateral to Agent for the Letter of Credit
Obligations. Such cash collateral shall be in the amount equal to one hundred
two percent (102%) of the amount of the Letter of Credit Obligations plus the
amount of any fees and expenses payable in connection therewith through the end
of the latest expiration date of the Letters of Credit giving rise to such
Letter of Credit Obligations.
 
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(d) At any time or times that an Event of Default exists or has occurred and is
continuing, Agent may enforce the rights of any Borrower or Guarantor against
any account debtor, secondary obligor or other obligor in respect of any of the
Accounts or other Receivables. Without limiting the generality of the foregoing,
Agent may, in its discretion, at such time or times (i) notify any or all
account debtors, secondary obligors or other obligors in respect thereof that
the Receivables have been assigned to Agent and that Agent has a security
interest therein and Agent may direct any or all account debtors, secondary
obligors and other obligors to make payment of Receivables directly to Agent,
(ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Receivables or other obligations included in the Collateral and
thereby discharge or release the account debtor or any secondary obligors or
other obligors in respect thereof without affecting any of the Obligations,
(iii) demand, collect or enforce payment of any Receivables or such other
obligations, but without any duty to do so, and Agent and Lenders shall not be
liable for any failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto (other than gross
negligence or willful misconduct) and (iv) take whatever other action Agent may
deem necessary or desirable for the protection of its interests and the
interests of Lenders. At any time that an Event of Default exists or has
occurred and is continuing, at Agent’s request, all invoices and statements sent
to any account debtor shall state that the Accounts and such other obligations
have been assigned to Agent and are payable directly and only to Agent and
Borrowers and Guarantors shall deliver to Agent such originals of documents
evidencing the sale and delivery of goods or the performance of services giving
rise to any Accounts as Agent may require. In the event any account debtor
returns Inventory when an Event of Default exists or has occurred and is
continuing, Borrowers shall, upon Agent’s request, hold the returned Inventory
in trust for Agent, segregate all returned Inventory from all of its other
property, dispose of the returned Inventory solely according to Agent’s
instructions, and not issue any credits, discounts or allowances with respect
thereto without Agent’s prior written consent.
 
(e) To the extent that applicable law imposes duties on Agent or any Lender to
exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law), each Borrower and Guarantor acknowledges and agrees that
it is not commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as any Borrower or Guarantor, for
expressions of interest in acquiring all or any portion of the Collateral, (vii)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing Internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, (xi) to purchase insurance or credit enhancements to
insure Agent or Lenders against risks of loss, collection or disposition of
Collateral or to provide to Agent or Lenders a guaranteed return from the
collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Borrower and Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any Borrower
or Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.
 
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(f) For the purpose of enabling Agent to exercise the rights and remedies
hereunder, each Borrower and Guarantor hereby grants to Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable at any time an
Event of Default shall exist or have occurred and for so long as the same is
continuing) without payment of royalty or other compensation to any Borrower or
Guarantor, to use, assign, license or sublicense any of the trademarks,
service-marks, trade names, business names, trade styles, designs, logos and
other source of business identifiers and other Intellectual Property and general
intangibles now owned or hereafter acquired by any Borrower or Guarantor,
wherever the same maybe located, including in such license reasonable access to
all media in which any of the licensed items may be recorded or stored and to
all computer programs used for the compilation or printout thereof.
 
(g) At any time an Event of Default exists or has occurred and is continuing,
Agent may apply the cash proceeds of Collateral actually received by Agent from
any sale, lease, foreclosure or other disposition of the Collateral to payment
of the Obligations, in whole or in part and in accordance with the terms hereof,
whether or not then due or may hold such proceeds as cash collateral for the
Obligations. Each Borrower and each Guarantor shall remain liable to Agent and
Lenders for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and expenses.
 
(h) Without limiting the foregoing, upon the occurrence and continuation of a
Default or an Event of Default, (i) Agent and Lenders may without notice, (A)
cease making Loans or arranging for Letters of Credit or reduce the lending
formulas or amounts of Loans and Letters of Credit available to Borrowers and/or
(B) terminate any provision of this Agreement providing for any future Loans or
Letters of Credit to be made by Agent and Lenders to Borrowers and (ii) Agent
may, at its option, establish such Reserves as Agent determines, without
limitation or restriction, notwithstanding anything to the contrary contained
herein.
 
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
 
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver;
California Judicial Reference.
 
(a) The validity, interpretation and enforcement of this Agreement and the other
Financing Agreements (except as otherwise provided therein) and any dispute
arising out of the relationship between the parties hereto, whether in contract,
tort, equity or otherwise, shall be governed by the internal laws of the State
of California but excluding any principles of conflicts of law or other rule of
law that would cause the application of the law of any jurisdiction other than
the laws of the State of California.
 
(b) Borrowers, Guarantors, Lenders and Agent irrevocably consent and submit to
the non-exclusive jurisdiction of the state and federal courts located in Los
Angeles County, California, whichever Agent may elect, and waive any objection
based on venue or forum non conveniens with respect to any action instituted
therein arising under this Agreement or any of the other Financing Agreements or
in any way connected with or related or incidental to the dealings of the
parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Agent and Lenders shall
have the right to bring any action or proceeding against any Borrower or
Guarantor or its or their property in the courts of any other jurisdiction which
Agent deems necessary or appropriate in order to realize on the Collateral or to
otherwise enforce its rights against any Borrower or Guarantor or its or their
property).
 
(c) Each Borrower and Guarantor hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent’s option,
by service upon any Borrower or Guarantor in any other manner provided under the
rules of any such courts. Within thirty (30) days after such service, such
Borrower or Guarantor shall appear in answer to such process, failing which such
Borrower or Guarantor shall be deemed in default and judgment may be entered by
Agent against such Borrower or Guarantor for the amount of the claim and other
relief requested.
 
(d) BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS,
GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT ANY BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
 
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(e) IF ANY ACTION OR PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA
BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO (INCLUDING WITHOUT
LIMITATION ANY OTHER FINANCING AGREEMENT), (i) THE COURT SHALL, AND IS HEREBY
DIRECTED TO, MAKE A GENERAL REFERENCE PURSUANT TO CALIFORNIA CODE OF CIVIL
PROCEDURE SECTION 638 TO A REFEREE OR REFEREES TO HEAR AND DETERMINE ALL OF THE
ISSUES IN SUCH ACTION OR PROCEEDING (WHETHER OF FACT OR OF LAW) AND TO REPORT A
STATEMENT OF DECISION, PROVIDED THAT AT THE OPTION OF AGENT ANY SUCH ISSUES
PERTAINING TO A “PROVISIONAL REMEDY” AS DEFINED IN CALIFORNIA CODE OF CIVIL
PROCEDURE SECTION 1281.8 SHALL BE HEARD AND DETERMINED BY THE COURT, AND (ii)
BORROWERS SHALL BE JOINTLY AND SEVERALLY RESPONSIBLE TO PAY ALL FEES AND
EXPENSES OF ANY REFEREE APPOINTED IN SUCH ACTION OR PROCEEDING.
 
(f) Agent and Lenders shall not have any liability to any Borrower or Guarantor
(whether in tort, contract, equity or otherwise) for losses suffered by such
Borrower or Guarantor in connection with, arising out of, or in any way related
to the transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined that
the losses were the result of acts or omissions constituting gross negligence or
willful misconduct of Agent or any Lender. In any such litigation, Agent and
Lenders shall be entitled to the benefit of the rebuttable presumption that it
acted in good faith and with the exercise of ordinary care in the performance by
it of the terms of this Agreement. Each Borrower and Guarantor: (i) certifies
that neither Agent, any Lender nor any representative, agent or attorney acting
for or on behalf of Agent or any Lender has represented, expressly or otherwise,
that Agent and Lenders would not, in the event of litigation, seek to enforce
any of the waivers provided for in this Agreement or any of the other Financing
Agreements and (ii) acknowledges that in entering into this Agreement and the
other Financing Agreements, Agent and Lenders are relying upon, among other
things, the waivers and certifications set forth in this Section 11.1 and
elsewhere herein and therein.
 
11.2 Amendments and Waivers.
 
(a) Neither this Agreement nor any other Financing Agreement nor any terms
hereof or thereof may be amended, waived, discharged or terminated unless such
amendment, waiver, discharge or termination is in writing signed by Agent and
the Required Lenders or at Agent’s option, by Agent with the authorization or
consent of the Required Lenders, and as to amendments to any of the Financing
Agreements (other than with respect to any provision of Section 12 hereof), by
any Borrower and such amendment, waiver, discharger or termination shall be
effective and binding as to all Lenders only in the specific instance and for
the specific purpose for which given; except, that, no such amendment, waiver,
discharge or termination shall:
 
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(i) reduce the interest rate or any fees or extend the time of payment of
principal, interest or any fees or reduce the principal amount of any Loan or
Letters of Credit, in each case without the consent of each Lender directly
affected thereby,
 
(ii) increase the Commitment of any Lender over the amount thereof then in
effect or provided hereunder, in each case without the consent of the Lender
directly affected thereby,
 
(iii) release any Collateral (except as expressly required hereunder or under
any of the other Financing Agreements or applicable law and except as permitted
under Section 12.21(b) hereof), without the consent of Agent and all of Lenders,
 
(iv) reduce any percentage specified in the definition of Required Lenders,
without the consent of Agent and all of Lenders,
 
(v) consent to the assignment or transfer by any Borrower or Guarantor of any of
their rights and obligations under this Agreement, without the consent of Agent
and all of Lenders,
 
(vi) amend the priority of payment of Obligations as set forth in Section 6.4(a)
hereof, without the consent of Agent and all of Lenders, or
 
(vii) amend, modify or waive any terms of this Section 11.2 hereof, without the
consent of Agent and all of Lenders.
 
(b) Agent and Lenders shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its or their rights, powers
and/or remedies unless such waiver shall be in writing and signed as provided
herein. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Agent or any Lender of any right, power and/or remedy
on any one occasion shall not be construed as a bar to or waiver of any such
right, power and/or remedy which Agent or any Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
 
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(c) Notwithstanding anything to the contrary contained in Section 11.2(a) above,
in connection with any amendment, waiver, discharge or termination, in the event
that any Lender whose consent thereto is required shall fail to consent or fail
to consent in a timely manner (such Lender being referred to herein as a
“Non-Consenting Lender”), but the consent of any other Lenders to such
amendment, waiver, discharge or termination that is required are obtained, if
any, then Wachovia or, with the prior written consent of Wachovia, Borrowers
shall have the right, but not the obligation, at any time thereafter, and upon
the exercise by Wachovia of such right, such Non-Consenting Lender shall have
the obligation, to sell, assign and transfer to Wachovia or such Eligible
Transferee as Wachovia or, with the prior written consent of Wachovia, Borrowers
may specify, the Commitment of such Non-Consenting Lender and all rights and
interests of such Non-Consenting Lender pursuant thereto. Wachovia shall provide
the Non-Consenting Lender with prior written notice of its intent to exercise
its right under this Section, which notice shall specify on date on which such
purchase and sale shall occur. Such purchase and sale shall be pursuant to the
terms of an Assignment and Acceptance (whether or not executed by the
Non-Consenting Lender), except that on the date of such purchase and sale,
Wachovia, or such Eligible Transferee specified by Wachovia or Borrowers, as
applicable, shall pay to the Non-Consenting Lender (except as Wachovia and such
Non-Consenting Lender may otherwise agree) the amount equal to: (i) the
principal balance of the Loans held by the Non-Consenting Lender outstanding as
of the close of business on the business day immediately preceding the effective
date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect
of interest and fees payable to the Non-Consenting Lender to the effective date
of the purchase (but in no event shall the Non-Consenting Lender be deemed
entitled to any early termination fee), minus (iii) the amount of the closing
fee received by the Non-Consenting Lender pursuant to the terms hereof or of any
of the other Financing Agreements multiplied by the fraction, the numerator of
which is the number of months remaining in the then current term of the Credit
Facility and the denominator of which is the number of months in the then
current term thereof. Such purchase and sale shall be effective on the date of
the payment of such amount to the Non-Consenting Lender and the Commitment of
the Non-Consenting Lender shall terminate on such date.
 
(d) The consent of Agent shall be required for any amendment, waiver or consent
affecting the rights or duties of Agent hereunder or under any of the other
Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Equipment
shall not be deemed an amendment to the advance rates provided for in this
Section 11.2. Notwithstanding anything to the contrary contained in Section
11.2(a) above, (i) in the event that Agent shall agree that any items otherwise
required to be delivered to Agent as a condition of the initial Loans and
Letters of Credit hereunder may be delivered after the date hereof, Agent may,
in its discretion, agree to extend the date for delivery of such items or take
such other action as Agent may deem appropriate as a result of the failure to
receive such items as Agent may determine or may waive any Event of Default as a
result of the failure to receive such items, in each case without the consent of
any Lender and (ii) Agent may consent to any change in the type of organization,
jurisdiction of organization or other legal structure of any Borrower, Guarantor
or any of their Subsidiaries and amend the terms hereof or of any of the other
Financing Agreements as may be necessary or desirable to reflect any such
change, in each case without the approval of any Lender.
 
11.3 Waiver of Counterclaims. Each Borrower and Guarantor waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
 
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11.4 Indemnification. Each Borrower and Guarantor shall, jointly and severally,
indemnify and hold Agent and each Lender, and their respective officers,
directors, agents, employees, advisors and counsel and their respective
Affiliates (each such person being an “Indemnitee”), harmless from and against
any and all losses, claims, damages, liabilities, costs or expenses (including
attorneys’ fees and expenses) imposed on, incurred by or asserted against any of
them in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution,
delivery, enforcement, performance or administration of this Agreement, any
other Financing Agreements, or any undertaking or proceeding related to any of
the transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the reasonable, out-of-pocket fees and expenses of counsel except that
Borrowers and Guarantors shall not have any obligation under this Section 11.4
to indemnify an Indemnitee with respect to a matter covered hereby resulting
from the gross negligence or willful misconduct of such Indemnitee or such
Indemnitee's officers, directors, agents, employees, advisors, counsel or
Affiliates (but without limiting the obligations of Borrowers or Guarantors as
to any other Indemnitee). To the extent that the undertaking to indemnify, pay
and hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrowers and Guarantors shall pay the
maximum portion which it is permitted to pay under applicable law to Agent and
Lenders in satisfaction of indemnified matters under this Section. To the extent
permitted by applicable law, no Borrower or Guarantor shall assert, and each
Borrower and Guarantor hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, any of the other Financing Agreements or any
undertaking or transaction contemplated hereby. No Indemnitee referred to above
shall be liable for any damages arising from the use by unintended recipients of
any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or any of the other Financing Agreements or the transaction
contemplated hereby or thereby. All amounts due under this Section shall be
payable upon demand. The foregoing indemnity shall survive the payment of the
Obligations and the termination of this Agreement.
 
SECTION 12. JOINT AND SEVERAL LIABILITY; SURETYSHIP WAIVERS; THE AGENT; ETC.
 
12.1 Independent Obligations; Subrogation. The Obligations of each Borrower
hereunder are joint and several. To the maximum extent permitted by law, each
Borrower hereby waives any claim, right or remedy which such Borrower now has or
hereafter acquires against any other Borrower that arises hereunder including,
without limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification, or participation in any claim, right
or remedy of Agent or any Lender against any Borrower or any Collateral which
Agent now has or hereafter acquires, whether or not such claim, right or remedy
arises in equity, under contract, by statute, under common law or otherwise
until the Obligations are fully paid and finally discharged. In addition, each
Borrower hereby waives any right to proceed against the other Borrowers, now or
hereafter, for contribution, indemnity, reimbursement, and any other suretyship
rights and claims, whether direct or indirect, liquidated or contingent, whether
arising under express or implied contract or by operation of law, which any
Borrower may now have or hereafter have as against the other Borrowers with
respect to the Obligations until the Obligations are fully paid and finally
discharged. Each Borrower also hereby waives any rights of recourse to or with
respect to any asset of the other Borrowers until the Obligations are fully paid
and finally discharged.
 
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12.2 Authority to Modify Obligations and Security. Each Borrower authorizes
Agent, without notice or demand and without affecting any Borrowers’ liability
hereunder, from time to time, whether before or after any notice of termination
hereof or before or after any default in respect of the Obligations, to: (a)
renew, extend, accelerate, or otherwise change the time for payment of, or
otherwise change any other term or condition of, any document or agreement
evidencing or relating to any Obligations as such Obligations relate solely to
the other Borrowers, including, without limitation, to increase or decrease the
rate of interest thereon; (b) accept, substitute, waive, defease, increase,
release, exchange or otherwise alter any Collateral, in whole or in part,
securing the other Borrowers’ Obligations; (c) apply any and all such Collateral
of the other Borrowers and direct the order or manner of sale thereof as Agent,
in its sole discretion, may determine; (d) deal with the other Borrowers as
Agent may elect; (e) in Agent’s sole discretion, settle, release on terms
satisfactory to them, or by operation of law or otherwise, compound, compromise,
collect or otherwise liquidate any of the other Borrowers’ Obligations and/or
any of the Collateral in any manner, and bid and purchase any of the collateral
at any sale thereof; (vi) apply any and all payments or recoveries from the
other Borrowers as Agent, in its sole discretion, may determine, whether or not
such indebtedness relates to the Obligations; all whether such Obligations are
secured or unsecured or guaranteed or not guaranteed by others; and (vii) apply
any sums realized from Collateral furnished by the other Borrowers upon any of
its indebtedness or obligations to Agent as Agent, in its sole discretion, may
determine, whether or not such indebtedness relates to the Obligations; all
without in any way diminishing, releasing or discharging the liability of any
Borrower hereunder.
 
12.3 Waiver of Defenses. Upon and during the continuation of an Event of Default
by any Borrower in respect of any Obligations, Agent may, at its option and
without notice to any Borrower, proceed directly against any Borrower to collect
and recover the full amount of the liability hereunder, or any portion thereof,
and each Borrower waives any right to require Agent to: (a) proceed against the
other Borrowers or any other person whomsoever; (b) proceed against or exhaust
any Collateral given to or held by Agent in connection with the Obligations; (c)
give notice of the terms, time and place of any public or private sale of any of
the Collateral except as otherwise provided herein; or (d) pursue any other
remedy in Agent’s power whatsoever. A separate action or actions may be brought
and prosecuted against any Borrower whether or not action is brought against the
other Borrowers and whether the other Borrowers be joined in any such action or
actions; and each Borrower waives the benefit of any statute of limitations
affecting the liability hereunder or the enforcement hereof, and agrees that any
payment of any Obligations or other act which shall toll any statute of
limitations applicable thereto shall similarly operate to toll such statute of
limitations applicable to the liability hereunder.
 
12.4 Exercise of Lender’s Rights. Each Borrower hereby authorizes and empowers
Agent in its sole discretion, without any notice or demand to such Borrower
whatsoever and without affecting the liability of such Borrower hereunder, to
exercise any right or remedy which Agent may have available to it against the
other Borrowers.
 
12.5 Additional Waivers. Each Borrower waives any defense arising by reason of
any disability or other defense of the other Borrowers or by reason of the
cessation from any cause whatsoever of the liability of the other Borrowers or
by reason of any act or omission of Agent or others which directly or indirectly
results in or aids the discharge or release of the other Borrowers or any
Obligations or any Collateral by operation of law or otherwise. The Obligations
shall be enforceable against each Borrower without regard to the validity,
regularity or enforceability of any of the Obligations with respect to any of
the other Borrowers or any of the documents related thereto or any collateral
security documents securing any of the Obligations. No exercise by Agent of, and
no omission of Agent to exercise, any power or authority recognized herein and
no impairment or suspension of any right or remedy of Agent against any Borrower
or any Collateral shall in any way suspend, discharge, release, exonerate or
otherwise affect any of the Obligations or any Collateral furnished by the
Borrowers or give to the Borrowers any right of recourse against Agent. Each
Borrower specifically agrees that the failure of Agent: (a) to perfect any lien
on or security interest in any property heretofore or hereafter given any
Borrower to secure payment of the Obligations, or to record or file any document
relating thereto or (b) to file or enforce a claim against the estate (either in
administration, bankruptcy or other proceeding) of any Borrower shall not in any
manner whatsoever terminate, diminish, exonerate or otherwise affect the
liability of any Borrower hereunder.
 
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12.6 Additional Indebtedness. Additional Obligations may be created from time to
time at the request of any Borrower and without further authorization from or
notice to any other Borrower even though the borrowing Borrower’s financial
condition may deteriorate since the date hereof. Each Borrower waives the right,
if any, to require Agent to disclose to such Borrower any information it may now
have or hereafter acquire concerning the other Borrowers’ character, credit,
Collateral, financial condition or other matters. Each Borrower has established
adequate means to obtain from the other Borrowers, on a continuing basis,
financial and other information pertaining to such Borrower’s business and
affairs, and assumes the responsibility for being and keeping informed of the
financial and other conditions of the other Borrowers and of all circumstances
bearing upon the risk of nonpayment of the Obligations which diligent inquiry
would reveal. Agent shall not need to inquire into the powers of any Borrower or
the authority of any of their respective officers, directors, partners or agents
acting or purporting to act in their behalf, and any Obligations created in
reliance upon the purported exercise of such power or authority is hereby
guaranteed. All Obligations of each Borrower to Agent heretofore, now or
hereafter created shall be deemed to have been granted at each Borrower’s
special insistence and request and in consideration of and in reliance upon this
Agreement.
 
12.7 Waiver of Notices. Each Borrower and each Guarantor hereby expressly waives
diligence, all rights of setoff and counterclaim against Agent and Lenders, and
all demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and chattel paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, including notice of the
existence, creation or incurring of any new or additional Obligations, except
such as are expressly provided for herein. No notice to or demand on any
Borrower which Agent may elect to give shall entitle such Borrower to any other
or further notice or demand in the same, similar or other circumstances.
 
12.8 Subordination. Except as otherwise provided in this Section 12.8, and
except for expenses paid by one Borrower for the other Borrower’s benefit, any
indebtedness of any Borrower now or hereafter owing to any other Borrower is
hereby subordinated to the Obligations, whether heretofore, now or hereafter
created, and whether before or after notice of termination hereof, and,
following the occurrence and during the continuation of an Event of Default, no
Borrower shall, without the prior consent of Agent, pay in whole or in part any
of such indebtedness nor will any such Borrower accept any payment of or on
account of any such indebtedness at any time while such Borrower remains liable
hereunder. At the request of Agent, after the occurrence and during the
continuance of an Event of Default, each Borrower shall pay to Agent all or any
part of such subordinated indebtedness and any amount so paid to Agent at its
request shall be applied to payment of the Obligations. Each payment on the
indebtedness of any Borrower to the other Borrowers received in violation of any
of the provisions hereof shall be deemed to have been received by any other
Borrower as trustee for Agent and Lenders and shall be paid over to Agent
immediately on account of the Obligations, but without otherwise affecting in
any manner any such Borrower’s liability under any of the provisions of this
Agreement. Each Borrower agrees to file all claims against the other Borrowers
in any bankruptcy or other proceeding in which the filing of claims is required
by law in respect of any indebtedness of the other Borrowers to such Borrower,
and Agent shall be entitled to all of any such Borrower’s rights thereunder. If
for any reason, after Agent's request pertaining to any such filing, any such
Borrower fails to file such claim at least thirty (30) days prior to the last
date on which such claim should be filed, Agent, as such Borrower’s
attorney-in-fact, is hereby authorized to do so in Borrowers’ name or, in
Agent’s discretion, to assign such claim to, and cause a proof of claim to be
filed in the name of, Agent’s nominee. In all such cases, whether in
administration, bankruptcy or otherwise, the person or persons authorized to pay
such claim shall pay to Agent the full amount payable on the claim in the
proceeding, and to the full extent necessary for that purpose any such Borrower
hereby assigns to Agent all such Borrower’s rights to any payments or
distributions to which such Borrower otherwise would be entitled. If the amount
so paid is greater than any such Borrower’s liability hereunder, Agent will pay
the excess amount to the person legally entitled thereto.
 
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12.9 Revival. If any payments of money or transfers of property made to Agent
and Lenders by any Borrower should for any reason subsequently be declared to be
fraudulent (within the meaning of any state or federal law relating to
fraudulent conveyances), preferential or otherwise voidable or recoverable in
whole or in part for any reason (hereinafter collectively called “voidable
transfers”) under the Bankruptcy Code or any other federal or state law and
Agent or any Lender is required to repay or restore any such voidable transfer,
or the amount or any portion thereof, then as to any such voidable transfer or
the amount repaid or restored and all reasonable costs and expenses (including
reasonable attorneys’ fees) of Agent or such Lender related thereto, such
Borrower’s liability hereunder shall automatically be revived, reinstated and
restored and shall exist as though such voidable transfer had never been made to
Agent or such Lender.
 
12.10 Understanding of Waivers. Each Borrower warrants and agrees that the
waivers set forth in this Section 12 are made with full knowledge of their
significance and consequences. If any of such waivers are determined to be
contrary to any applicable law or public policy, such waivers shall be effective
only to the maximum extent permitted by law.
 
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12.11 Appointment, Powers and Immunities. Each Lender irrevocably designates,
appoints and authorizes Wachovia to act as Agent hereunder and under the other
Financing Agreements with such powers as are specifically delegated to Agent by
the terms of this Agreement and of the other Financing Agreements, together with
such other powers as are reasonably incidental thereto. Agent (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement
and in the other Financing Agreements, and shall not by reason of this Agreement
or any other Financing Agreement be a trustee or fiduciary for any Lender; (b)
shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any of the other
Financing Agreements, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Financing Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any
failure by any Borrower or any Guarantor or any other Person to perform any of
its obligations hereunder or thereunder; and (c) shall not be responsible to
Lenders for any action taken or omitted to be taken by it hereunder or under any
other Financing Agreement or under any other document or instrument referred to
or provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may employ
agents and attorneys in fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys in fact selected by it in good faith.
Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement
(if and to the extent permitted herein) in form and substance satisfactory to
Agent shall have been delivered to and acknowledged by Agent.
 
12.12 Reliance by Agent. Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telecopy,
telex, telegram or cable) believed by it to be genuine and correct and to have
been signed or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by Agent. As to any matters not expressly provided for by this
Agreement or any other Financing Agreement, Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or thereunder in
accordance with instructions given by the Required Lenders or all of Lenders as
is required in such circumstance, and such instructions of such Agents and any
action taken or failure to act pursuant thereto shall be binding on all Lenders.
 
12.13 Events of Default.
 
(a) Agent shall not be deemed to have knowledge or notice of the occurrence of a
Default or an Event of Default or other failure of a condition precedent to the
Loans and Letters of Credit hereunder, unless and until Agent has received
written notice from a Lender, or Borrower specifying such Event of Default or
any unfulfilled condition precedent, and stating that such notice is a “Notice
of Default or Failure of Condition”. In the event that Agent receives such a
Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.17) take such action
with respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders to the extent provided for herein;
provided, that, unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to or by reason of such Event of Default or
failure of condition precedent, as it shall deem advisable in the best interest
of Lenders. Without limiting the foregoing, and notwithstanding the existence or
occurrence and continuance of an Event of Default or any other failure to
satisfy any of the conditions precedent set forth in Section 4 of this Agreement
to the contrary, unless and until otherwise directed by the Required Lenders,
Agent may, but shall have no obligation to, continue to make Loans and issue or
cause to be issued any Letter of Credit for the ratable account and risk of
Lenders from time to time if Agent believes making such Loans or issuing or
causing to be issued such Letter of Credit is in the best interests of Lenders.
 
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(b) Except with the prior written consent of Agent, no Lender may assert or
exercise any enforcement right or remedy in respect of the Loans, Letter of
Credit Obligations or other Obligations, as against any Borrower or Guarantor or
any of the Collateral or other property of any Borrower or Guarantor.
 
12.14 Wachovia in its Individual Capacity. With respect to its Commitment and
the Loans made and Letters of Credit issued or caused to be issued by it (and
any successor acting as Agent), so long as Wachovia shall be a Lender hereunder,
it shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as Agent, and the term “Lender”
or “Lenders” shall, unless the context otherwise indicates, include Wachovia in
its individual capacity as Lender hereunder. Wachovia (and any successor acting
as Agent) and its Affiliates may (without having to account therefor to any
Lender) lend money to, make investments in and generally engage in any kind of
business with Borrowers (and any of its Subsidiaries or Affiliates) as if it
were not acting as Agent, and Wachovia and its Affiliates may accept fees and
other consideration from any Borrower or Guarantor and any of its Subsidiaries
and Affiliates for services in connection with this Agreement or otherwise
without having to account for the same to Lenders.
 
12.15 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrowers hereunder and without limiting any obligations of
Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement.
 
12.16 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it has,
independently and without reliance on Agent or other Lender, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of Borrowers and Guarantors and has made its own decision to enter into
this Agreement and that it will, independently and without reliance upon Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Financing
Agreements. Agent shall not be required to keep itself informed as to the
performance or observance by any Borrower or Guarantor of any term or provision
of this Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties or
books of any Borrower or Guarantor. Agent will use reasonable efforts to provide
Lenders with any information received by Agent from any Borrower or Guarantor
which is required to be provided to Lenders or deemed to be requested by Lenders
hereunder and with a copy of any Notice of Default or Failure of Condition
received by Agent from any Borrower or any Lender; provided, that, Agent shall
not be liable to any Lender for any failure to do so, except to the extent that
such failure is attributable to Agent's own gross negligence or willful
misconduct. Except for notices, reports and other documents expressly required
to be furnished to Lenders by Agent or deemed requested by Lenders hereunder,
Agent shall not have any duty or responsibility to provide any Lender with any
other credit or other information concerning the affairs, financial condition or
business of any Borrower or Guarantor that may come into the possession of
Agent.
 
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12.17 Failure to Act. Except for action expressly required of Agent hereunder
and under the other Financing Agreements, Agent shall in all cases be fully
justified in failing or refusing to act hereunder and thereunder unless it shall
receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.15 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
 
12.18 Additional Loans. Agent shall not make any Loans or provide any Letter of
Credit to any Borrower on behalf of Lenders intentionally and with actual
knowledge that such Loans or Letter of Credit would cause the aggregate amount
of the total outstanding Loans and Letters of Credit to Borrowers to exceed the
Borrowing Base, without the prior consent of all Lenders, except, that, Agent
may make such additional Loans or provide such additional Letter of Credit on
behalf of Lenders, intentionally and with actual knowledge that such Loans or
Letter of Credit will cause the total outstanding Loans and Letters of Credit to
Borrowers to exceed the Borrowing Base, as Agent may deem necessary or advisable
in its discretion, provided, that: (a) the total principal amount of the
additional Loans or additional Letters of Credit to any Borrower which Agent may
make or provide after obtaining such actual knowledge that the aggregate
principal amount of the Loans equal or exceed the Borrowing Bases of Borrowers,
plus the amount of Special Agent Advances made pursuant to Section 12.21(a)(ii)
hereof then outstanding, shall not exceed the aggregate amount equal to ten
percent (10%) of the Maximum Credit and shall not cause the total principal
amount of the Loans and Letters of Credit to exceed the Maximum Credit and (b)
no such additional Loan or Letter of Credit shall be outstanding more than
ninety (90) days after the date such additional Loan or Letter of Credit is made
or issued (as the case may be), except as the Required Lenders may otherwise
agree. Each Lender shall be obligated to pay Agent the amount of its Pro Rata
Share of any such additional Loans or Letters of Credit.
 
12.19 Concerning the Collateral and the Related Financing Agreements. Each
Lender authorizes and directs Agent to enter into this Agreement and the other
Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
 
12.20 Field Audit, Examination Reports and other Information; Disclaimer by
Lenders. By signing this Agreement, each Lender:
 
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(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field audit or examination report and
report with respect to the Borrowing Base prepared or received by Agent (each
field audit or examination report and report with respect to the Borrowing Base
being referred to herein as a “Report” and collectively, “Reports”), appraisals
with respect to the Collateral and financial statements with respect Parent
Guarantor and its Subsidiaries received by Agent;
 
(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (ii) shall not be liable for any information contained in
any Report, appraisal or financial statement;
 
(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or any other party performing any audit or
examination will inspect only specific information regarding Borrowers and
Guarantors and will rely significantly upon Borrowers’ and Guarantors’ books and
records, as well as on representations of Borrowers’ and Guarantors’ personnel;
and
 
(d) agrees to keep all Reports confidential and strictly for its internal use in
accordance with the terms of Section 13.5 hereof, and not to distribute or use
any Report in any other manner.
 
12.21 Collateral Matters.
 
(a) Agent may, at its option, from time to time, at any time on or after an
Event of Default and for so long as the same is continuing or upon any other
failure of a condition precedent to the Loans and Letters of Credit hereunder,
make such disbursements and advances (“Special Agent Advances”) which Agent, in
its sole discretion, (i) deems necessary or desirable either to preserve or
protect the Collateral or any portion thereof or (ii) to enhance the likelihood
or maximize the amount of repayment by Borrowers and Guarantors of the Loans and
other Obligations, provided, that, (A) the aggregate principal amount of the
Special Agent Advances pursuant to this clause (ii) outstanding at any time,
plus the then outstanding principal amount of the additional Loans and Letters
of Credit which Agent may make or provide as set forth in Section 12.18 hereof,
shall not exceed the amount equal to ten percent (10%) percent of the Maximum
Credit and (B) the aggregate principal amount of the Special Agent Advances
pursuant to this clause (ii) outstanding at any time, plus the then outstanding
principal amount of the Loans, shall not exceed the Maximum Credit, except at
Agent’s option, provided, that, to the extent that the aggregate principal
amount of Special Agent Advances plus the then outstanding principal amount of
the Loans exceed the Maximum Credit the Special Agent Advances that are in
excess of the Maximum Credit shall be for the sole account and risk of Agent and
notwithstanding anything to the contrary set forth below, no Lender shall have
any obligation to provide its share of such Special Agent Advances in excess of
the Maximum Credit, or (iii) to pay any other amount chargeable to any Borrower
or Guarantor pursuant to the terms of this Agreement or any of the other
Financing Agreements consisting of (A) costs, fees and expenses and (B) payments
to issuing bank in respect of any Letter of Credit Obligations. The Special
Agent Advances shall be repayable on demand and together with all interest
thereon shall constitute Obligations secured by the Collateral. Special Agent
Advances shall not constitute Loans but shall otherwise constitute Obligations
hereunder. Interest on Special Agent Advances shall be payable at the Interest
Rate then applicable to Prime Rate Loans and shall be payable on demand. Without
limitation of its obligations pursuant to Section 6.9, each Lender agrees that
it shall make available to Agent, upon Agent's demand, in immediately available
funds, the amount equal to such Lender's Pro Rata Share of each such Special
Agent Advance. If such funds are not made available to Agent by such Lender,
such Lender shall be deemed a Defaulting Lender and Agent shall be entitled to
recover such funds, on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent’s option based on
the arithmetic mean determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of the three leading brokers of Federal funds transactions in New
York City selected by Agent) and if such amounts are not paid within three (3)
days of Agent’s demand, at the highest Interest Rate provided for in Section 3.1
hereof applicable to Prime Rate Loans.
 
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(b) Lenders hereby irrevocably authorize Agent, at its option and in its
discretion to release any security interest in, mortgage or lien upon, any of
the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting property being
sold or disposed of if any Borrower or Guarantor certifies to Agent that the
sale or disposition is made in compliance with Section 9.7 hereof (and Agent may
rely conclusively on any such certificate, without further inquiry), or (iii)
constituting property in which any Borrower or Guarantor did not own an interest
at the time the security interest, mortgage or lien was granted or at any time
thereafter, or (iv) having a value in the aggregate in any twelve (12) month
period of less than $6,500,000, and to the extent Agent may release its security
interest in and lien upon any such Collateral pursuant to the sale or other
disposition thereof, such sale or other disposition shall be deemed consented to
by Lenders, or (v) if required or permitted under the terms of any of the other
Financing Agreements, including any intercreditor agreement, or (vi) approved,
authorized or ratified in writing by all of Lenders. Except as provided above,
Agent will not release any security interest in, mortgage or lien upon, any of
the Collateral without the prior written authorization of all of Lenders. Upon
request by Agent at any time, Lenders will promptly confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to this
Section.
 
(c) Without any manner limiting Agent's authority to act without any specific or
further authorization or consent by the Required Lenders, each Lender agrees to
confirm in writing, upon request by Agent, the authority to release Collateral
conferred upon Agent under this Section. Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the security interest, mortgage or liens granted to Agent upon
any Collateral to the extent set forth above; provided, that, (i) Agent shall
not be required to execute any such document on terms which, in Agent's opinion,
would expose Agent to liability or create any obligations or entail any
consequence other than the release of such security interest, mortgage or liens
without recourse or warranty and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any security interest, mortgage
or lien upon (or obligations of any Borrower or Guarantor in respect of) the
Collateral retained by such Borrower or Guarantor.
 
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(d) Agent shall have no obligation whatsoever to any Lender or any other Person
to investigate, confirm or assure that the Collateral exists or is owned by any
Borrower or Guarantor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letters of Credit hereunder, or
whether any particular reserves are appropriate, or that the liens and security
interests granted to Agent pursuant hereto or any of the Financing Agreements or
otherwise have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent in this Agreement or in any of the other Financing
Agreements, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, subject to the other terms and
conditions contained herein, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent's own interest in the Collateral as
a Lender and that Agent shall have no duty or liability whatsoever to any other
Lender.
 
12.22 Agency for Perfection. Each Lender hereby appoints Agent and each other
Lender as agent and bailee for the purpose of perfecting the security interests
in and liens upon the Collateral of Agent in assets which, in accordance with
Article 9 of the UCC can be perfected only by possession (or where the security
interest of a secured party with possession has priority over the security
interest of another secured party) and Agent and each Lender hereby acknowledges
that it holds possession of any such Collateral for the benefit of Agent as
secured party. Should any Lender obtain possession of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent's request therefor
shall deliver such Collateral to Agent or in accordance with Agent's
instructions.
 
12.23 Successor Agent. Agent may resign as Agent upon thirty (30) days’ notice
to Lenders and Parent Guarantor. If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and
Parent Guarantor, a successor agent from among Lenders. Upon the acceptance by
the Lender so selected of its appointment as successor agent hereunder, such
successor agent shall succeed to all of the rights, powers and duties of the
retiring Agent and the term “Agent” as used herein and in the other Financing
Agreements shall mean such successor agent and the retiring Agent’s appointment,
powers and duties as Agent shall be terminated. After any retiring Agent’s
resignation hereunder as Agent, the provisions of this Section 12 shall inure to
its benefit as to any actions taken or omitted by it while it was Agent under
this Agreement. If no successor agent has accepted appointment as Agent by the
date which is thirty (30) days after the date of a retiring Agent’s notice of
resignation, the retiring Agent’s resignation shall nonetheless thereupon become
effective and Lenders shall perform all of the duties of Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.
 
12.24 Other Agent Designations. Agent may at any time and from time to time
determine that a Lender may, in addition, be a “Co-Agent”, “Syndication Agent”,
“Documentation Agent” or similar designation hereunder and enter into an
agreement with such Lender to have it so identified for purposes of this
Agreement. Any such designation shall be effective upon written notice by Agent
to Borrowers of any such designation. Any Lender that is so designated as a
Co-Agent, Syndication Agent, Documentation Agent or such similar designation by
Agent shall have no right, power, obligation, liability, responsibility or duty
under this Agreement or any of the other Financing Agreements other than those
applicable to all Lenders as such. Without limiting the foregoing, the Lenders
so identified shall not have or be deemed to have any fiduciary relationship
with any Lender and no Lender shall be deemed to have relied, nor shall any
Lender rely, on a Lender so identified as a Co-Agent, Syndication Agent,
Documentation Agent or such similar designation in deciding to enter into this
Agreement or in taking or not taking action hereunder.
 
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SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
 
13.1 Term.
 
(a) This Agreement and the other Financing Agreements shall continue in full
force and effect for a term ending on the date three (3) years from the date
hereof (the “Maturity Date”), unless sooner terminated pursuant to the terms
hereof. Borrowers may terminate this Agreement at any time upon ten (10)
Business Days' prior written notice to Agent (which notice shall be
irrevocable); provided, that this Agreement and all other Financing Agreements
must be terminated simultaneously. In addition, Agent may terminate this
Agreement at any time that an Event of Default has occurred and is continuing.
Upon the Maturity Date or any other effective date of termination of the
Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid
Obligations and shall furnish cash collateral to Agent (or at Agent’s option, a
letter of credit issued for the account of Borrowers and at Borrowers’ expense,
in form and substance satisfactory to Agent, by an issuer acceptable to Agent
and payable to Agent as beneficiary) in such amounts as Agent determines are
reasonably necessary to secure Agent and Lenders from loss, cost, damage or
expense, including reasonable attorneys' fees and expenses, in connection with
any contingent Obligations that are known or ascertainable or that are likely to
ripen, including issued and outstanding Letter of Credit Obligations and checks
or other payments provisionally credited to the Obligations and/or as to which
Agent or any Lender has not yet received final and indefeasible payment and any
continuing obligations of Agent or any Lender pursuant to any Deposit Account
Control Agreement. The amount of such cash collateral (or letter of credit, as
Agent may determine) as to any Letter of Credit Obligations shall be in the
amount equal to one hundred two percent (102%) of the amount of the Letter of
Credit Obligations plus the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of the
Letters of Credit giving rise to such Letter of Credit Obligations. Such
payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to the Agent Payment Account or such other bank
account of Agent, as Agent may, in its discretion, designate in writing to
Borrowers for such purpose. Interest shall be due until and including the next
Business Day, if the amounts so paid by Borrowers to the Agent Payment Account
or other bank account designated by Agent are received in such bank account
later than 12:00 noon, Pasadena, California time.
 
(b) No termination of this Agreement or any of the other Financing Agreements
shall relieve or discharge any Borrower or Guarantor of its respective duties,
obligations and covenants under this Agreement or any of the other Financing
Agreements until all Obligations (other than contingent indemnification
Obligations) have been fully discharged and paid, and Agent's continuing
security interest in the Collateral and the rights and remedies of Agent and
Lenders hereunder, under the other Financing Agreements and applicable law,
shall remain in effect until all such Obligations (other than contingent
indemnification Obligations) have been fully discharged and paid. Accordingly,
each Borrower and Guarantor waives any rights it may have under the UCC to
demand the filing of termination statements with respect to the Collateral and
Agent shall not be required to send such termination statements to Borrowers or
Guarantors, or to file them with any filing office, (i) unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations paid and satisfied in full in immediately available funds, and (ii)
except in the case of any sale or other disposition of such Collateral permitted
pursuant to Section 9.7 hereof.
 
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13.2 Interpretative Provisions.
 
(a) All terms used herein which are defined in Article 1, Article 8 or Article 9
of the UCC shall have the meanings given therein unless otherwise defined in
this Agreement.
 
(b) All references to the plural herein shall also mean the singular and to the
singular shall also mean the plural unless the context otherwise requires.
 
(c) All references to any Borrower, Guarantor, Agent and Lenders pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.
 
(d) The words “hereof”, “herein”, “hereunder”, “this Agreement” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
 
(e) The word “including” when used in this Agreement shall mean “including,
without limitation” and the word “will” when used in this Agreement shall be
construed to have the same meaning and effect as the word “shall”.
 
(f) An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.2 or is cured in a
manner satisfactory to Agent, if such Event of Default is capable of being cured
as determined by Agent.
 
(g) All references to the term “good faith” used herein when applicable to Agent
or any Lender shall mean, notwithstanding anything to the contrary contained
herein or in the UCC, honesty in fact in the conduct or transaction concerned.
Borrowers and Guarantors shall have the burden of proving any lack of good faith
on the part of Agent or any Lender alleged by any Borrower or Guarantor at any
time.
 
(h) Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations hereunder shall be computed unless
otherwise specifically provided herein, in accordance with GAAP as consistently
applied and using the same method for inventory valuation as used in the
preparation of the financial statements of Borrowers most recently received by
Agent prior to the date hereof. Notwithstanding anything to the contrary
contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term “unqualified
opinion” as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is unqualified and also does not include
any explanation, supplemental comment or other comment concerning the ability of
the applicable person to continue as a going concern or the scope of the audit.
 
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(i) 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”.
 
(j) Unless otherwise expressly provided herein, (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing or interpreting the statute or regulation.
 
(k) The captions and headings of this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.
 
(l) This Agreement and other Financing Agreements may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
 
(m) This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Borrowers and counsel to
Agent, and are the products of all parties. Accordingly, this Agreement and the
other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent’s or any Lender’s involvement in their preparation.
 
(n) Unless otherwise expressly provided in this Agreement or in the other
Financing Agreements, Article, Section, Exhibit and Schedule references herein
and therein are to the Financing Agreement in which such reference appears.
 
13.3 Notices.
 
(a) All notices, requests and demands hereunder shall be in writing and deemed
to have been given or made: if delivered in person, immediately upon delivery;
if by telex, telegram or facsimile transmission, immediately upon sending and
upon confirmation of receipt; if by nationally recognized overnight courier
service with instructions to deliver the next Business Day, one (1) Business Day
after sending; and if by certified mail, return receipt requested, five (5) days
after mailing. Notices delivered through electronic communications shall be
effective to the extent set forth in Section 13.3(b) below. All notices,
requests and demands upon the parties are to be given to the following addresses
(or to such other address as any party may designate by notice in accordance
with this Section):
 
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If to any Borrower:
Jazz Semiconductor, Inc.
4321 Jamboree Road
Newport Beach, California 92660
Attention: Chief Financial Officer
Telephone No.:   (949) 435-8000
Telecopy No.:     (949) 435-8200
   
If to Parent Guarantor:
Jazz Technologies, Inc.
4321 Jamboree Road
Newport Beach, California 92660
Attention: Chief Financial Officer
Telephone No.:   (949) 435-8000
Telecopy No.:    (949) 435-8200
   
If to Foreign Parent Nonguarantor:
Tower Semiconductor Ltd.
Ramat Gavriel Industrial Area
P.O. Box 619
Migdal Haemek Israel 23105
Attention: Chief Financial Officer
Telephone No.: +972-(4)-650-6418
Telecopy No.: +972-(4)-604-7242
   
with a copy to:
Cooley Godward LLP
101 California Street, 5th Floor
San Francisco, CA 94111-5800
Attention: Mischi a Marca
Telephone No.:   (415) 693-2148
Telecopy No.:     (415) 693-2222
   
with a copy to:
Yigal Arnon & Co.
1 Azrieli Center
Tel-Aviv 67021
Israel
Attention: David Schapiro
Telephone No.:   972-(3)-607-7726
Telecopy No.:     +972-(3)-608-7714
   
If to Agent:
Wachovia Capital Finance Corporation (Western)
251 South Lake Avenue, Suite 900
Pasadena, California 91101
Attention: Portfolio Manager
Telephone No.:   (626) 304-4900
Telecopy No.:     (626) 304-4949
   
with a copy to:
Mayer, Brown, Rowe & Maw LLP
350 South Grand Avenue, 25th Floor
Los Angeles, California 90071
Attention: Marshall Stoddard
Telephone No.:   (213) 229-9500
Telecopy No.:     (213) 625-0248

 
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(b) Notices and other communications to Agent hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet
websites) pursuant to procedures approved by Agent or as otherwise determined by
Agent. Unless Agent otherwise requires, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided, that, if such notice or other communication is not
given during the normal business hours of the recipient, such notice shall be
deemed to have been sent at the opening of business on the next Business Day for
the recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(i) of notification that such notice or communications is available and
identifying the website address therefor.
 
13.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
 
13.5 Confidentiality.
 
(a) Agent and each Lender shall use all reasonable efforts to keep confidential,
in accordance with its customary procedures for handling confidential
information and safe and sound lending practices, any non-public information
supplied to it by any Borrower or any Guarantor pursuant to this Agreement,
provided, that, nothing contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order, (ii) to bank examiners and other regulators, auditors and/or
accountants, in connection with any litigation to which Agent or such Lender is
a party, (iii) to any Lender or Participant (or prospective Lender or
Participant) or to any Affiliate of any Lender so long as such Lender or
Participant (or prospective Lender or Participant) or Affiliate shall have been
instructed to treat such information as confidential in accordance with this
Section 13.5, or (iv) subject to this Section 13.5, to counsel for Agent or any
Lender, any Affiliate of Lender or any Participant (or prospective Lender or
Participant).
 
(b) In the event that Agent or any Lender receives a request or demand to
disclose any confidential information pursuant to any subpoena or court order,
Agent or such Lender, as the case may be, agrees (i) to the extent permitted by
applicable law or if permitted by applicable law, to the extent Agent or such
Lender determines in good faith that it will not create any risk of liability to
Agent or such Lender, Agent or such Lender will promptly notify Borrowers of
such request so that Borrowers may seek a protective order or other appropriate
relief or remedy and (ii) if disclosure of such information is required,
disclose such information and, subject to reimbursement by Borrowers of Agent’s
or such Lender’s expenses, cooperate with Borrowers in the reasonable efforts to
obtain an order or other reliable assurance that confidential treatment will be
accorded to such portion of the disclosed information which Borrowers so
designates, to the extent permitted by applicable law or if permitted by
applicable law, to the extent Agent or such Lender determines in good faith that
it will not create any risk of liability to Agent or such Lender.
 
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(c) In no event shall this Section 13.5 or any other provision of this
Agreement, any of the other Financing Agreements or applicable law be deemed:
(i) to apply to or restrict disclosure of information that has been or is made
public by any Borrower, any Guarantor or any third party or otherwise becomes
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent or any Lender (or any Affiliate of any Lender)
on a non-confidential basis from a person other than a Borrower or a Guarantor,
(iii) to require Agent or any Lender to return any materials furnished by a
Borrower or a Guarantor to Agent or a Lender or prevent Agent or a Lender from
responding to routine informational requests in accordance with the Code of
Ethics for the Exchange of Credit Information promulgated by The Robert Morris
Associates or other applicable industry standards relating to the exchange of
credit information. The obligations of Agent and Lenders under this Section 13.5
shall supersede and replace the obligations of Agent and Lenders under any
confidentiality letter signed prior to the date hereof or any other arrangements
concerning the confidentiality of information provided by any Borrower or any
Guarantor to Agent or any Lender. In addition, Agent and Lenders may disclose
information relating to this Agreement to Gold Sheets and other similar bank
trade publications, with such information to consist of deal terms and other
information customarily found in such publications and the use of the name,
logos and other insignia of each Borrower and Guarantor in any “tombstone” or
comparable advertising, on its website or in other marketing materials of Agent
or its Affiliates.
 
13.6 Successors. This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to the
benefit of and be enforceable by Agent, Lenders, Borrowers, Guarantors and their
respective permitted successors and assigns, provided that, except as otherwise
permitted hereunder, no Borrower may assign its rights under this Agreement, the
other Financing Agreements and any other document referred to herein or therein
without the prior written consent of Agent and Lenders. Any such purported
assignment without such express prior written consent shall be void. Agent may,
with the prior written consent of Borrowers (which consent shall not be
unreasonably withheld or delayed), assign its rights and delegate its
obligations under this Agreement and the other Financing Agreements and further
may assign, or sell participations in, all or any part of the Loans, the Letters
of Credit or any other interest herein to another financial institution or other
person on terms and conditions acceptable to Agent, provided, that, (a) in the
event of any such assignment of rights, delegation of obligations or sale of
participations or other interest by Agent to any Affiliate or Affiliates of
Agent, (b) in the event of any such sale or assignment in connection with the
merger, consolidation, sale, transfer or other disposition of all or any
substantial portion of Agent's business, loan portfolio or other assets or (c)
after the occurrence and during the continuation of an Event of Default, no such
consent from Borrowers shall be required.
 
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13.7 Assignments; Participations.
 
(a) Each Lender may, with the prior written consent of Agent, assign all or, if
less than all, a portion equal to at least $5,000,000 in the aggregate for the
assigning Lender, of such rights and obligations under this Agreement to one or
more Eligible Transferees (but not including for this purpose any assignments in
the form of a participation), each of which assignees shall become a party to
this Agreement as a Lender by execution of an Assignment and Acceptance;
provided, that, (i) such transfer or assignment will not be effective until
recorded by Agent on the Register and (ii) Agent shall have received for its
sole account payment of a processing fee from the assigning Lender or the
assignee in the amount of $5,000.
 
(b) Agent shall maintain a register of the names and addresses of Lenders, their
Commitments and the principal amount of their Loans (the “Register”). Agent
shall also maintain a copy of each Assignment and Acceptance delivered to and
accepted by it and shall modify the Register to give effect to each Assignment
and Acceptance. The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and any Borrowers, Guarantors, Agent and
Lenders may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrowers and any Lender at any reasonable time and from
time to time upon reasonable prior notice.
 
(c) Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and to the other Financing Agreements and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letter of
Credit Obligations) of a Lender hereunder and thereunder and the assigning
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement.
 
(d) By execution and delivery of an Assignment and Acceptance, the assignor and
assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and Acceptance,
the assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any of the other Financing
Agreements or the execution, legality, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Financing Agreements furnished
pursuant hereto, (ii) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower, Guarantor or any of their Subsidiaries or the performance or
observance by any Borrower or Guarantor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent 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 and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning any Borrower or Guarantor in
the possession of Agent or any Lender from time to time to assignees and
Participants.
 
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(e) Each Lender may sell participations to one or more banks or other entities
in or to all or a portion of its rights and obligations under this Agreement and
the other Financing Agreements (including, without limitation, all or a portion
of its Commitments and the Loans owing to it and its participation in the Letter
of Credit Obligations, without the consent of Agent or the other Lenders);
provided, that, (i) such Lender's obligations under this Agreement (including,
without limitation, its Commitment hereunder) and the other Financing Agreements
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, and Borrowers,
Guarantors, the other Lenders and Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Financing Agreements, and (iii)
the Participant shall not have any rights under this Agreement or any of the
other Financing Agreements (the Participant's rights against such Lender in
respect of such participation to be those set forth in the agreement executed by
such Lender in favor of the Participant relating thereto) and all amounts
payable by any Borrower or Guarantor hereunder shall be determined as if such
Lender had not sold such participation.
 
(f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging
its Loans hereunder to a Federal Reserve Bank in support of borrowings made by
such Lenders from such Federal Reserve Bank; provided, that, no such pledge
shall release such Lender from any of its obligations hereunder or substitute
any such pledgee for such Lender as a party hereto.
 
(g) Borrowers and Guarantors shall assist Agent or any Lender permitted to sell
assignments or participations under this Section 13.7 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Borrowers shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrowers and Guarantors and their affairs provided,
prepared or reviewed by any Borrower or Guarantor that are contained in any
selling materials and all other information provided by it and included in such
materials.
 
13.8 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
 
118

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13.9 USA Patriot Act. Each Lender hereby notifies each Borrower that pursuant to
the requirements of the USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into
law October 26, 2001) (the “Act”), it is required to obtain, verify and record
information that identifies each person or corporation who opens an account
and/or enters into a business relationship with it, which information includes
the name and address of each Borrower and each Guarantor and other information
that will allow such Lender to identify each Borrower and each Guarantor in
accordance with the Act and any other applicable law. Each Borrower and each
Guarantor is hereby advised that any Loans or Letters of Credit hereunder are
subject to satisfactory results of such verification.
 
13.10 Counterparts, Etc. This Agreement or any of the other Financing Agreements
may be executed in any number of counterparts, each of which shall be an
original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile or other electronic method of
transmission shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement or any of such other Financing
Agreements. Any party delivering an executed counterpart of any such agreement
by telefacsimile or other electronic method of transmission shall also deliver
an original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of such agreement.
 
[Remainder of Page Intentionally Blank]
 
119

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed and delivered by its officers thereunto duly authorized as of the
date first above written.

JAZZ SEMICONDUCTOR, INC.,
as a Borrower
   
By:
  /s/ Paul A. Pittman
Name: Paul A. Pittman
Title: Chief Financial Officer

 

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

NEWPORT FAB, LLC,
as a Borrower
   
By:
  /s/ Paul A. Pittman
Name: Paul A. Pittman
Title: Manager

 

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

JAZZ TECHNOLOGIES, INC.,
as Parent Guarantor
   
By:
  /s/ Paul A. Pittman
Name: Paul A. Pittman
Title: Chief Financial Officer

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

WACHOVIA CAPITAL FINANCE
CORPORATION (WESTERN),
as Agent and a Lender
   
By:
/s/ Albert Sarkis
Name: Albert Sarkis
Title: Vice President

 

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

 
EXHIBIT A
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
ASSIGNMENT AND ACCEPTANCE AGREEMENT
 
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”)
dated as of _____________, 200_ is made between ________________________ (the
“Assignor”) and ____________________ (the “Assignee”).
 
W I T N E S S E T H:
 
WHEREAS, Wachovia Capital Finance Corporation (Western), in its capacity as
agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on
behalf of the financial institutions which are parties thereto as lenders (in
such capacity, “Agent”), and the financial institutions which are parties to the
Loan Agreement as lenders (individually, each a “Lender” and collectively,
“Lenders”) have entered or are about to enter into financing arrangements
pursuant to which Agent and Lenders may make loans and advances and provide
other financial accommodations to Jazz Semiconductor, Inc. and Newport Fab, LLC
(collectively, “Borrowers”) as set forth in the Second Amended and Restated Loan
and Security Agreement, dated September 19, 2008, by and among Borrowers,
certain of their affiliates, Jazz Technologies, Inc., as parent guarantor, Agent
and Lenders (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the “Loan Agreement”),
and the other agreements, documents and instruments referred to therein or at
any time executed and/or delivered in connection therewith or related thereto
(all of the foregoing, together with the Loan Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, being collectively referred to herein as the “Financing
Agreements”);
 
WHEREAS, as provided under the Loan Agreement, Assignor committed to making
Loans (the “Committed Loans”) to Borrowers in an aggregate amount not to exceed
$___________ (the “Commitment”);
 
WHEREAS, Assignor wishes to assign to Assignee [part of the] [all] rights and
obligations of Assignor under the Loan Agreement in respect of its Commitment in
an amount equal to $______________ (the “Assigned Commitment Amount”) on the
terms and subject to the conditions set forth herein and Assignee wishes to
accept assignment of such rights and to assume such obligations from Assignor on
such terms and subject to such conditions;
 
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
 
1. Assignment and Acceptance.
 
(a) Subject to the terms and conditions of this Assignment and Acceptance,
Assignor hereby sells, transfers and assigns to Assignee, and Assignee hereby
purchases, assumes and undertakes from Assignor, without recourse and without
representation or warranty (except as provided in this Assignment and
Acceptance) an interest in (i) the Commitment and each of the Committed Loans of
Assignor and (ii) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Loan Agreement and
the other Financing Agreements, so that after giving effect thereto, the
Commitment of Assignee shall be as set forth below and the Pro Rata Share of
Assignee shall be _______ (__%) percent.
 
A-1

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

 
(b) With effect on and after the Effective Date (as defined in Section 5
hereof), Assignee shall be a party to the Loan Agreement and succeed to all of
the rights and be obligated to perform all of the obligations of a Lender under
the Loan Agreement, including the requirements concerning confidentiality and
the payment of indemnification, with a Commitment in an amount equal to the
Assigned Commitment Amount. Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender. It is the intent of the parties
hereto that the Commitment of Assignor shall, as of the Effective Date, be
reduced by an amount equal to the Assigned Commitment Amount and Assignor shall
relinquish its rights and be released from its obligations under the Loan
Agreement to the extent such obligations have been assumed by Assignee;
provided, that, Assignor shall not relinquish its rights under Sections 2.2,
6.4, 6.9, 11.5 and 12.5 of the Loan Agreement to the extent such rights relate
to the time prior to the Effective Date.
 
(c) After giving effect to the assignment and assumption set forth herein, on
the Effective Date Assignee's Commitment will be $_____________.
 
(d) After giving effect to the assignment and assumption set forth herein, on
the Effective Date Assignor's Commitment will be $______________ (as such amount
may be further reduced by any other assignments by Assignor on or after the date
hereof).
 
2. Payments.
 
(a) As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, Assignee shall pay to Assignor on the Effective Date in
immediately available funds an amount equal to $____________, representing
Assignee's Pro Rata Share of the principal amount of all Committed Loans.
 
(b) Assignee shall pay to Agent the processing fee in the amount specified in
Section 13.7(a) of the Loan Agreement.
 
3. Reallocation of Payments. Any interest, fees and other payments accrued to
the Effective Date with respect to the Commitment, Committed Loans and
outstanding Letters of Credit shall be for the account of Assignor. Any
interest, fees and other payments accrued on and after the Effective Date with
respect to the Assigned Commitment Amount shall be for the account of Assignee.
Each of Assignor and Assignee agrees that it will hold in trust for the other
party any interest, fees and other amounts which it may receive to which the
other party is entitled pursuant to the preceding sentence and pay to the other
party any such amounts which it may receive promptly upon receipt.
 
A-2

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

 
4. Independent Credit Decision. Assignee acknowledges that it has received a
copy of the Loan Agreement and the Schedules and Exhibits thereto, together with
copies of the most recent financial statements of _____________ and its
Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance and agrees that it will, independently and
without reliance upon Assignor, 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 and legal decisions in taking or not taking action under the Loan
Agreement.
 
5. Effective Date; Notices.
 
(a) As between Assignor and Assignee, the effective date for this Assignment and
Acceptance shall be _______________, 200_ (the “Effective Date”); provided,
that, the following conditions precedent have been satisfied on or before the
Effective Date:
 
(i) this Assignment and Acceptance shall be executed and delivered by Assignor
and Assignee;
 
(ii) the consent of Agent as required for an effective assignment of the
Assigned Commitment Amount by Assignor to Assignee shall have been duly obtained
and shall be in full force and effect as of the Effective Date;
 
(iii) written notice of such assignment, together with payment instructions,
addresses and related information with respect to Assignee, shall have been
given to Borrowers and Agent;
 
(iv) Assignee shall pay to Assignor all amounts due to Assignor under this
Assignment and Acceptance; and
 
(v) the processing fee referred to in Section 2(b) hereof shall have been paid
to Agent.
 
(b) the execution of this Assignment and Acceptance, Assignor shall deliver to
Borrowers and Agent for acknowledgment by Agent, a Notice of Assignment in the
form attached hereto as Schedule 1.
 
6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
 
(a) Assignee hereby appoints and authorizes Assignor in its capacity as Agent to
take such action as agent on its behalf to exercise such powers under the Loan
Agreement as are delegated to Agent by Lenders pursuant to the terms of the Loan
Agreement.
 
(b) Assignee shall assume no duties or obligations held by Assignor in its
capacity as Agent under the Loan Agreement.]
 
A-3

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

 
7. Withholding Tax. Assignee (a) represents and warrants to Assignor, Agent and
Borrowers that under applicable law and treaties no tax will be required to be
withheld by Assignee, Agent or Borrowers with respect to any payments to be made
to Assignee hereunder or under any of the Financing Agreements, (b) agrees to
furnish (if it is organized under the laws of any jurisdiction other than the
United States or any State thereof) to Agent and Borrowers prior to the time
that Agent or Borrowers are required to make any payment of principal, interest
or fees hereunder, duplicate executed originals of either U.S. Internal Revenue
Service Form W-8BEN or W-8ECI, as applicable (wherein Assignee claims
entitlement to the benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all payments hereunder)
and agrees to provide new such forms upon the expiration of any previously
delivered form or comparable statements in accordance with applicable U.S. law
and regulations and amendments thereto, duly executed and completed by Assignee,
and (c) agrees to comply with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
 
8. Representations and Warranties.
 
(a) Assignor represents and warrants that (i) it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any security interest, lien, encumbrance or other adverse
claim, (ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Assignment and Acceptance and any other documents required or permitted to
be executed or delivered by it in connection with this Assignment and Acceptance
and to fulfill its obligations hereunder, (iii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Loan Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
 
(b) Assignor makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Loan Agreement or any of the other Financing Agreements or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Agreement or any other instrument or document furnished
pursuant thereto. Assignor makes no representation or warranty in connection
with, and assumes no responsibility with respect to, the solvency, financial
condition or statements of Borrowers, Guarantors or any of their respective
Affiliates, or the performance or observance by Borrowers, Guarantors or any
other Person, of any of its respective obligations under the Loan Agreement or
any other instrument or document furnished in connection therewith.
 
(c) Assignee represents and warrants that (i) it is duly organized and existing
and it has full power and authority to take, and has taken, all action necessary
to execute and deliver this Assignment and Acceptance and any other documents
required or permitted to be executed or delivered by it in connection with this
Assignment and Acceptance, and to fulfill its obligations hereunder, (ii) no
notices to, or consents, authorizations or approvals of, any Person are required
(other than any already given or obtained) for its due execution, delivery and
performance of this Assignment and Acceptance, and apart from any agreements or
undertakings or filings required by the Loan Agreement, no further action by, or
notice to, or filing with, any Person is required of it for such execution,
delivery or performance; and (iii) this Assignment and Acceptance has been duly
executed and delivered by it and constitutes the legal, valid and binding
obligation of Assignee, enforceable against Assignee in accordance with the
terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights to general equitable principles.
 
A-4

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

 
9. Further Assurances. Assignor and Assignee each hereby agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to Borrowers or Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
 
10. Miscellaneous.
 
(a) Any amendment or waiver of any provision of this Assignment and Acceptance
shall be in writing and signed by the parties hereto. No failure or delay by
either party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof and any waiver of any breach of the provisions of
this Assignment and Acceptance shall be without prejudice to any rights with
respect to any other for further breach thereof.
 
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
 
(c) Assignor and Assignee shall each pay its own costs and expenses incurred in
connection with the negotiation, preparation, execution and performance of this
Assignment and Acceptance.
 
(d) This Assignment and Acceptance may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.
 
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. Assignor and Assignee each
irrevocably submits to the non-exclusive jurisdiction of any State or Federal
court sitting in Los Angeles County, California over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such California State or Federal court. Each party to
this Assignment and Acceptance hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
 
(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT
AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING AGREEMENTS OR ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
 
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
Acceptance to be executed and delivered by their duly authorized officers as of
the date first above written.

[ASSIGNOR]
   
By:
     

Title:
        
[ASSIGNEE]

By:
   

Title:
   

A-5

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

SCHEDULE 1
 
NOTICE OF ASSIGNMENT AND ACCEPTANCE
 
______________, 20__
 
__________________________
 
__________________________
 
__________________________
 
Attn.:     
 
Re:      
 
Ladies and Gentlemen:
 
Wachovia Capital Finance Corporation (Western), in its capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the financial institutions which are parties thereto as lenders (in such
capacity, “Agent”), and the financial institutions which are parties to the Loan
Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”)
have entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans and advances and provide other financial
accommodations to Jazz Semiconductor, Inc. and Newport Fab, LLC (collectively,
“Borrowers”) as set forth in the Second Amended and Restated Loan and Security
Agreement, dated September 19, 2008, by and among Borrowers, certain of their
affiliates, Jazz Technologies, Inc., as parent guarantor, Agent and Lenders (as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the “Loan Agreement”), and the other
agreements, documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related thereto (all of the
foregoing, together with the Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the “Financing Agreements”).
Capitalized terms not otherwise defined herein shall have the respective
meanings ascribed thereto in the Loan Agreement.
 
1. We hereby give you notice of, and request your consent to, the assignment by
__________________________ (the “Assignor”) to ___________________________ (the
“Assignee”) such that after giving effect to the assignment Assignee shall have
an interest equal to ________ (__%) percent of the total Commitments pursuant to
the Assignment and Acceptance Agreement attached hereto (the “Assignment and
Acceptance”). We understand that the Assignor's Commitment shall be reduced by
$_____________, as the same may be further reduced by other assignments on or
after the date hereof.
 
2. Assignee agrees that, upon receiving the consent of Agent to such assignment,
Assignee will be bound by the terms of the Loan Agreement as fully and to the
same extent as if the Assignee were the Lender originally holding such interest
under the Loan Agreement.
 
A-6

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

 

3.
The following administrative details apply to Assignee:

 

(A)
Notice address:

Assignee name:
    
Address:
    
Attention:
      
Telephone:
   
Telecopier:
 

 

(B)
Payment instructions:

Account No.:
    
At:
    
Reference:
    
Attention:
   

 
4. You are entitled to rely upon the representations, warranties and covenants
of each of Assignor and Assignee contained in the Assignment and Acceptance.

A-7

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

IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of Assignment
and Acceptance to be executed by their respective duly authorized officials,
officers or agents as of the date first above mentioned.

Very truly yours,
 
 
[NAME OF ASSIGNOR]
 
 
By:
     
 
 
Title:
     
 
 
[NAME OF ASSIGNEE]
 
 
By:
     
 
 
Title:
    

ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
   
WACHOVIA CAPITAL FINANCE CORPORATION
(WESTERN), as Agent
   
By:
         
Title:
      

 
A-8

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EXHIBIT B
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Information Certificate
 
[See Attached]

B-1

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

EXHIBIT C
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Compliance Certificate
 
To:
Wachovia Capital Finance Corporation (Western), as Agent

251 South Lake Avenue, Suite 900
Pasadena, California 91101
Attention: Portfolio Manager
 
Ladies and Gentlemen:
 
I hereby certify to you on behalf of the Borrowers pursuant to Section 9.6 of
the Loan Agreement (as defined below) as follows:
 
1. I am the duly elected Chief Financial Officer of Jazz Semiconductor, Inc., a
Delaware corporation, and Newport Fab, LLC, a Delaware limited liability company
(collectively, “Borrowers”). Capitalized terms used herein without definition
shall have the meanings given to such terms in the Second Amended and Restated
Loan and Security Agreement, dated as of September 19, 2008, by and among
Wachovia Capital Finance Corporation (Western), a California corporation
(“Agent”), Wachovia Capital Markets, LLC, as lead arranger, bookrunner and
syndication agent, the parties thereto from time to time as lenders (the
“Lenders”), Jazz Technologies, Inc., a Delaware corporation (“Parent Guarantor”)
and Borrowers (as the same may be amended, modified or supplemented, from time
to time, the “Loan Agreement”).
 
2. I have reviewed the terms of the Loan Agreement, and have made, or have
caused to be made under my supervision, a review in reasonable detail of the
transactions and the financial condition of Borrowers and each of their
Subsidiaries, during the immediately preceding fiscal quarter.
 
3. The review described in Section 2 above did not disclose the existence at the
end of such fiscal quarter, and I have no knowledge of the existence and
continuance on the date hereof, of any condition or event which constitutes a
Default or an Event of Default, except as set forth on Schedule I attached
hereto. Described on Schedule I attached hereto are the exceptions, if any, to
this Section 3 listing, in detail, the nature of the condition or event, the
period during which it has existed and the action which any Borrower, any
Guarantor or any other Credit Party has taken, is taking, or proposes to take
with respect to such condition or event.
 
4. I further certify that, based on the review described in Section 2 above, no
Borrower, Guarantor or other Credit Party has at any time during or at the end
of such fiscal quarter, except as specifically described on Schedule II attached
hereto or as permitted by the Loan Agreement, done any of the following:
 
C-1

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

 
(a) Changed its corporate name (other than as previously disclosed to you
pursuant to Section 9.1(b) of the Loan Agreement) since the Effective Date.
 
(b) Changed the location of its chief executive office, changed its jurisdiction
of incorporation or formation, changed its type of organization or changed the
location of or disposed of any of its properties or assets with a fair market
value in excess of $1,000,000 in the aggregate (other than pursuant to the sale
of Inventory in the ordinary course of its business or as otherwise permitted by
Section 9.2 of the Loan Agreement), or established any new asset locations.
 
5. I further certify that, based on the review described in Section 2 above,
Schedule III attached hereto lists all trade names or styles under which each
Borrower and Guarantor transacts business that have not been disclosed to you
prior to the date hereof.
 
6. Attached hereto as Schedule IV are the calculations used in determining, as
of the end of such fiscal quarter whether Parent Guarantor and Borrowers are in
compliance with the covenant set forth in Section 9.24 of the Loan Agreement for
such fiscal quarter.
 
7. [Attached hereto as Schedule V are the calculations used in determining, as
of the end of such fiscal quarter whether Parent Guarantor and Borrowers are in
compliance with the covenant set forth in Section 9.18 of the Loan Agreement for
such fiscal quarter.]
 
The foregoing certifications are made and delivered this day of ___________,
20__.

Very truly yours,
 
     
Name:
 
Title: Chief Financial Officer

C-2

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EXHIBIT D
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Borrowing Base Certificate
 
[See Attached]
 
D-1

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

EXHIBIT E
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Non-U.S. Lender Statement

FORM OF EXEMPTION CERTIFICATE
Reference is made to the Second Amended and Restated Loan and Security
Agreement, dated as of September 19, 2007 (as amended, restated, supplemented,
replaced or otherwise modified from time to time, the “Loan Agreement”) by and
among Jazz Semiconductor, Inc., a Delaware corporation (“Jazz”), Newport Fab,
LLC, a Delaware limited liability company (“Newport”, and together with Jazz,
each individually a “Borrower” and collectively, “Borrowers”), Jazz
Technologies, Inc., formerly known as Acquicor Technology Inc., a Delaware
corporation, as a guarantor, the financial institutions from time to time party
to the Loan Agreement as lenders (each a “Lender” and collectively, the
“Lenders”), Wachovia Capital Finance Corporation (Western), a California
corporation (“Wachovia”), in its capacity as administrative agent for the
Lenders (in such capacity, “Agent”), and Wachovia Capital Markets, LLC, in its
capacity as lead arranger, bookrunner and syndication agent. Capitalized terms
used herein that are not defined herein shall have the meanings ascribed to them
in the Loan Agreement. _______________________ (the “Non-U.S. Lender”) is
providing this certificate pursuant to Section 6.4(e) of the Loan Agreement. The
Non-U.S. Lender hereby represents and warrants that:
 
1. The Non-U.S. Lender is the sole record and beneficial owner of the Loans in
respect of which it is providing this certificate.
 
2. The Non-U.S. Lender is not a “bank” for purposes of Section 881(c)(3)(A) of
the Internal Revenue Code of 1986, as amended (the “Code”). In this regard, the
Non-U.S. Lender further represents and warrants that:
 
(a) the Non-U.S. Lender is not subject to regulatory or other legal requirements
as a bank in any jurisdiction; and
 
(b) the Non-U.S. Lender has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for any exemption from
tax, securities law or other legal requirements;
 
3. The Non-U.S. Lender is not a 10-percent shareholder of either Borrower within
the meaning of Section 881(c)(3)(B) of the Code; and
 
4. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(C) of the
Code.
 
IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

[NAME OF NON-U.S. LENDER]
 
By: 
      
Name:
 
Title:

 
Date:

E-1

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

EXHIBIT F
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Form of Agreement with Foreign Parent Nonguarantor
 
[See Attached]

F-1

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

SCHEDULE 1.49
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Equipment Sublimit
 

   
Equipment Sublimit
 
Period
             
1.
 
$40,000,000.00
 
Effective Date to December 31, 2008
 
2.
 
$38,500,000.00
 
January 1, 2009 to March 31, 2009
 
3.
 
$37,000,000.00
 
April 1, 2009 to June 30, 2009
 
4.
 
$35,500,000.00
 
July 1, 2009 to September 30, 2009
 
5.
 
$34,000,000.00
 
October 1, 2009 to December 31, 2009
 
6.
 
$32,200,000.00
 
January 1, 2010 to March 31, 2010
 
7.
 
$30,400,000.00
 
April 1, 2010 to June 30, 2010
 
8.
 
$28,600,000.00
 
July 1, 2010 to September 30, 2010
 
9.
 
$26,800,000.00
 
October 1, 2010 to December 31, 2010
 
10.
 
$25,000,000.00
 
January 1, 2011 to March 31, 2011
 
11.
 
$23,200,000.00
 
April 1, 2011 to June 30, 2011
 
12.
 
$21,400,000.00
 
July 1, 2011 to Maturity Date
 

 

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

SCHEDULE 1.59
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Existing Letters of Credit

[Borrowers to Provide]

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

SCHEDULE 1.107
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Permitted Holders

Tower Semiconductor Ltd.

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

SCHEDULE 1.113
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Qualified Cash Accounts

[Borrowers to Provide]

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

SCHEDULE 8.8
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Environmental Compliance

None.

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

SCHEDULE 8.13
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Labor Disputes

Jazz Semiconductor maintains one material collective bargaining agreement. The
Labor Agreement is between Jazz Semiconductor and Local Union No. 2295 of the
International Brotherhood of Electrical Workers (IBEW). The agreement was
effective on May 2, 2008 and will expire midnight on December 19, 2009 and from
year to year thereafter unless written notice is given by either party thereto
to the other on or before sixty (60) days prior to the initial expiration date,
or any subsequent anniversary thereof, requesting that the agreement be
terminated.

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

SCHEDULE 8.15
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Material Contracts

[Borrowers to Provide]

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

SCHEDULE 9.9
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Permitted Indebtedness

None.

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

SCHEDULE 9.10
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
Existing Loans and Advances

None.
 

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