Exhibit 10.8

 

 

 

THIRD AMENDED AND RESTATED

CREDIT AGREEMENT

by and among

DIALOGIC CORPORATION,

as the Company,

DIALOGIC INC.,

as the Parent,

THE SUBSIDIARY GUARANTORS THAT ARE SIGNATORIES HERETO,

as the Subsidiary Guarantors,

THE LENDERS THAT ARE SIGNATORIES HERETO,

as the Lenders,

and

OBSIDIAN, LLC

as the Agent

Dated as of March 22, 2012

 

i

Third Amended & Restated Credit Agreement

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TABLE OF CONTENTS

 

              Page  

1.

     DEFINITIONS.      2      1.1.    Certain Defined Terms      2      1.2.   
Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement      2      1.3.    Other Definitional Provisions and Rules of
Construction      2      1.4.    Amendment and Restatement      3   

2.

     AMOUNTS AND TERMS OF COMMITMENTS AND LOANS      3      2.1.    Commitments;
Notes      3      2.2.    Interest on the Loans      4      2.3.    General
Provisions Regarding Payments      5      2.4.    Margin Regulations      5   

3.

     CLOSING; FEES      6      3.1.    Closing      6      3.2.    Expenses     
6      3.3.    Yield Enhancement Premium      6   

4.

     CONDITIONS TO CLOSING      6      4.1.    Representations and Warranties   
  6      4.2.    Performance; No Default      7      4.3.    Officer’s
Certificate      7      4.4.    Certificates; Good Standing Certificates      7
     4.5.    Loan Documents      8      4.6.    Opinions of Counsel      8     
4.7.    [Intentionally Omitted]      8      4.8.    Changes in Corporate
Structure      8      4.9.    Security Interests in Personal and Mixed Property
     8      4.10.    Financial Statements      9      4.11.    Evidence of
Insurance      9      4.12.    Proceedings and Documents      9      4.13.    No
Judgment or Orders; No Actions Pending      10      4.14.    Purchase Permitted
By Applicable Law, Etc      10      4.15.    Solvency Certificate      10     
4.16.    Consents and Approvals      10      4.17.    Related Agreements      11
     4.18.    Material Adverse Effect      11      4.19.    Working Capital
Facility Amendment      12      4.20.    Existing Parent Indebtedness      12   

5.

     REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL COMPANIES      12      5.1.
   Organization, Powers, Qualification, Good Standing, Business and Subsidiaries
     12      5.2.    Authorization of the Transactions, Etc.      13      5.3.
   Financial Condition; SEC Filings      14      5.4.    Absence of Certain
Developments      15   

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TABLE OF CONTENTS

 

Section

        Page     5.5.    Title to Properties; Liens; Real Property; Intellectual
Property      18      5.6.    Litigation; Adverse Facts      23      5.7.   
Payment of Taxes      23      5.8.    Compliance with Agreements and Laws;
Material Contracts      24      5.9.    Governmental Regulation      25     
5.10.    Securities Activities      25      5.11.    Employee Benefit Plans     
25      5.12.    Financial Advisors      28      5.13.    Environmental
Protection      28      5.14.    Labor Relations      29      5.15.    Solvency
     29      5.16.    Matters Relating to Collateral      30      5.17.   
Disclosure and Projections      31      5.18.    Existing Indebtedness and
Contingent Obligations; Future Liens      31      5.19.    Subordinated
Indebtedness; Ranking      32      5.20.    Foreign Assets Control Regulations,
Etc.      32      5.21.    Representations of other Loan Parties      33     
5.22.    Non-Grantor Subsidiaries      33      5.23.    Passive Foreign
Investment Company; Controlled Foreign Corporation      33      5.24.    Deposit
Accounts; Securities Accounts      33      5.25.    Loans to Officers and
Directors      33      5.26.    Insurance      33      5.27.    Customers     
34      5.28.    Absence of Certain Practices      34      5.29.    Accounts and
Notes Receivable; Accounts and Notes Payable      34      5.30.    Inventory   
  35      5.31.    Internal Controls      35      5.32.    Anti-Money Laundering
     35      5.33.    Foreign Corrupt Practices Act      36      5.34.   
Transactions with Affiliates      36      5.35.    Intercompany Loans      36   

6.

     REPRESENTATIONS OF THE LENDERS      36      6.1.    Due Authorization     
36      6.2.    Binding Obligation      36   

7.

     INFORMATION AS TO THE PRINCIPAL COMPANIES      37   

8.

     PREPAYMENT OF THE LOANS      41      8.1.    Maturity      41      8.2.   
Optional Prepayments      41      8.3.    Offers to Prepay in Connection with
Asset Sales      42      8.4.    Offers to Prepay in Connection with Issuances
of Capital Stock      42      8.5.    Allocation of Partial Prepayments      43
     8.6.    Maturity; Surrender, Etc      43      8.7.    Purchase of Loans by
the Company      44      8.8.    Applicable Prepayment Premium      44   

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TABLE OF CONTENTS

 

Section

        Page  

9.

     AFFIRMATIVE COVENANTS      45      9.1.    Existence, Etc      45      9.2.
   Payment of Taxes and Claims; Tax      45      9.3.    Maintenance of
Properties; Insurance; Application of Net Insurance/Condemnation Proceeds     
45      9.4.    Inspection Rights; Lender Meeting      47      9.5.   
Compliance with Laws, Etc.      48      9.6.    Environmental Matters      48   
  9.7.    Execution of Subsidiary Guaranty and Personal Property Collateral
Documents After the Closing Date      50      9.8.    Matters Relating to
Additional Real Property Collateral      52      9.9.    Deposit Accounts,
Securities Accounts and Cash Management Systems      52      9.10.    Further
Assurances; Additional Collateral      53      9.11.    Ranking      54     
9.12.    Use of Proceeds      54      9.13.    Assignability of Contracts     
54      9.14.    Agent for Service of Process      54   

10.

     NEGATIVE COVENANTS      54      10.1.    Indebtedness      54      10.2.   
Liens and Related Matters      56      10.3.    Investments; Acquisitions     
57      10.4.    Contingent Obligations      59      10.5.    Restricted Junior
Payments      60      10.6.    Restriction on Fundamental Changes; Asset Sales
     60      10.7.    Transactions with Affiliates      61      10.8.    Sales
and Lease-Backs      62      10.9.    Conduct of Business      62      10.10.   
Amendments or Waivers of Documents Relating to Indebtedness      62      10.11.
   Fiscal Periods      63      10.12.    Wholly-Owned Subsidiaries      63     
10.13.    Minimum Interest Coverage Ratio      63      10.14.    Minimum EBITDA
     64      10.15.    Maximum Consolidated Total Leverage Ratio      65     
10.16.    Minimum Liquidity.      65   

11.

     EVENTS OF DEFAULT      65   

12.

     REMEDIES ON DEFAULT, ETC.      69      12.1.    Acceleration      69     
12.2.    Other Remedies      69      12.3.    Rescission      69      12.4.   
No Waivers or Election of Remedies, Expenses, Etc      70   

13.

     REGISTRATION; EXCHANGE; SUBSTITUTION OF THE LOANS AND NOTES      70     
13.1.    Loan Register      70      13.2.    Transfer of Loans and Exchange of
Notes      70   

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TABLE OF CONTENTS

 

Section

        Page     13.3.    Replacement of Notes      71   

14.

   PAYMENTS ON LOANS      72      14.1.    Place of Payment      72   

15.

   EXPENSES, ETC.      72      15.1.    Transaction Expenses      72      15.2.
   Survival      73   

16.

     INDEMNIFICATION      73   

17.

     SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT      75   

18.

     AMENDMENT AND WAIVER      75      18.1.    Requirements      75      18.2.
   Solicitation of Lenders      75      18.3.    Binding Effect, Etc      75   
  18.4.    Loan prepaid by the Company, Etc      76   

19.

     NOTICES      76   

20.

     REPRODUCTION OF DOCUMENTS      76   

21.

     CONFIDENTIAL INFORMATION      77   

22.

     CERTAIN PAYMENTS      78      22.1.    Pro Rata Treatment      78     
22.2.    Payments Due on Non-Business Days      78      22.3.    Net Payments;
Taxes      78      22.4.    Default Interest      79   

23.

     APPOINTMENT OF AGENT      80      23.1.    Appointment      80      23.2.
   Rights of Agent      81      23.3.    Administration of the Collateral     
81      23.4.    Application of Proceeds      81      23.5.    Duties of Agent
     82      23.6.    Reliance by Agent      82      23.7.    Appointment of
Sub-Agents      82      23.8.    Resignation of Agent      83      23.9.   
Lender Non-Reliance      83      23.10.    Indemnification      83      23.11.
   Lenders      84      23.12.    Action by Agent      84      23.13.   
Appointment of Collateral Agent as Security Trustee      84      23.14.   
Intercreditor Agreement      84   

24.

     MISCELLANEOUS      85      24.1.    Reaffirmation of the Loan Documents   
  85      24.2.    Successors and Assigns      85      24.3.    Severability   
  85      24.4.    Construction      85      24.5.    Counterparts      85     
24.6.    Governing Law      86      24.7.    Waiver of Jury Trial      86   

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TABLE OF CONTENTS

 

Section

       Page  

24.8.

  Usury Savings Clause      86   

24.9.

  Right of Set-off      87   

24.10.

  Marshalling; Payments Set Aside      87   

24.11.

  Limitation of Liability      87   

24.12.

  Submission to Jurisdiction; Waivers      88   

24.13.

  Judgment Currency      88   

24.14.

  Existing Events of Default under Original Agreement      89   

 

SCHEDULE A    —      Information Relating to Lenders SCHEDULE B    —     
Defined Terms SCHEDULE 5.1    —      Principal Companies and Subsidiaries;      
Organization, Powers, Qualification,       Good Standing, Business and Capital
Stock SCHEDULE 5.2(c)    —      Consents, Approvals, Government Authorizations,
etc. SCHEDULE 5.3    —      Financial Statements; SEC Filings SCHEDULE 5.4   
—      Absence of Certain Developments SCHEDULE 5.4(b)    —      Dividends,
Redemptions, Etc. SCHEDULE 5.4(d)    —      Parent Options, Warrants, Etc.
SCHEDULE 5.4(e)    —      Employee bonus, compensation, severance, etc. SCHEDULE
5.4(s)    —      Intellectual Property Rights SCHEDULE 5.4(t)    —     
Suppliers and Customers SCHEDULE 5.4(x)    —      Tax Elections SCHEDULE 5.5(a)
   —      Real Property Assets SCHEDULE 5.5(a)(v)    —      Real Property
SCHEDULE 5.5(b)    —      Intellectual Property SCHEDULE 5.5(c)    —     
Tangible Personal Property SCHEDULE 5.6    —      Certain Litigation SCHEDULE
5.7    —      Payment of Taxes SCHEDULE 5.8(b)    —      Conflicts with
Contractual Obligations SCHEDULE 5.8(f)    —      Necessary Permits SCHEDULE
5.11(g)    —      Employee Program SCHEDULE 5.11(i)    —      Employee Benefit
Plan Violations SCHEDULE 5.12    —      Brokers’ and Finders’ Fees SCHEDULE 5.13
   —      Environmental Matters SCHEDULE 5.14(a)    —      Labor Relations
SCHEDULE 5.14(b)    —      Employee Salaries SCHEDULE 5.18(a)    —      Existing
Indebtedness SCHEDULE 5.18(b)    —      Contingent Obligations SCHEDULE 5.18(c)
   —      Future Liens SCHEDULE 5.24    —      Deposit Accounts; Securities
Accounts SCHEDULE 5.25    —      Loans to Directors and Officers SCHEDULE 5.26
   —      Insurance Policies SCHEDULE 5.27    —      Major Customers SCHEDULE
5.28    —      Absence of Certain Practices

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TABLE OF CONTENTS

 

Section

            Page SCHEDULE 5.29(a)   —      Accounts and Notes Receivable   
SCHEDULE 5.29(b)   —      Accounts and Notes Payable    SCHEDULE 5.31   —     
Internal Controls    SCHEDULE 5.33   —      Foreign Corrupt Practices Act   
SCHEDULE 5.34   —      Transactions with Affiliates    SCHEDULE 10.2   —     
Existing Liens    SCHEDULE 10.3(e)   —      Existing Investments    SCHEDULE
10.3(h)   —      Existing Investments in Non-Grantor Subsidiaries    EXHIBIT A  
—      Form of Note    EXHIBIT B   —      Form of Compliance Certificate   
EXHIBIT C   —      Form of Assignment Agreement    EXHIBIT D   —      Form of
Solvency Certificate   

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THIRD AMENDED AND RESTATED CREDIT AGREEMENT

This THIRD AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of March 22,
2012 (as the same may be amended, amended and restated, supplemented or
otherwise modified from time to time, this “Agreement”), by and among the
lenders identified on the signature pages hereof (such lenders, together with
their respective successors and permitted assigns, are referred to hereinafter
each individually as a “Lender” and collectively as the “Lenders”), OBSIDIAN,
LLC, a Delaware limited liability company, as the agent and collateral agent for
the Lenders (“Obsidian” and in such capacity, together with its successors and
assigns in such capacity, “Agent”), DIALOGIC CORPORATION, a British Columbia
corporation (the “Company”), DIALOGIC INC., a Delaware corporation (the “Parent”
and together with the Company, collectively, the “Principal Companies” and
individually a “Principal Company”) and each of the Subsidiary Guarantors
signatory hereto.

R E C I T A L S

WHEREAS, the Company, the lenders party thereto and Agent entered into that
certain Second Amended and Restated Credit Agreement, dated as of October 1,
2010 (as amended, the “Original Agreement”);

WHEREAS, the Existing Loans (as defined below) are and will remain outstanding;

WHEREAS, the Company, the Parent and the Lenders will contemporaneously enter
into the Related Agreements (as defined below), pursuant to which the Lenders
will receive warrants for common stock of the Parent in the amounts set forth in
the Related Agreements with respect to payment of the Yield Enhancement Premium
(as defined below) (such transactions, the “Restructuring”);

WHEREAS, the Principal Companies have requested that the Agent and the Lenders
amend and restate the Original Agreement (i) to permit the Restructuring and
(ii) to modify certain of the terms of the Original Agreement, in each case
subject to and in accordance with the terms and conditions hereinafter set
forth;

WHEREAS, the Obligations under the Original Agreement and under the other Loan
Documents are secured by a First Priority Lien on substantially all of the
Company’s real, personal and mixed property, including a pledge of all of the
capital stock of its Subsidiaries, and the Company desires that all Obligations
hereunder and under the other Loan Documents, shall continue to be so secured;

WHEREAS, certain of the Subsidiaries of the Company have guaranteed the
Obligations under the Original Agreement and under the other Loan Documents and
have secured their guaranties by granting to Agent, on behalf of Lenders, a
First Priority Lien on substantially all of their real, personal and mixed
property, including a pledge of all of the capital stock of their Subsidiaries,
and such Subsidiaries, desire that all Obligations hereunder and under the other
Loan Documents, shall continue to be subject to such secured guaranties; and

 

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Third Amended & Restated Credit Agreement

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WHEREAS, the Parent and certain of its Subsidiaries have agreed to guarantee the
Obligations hereunder and under the other Loan Documents and to secure their
guaranties by granting to Agent, on behalf of the Lenders, a First Priority Lien
on substantially all of their respective real, personal and mixed property,
including a pledge of all of the capital stock of the Parent’s Subsidiaries.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, each Principal Company, Lenders and Agent agree
to amend and restate the Original Agreement, effective as of the Closing Date,
as follows:

1. DEFINITIONS.

1.1. Certain Defined Terms. Certain capitalized terms used in this Agreement and
the other Loan Documents are defined in Schedule B.

1.2. Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement. Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by any Loan Party to the Lenders pursuant to clauses
(b), (c) and (l) of Section 7 shall be prepared in accordance with GAAP as in
effect at the time of such preparation. Calculations in connection with the
definitions, covenants and other provisions of this Agreement shall utilize GAAP
as in effect on the date of determination, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.3. If
at any time any change in GAAP would affect the computation of any financial
ratio or requirement set forth in any Loan Document, and the Company or Required
Lenders shall so request, the Agent, Lenders and the Principal Companies shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of Required Lenders), provided that, until so amended, such ratio or requirement
shall continue to be computed in accordance with GAAP prior to such change
therein.

1.3. Other Definitional Provisions and Rules of Construction.

(a) Any of the terms defined herein may, unless the context otherwise requires,
be used in the singular or the plural, depending on the reference.

(b) References to “Sections” shall be to Sections of this Agreement unless
otherwise specifically provided. References to a “Schedule” or an “Exhibit”
shall be to Schedules and Exhibits, respectively, attached to this Agreement, in
each case unless otherwise specifically provided.

(c) The use in any of the Loan Documents of the word “include” or “including”,
when following any general statement, term or matter, shall not be construed to
limit such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
non-limiting language (such as “without limitation” or “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.

 

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Third Amended & Restated Credit Agreement

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(d) References to any document, instrument or agreement (i) shall include all
exhibits, schedules and other attachments thereto, (ii) shall include all
documents, instruments or agreements issued or executed in replacement thereof,
and (iii) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, restated, supplemented or otherwise modified
from time to time and in effect at any given time unless specifically provided
otherwise.

1.4. Amendment and Restatement. Subject to the satisfaction or waiver of each
condition precedent contained in Section 4, the Original Agreement shall be
amended and restated as of the Closing Date in its entirety in the form of this
Agreement. It is the intention of each Principal Company, the Lenders and the
Agent that this Agreement supersede and replace the Original Agreement in its
entirety; provided, however, that (a) such amendment and restatement shall
operate to renew, amend, restate and modify the rights and obligations of the
parties under the Original Agreement, as applicable, as provided herein, but
shall not effect a novation, refinancing, discharge, extinguishment or refunding
thereof, (b) unless otherwise provided for herein and evidenced by a separate
written agreement, amendment or release, no other Loan Document, as defined in
and as executed and/or delivered pursuant to the terms of the Original Agreement
shall be amended, modified, terminated or released in any respect, and all of
such other Loan Documents shall remain in full force and effect, except that the
Principal Companies, the Lenders and the Agent agree that by executing this
Agreement it is confirmed and agreed that the definition of “Credit Agreement”
contained in each such Loan Document (or any other defined term referring to the
Original Agreement in any Loan Document) shall from and after the Closing Date
mean this Agreement and all future amendments hereto, (c) this Agreement is not
intended to constitute a release, waiver, or discharge of any of the rights or
remedies set forth in the Loan Documents or, prior to the Closing, the Original
Agreement, (d) subject to Section 2.1(a), all Obligations under the Loan
Documents (including principal amounts outstanding, accrued unpaid interest and
fees, any outstanding obligations of the Company or any other Loan Party with
respect to indemnification or expenses, and all obligations of the Grantors with
respect to guarantees of such Obligations) shall be carried forward, preserved,
ratified and confirmed as Obligations under this Agreement, and (e) the Liens
securing the Indebtedness and other Obligations under the existing Loan
Documents and granted pursuant to such existing Loan Documents shall not be
extinguished, but shall be carried forward, and such Liens shall secure all
Indebtedness hereunder and other Obligations as renewed, amended, restated and
modified hereby, whether created or existing before or after the Closing Date.

2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.

2.1. Commitments; Notes.

(a) Commitments. As of the Closing Date, immediately prior to the consummation
of the amendment and restatement contemplated hereby, the aggregate principal
amount of the loans outstanding under the Original Agreement is $89,874,633.40
plus $2,958,373.35 in accrued and unpaid interest thereon (the “Existing Accrued
Interest”). On or prior to the Closing Date, the Existing Accrued Interest will
be added to the outstanding principal

 

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Third Amended & Restated Credit Agreement

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amount of the Existing Loans. On the Closing Date, after giving effect to the
addition of the Existing Accrued Interest to the outstanding principal amount of
the Existing Loans, each Existing Loan made by a Lender pursuant to the Original
Agreement, together with all other amounts due and owing pursuant to the Loan
Documents as of the Closing Date shall constitute a Loan hereunder. The
aggregate principal amount of the Loans after giving effect to this Agreement is
$92,833,006.75 and the principal amount of each Lender’s Loans after giving
effect to this Agreement is set forth in Schedule A annexed hereto. The Company
acknowledges and agrees that (i) the full proceeds of the Loans have been
disbursed by the Lenders to the Company and (ii) the Lenders have no further
obligation to make any Loans. Amounts repaid or prepaid with respect to the
Loans may not be reborrowed. Notwithstanding the foregoing, the Lenders may, in
their sole discretion, agree to make additional Loans to the Company in an
aggregate principal amount up to $10,000,000 on the same terms and conditions
set forth herein.

(b) Notes. The Company shall execute and deliver on the Closing Date to each
Lender a note (a “Note” and collectively, the “Notes”) substantially in the form
of Exhibit A annexed hereto to evidence such Lender’s Loan, in the principal
amount of such Lender’s Loan and with other appropriate insertions.

2.2. Interest on the Loans.

(a) Rate of Interest. Subject to the provisions of Sections 22 and 24.8, each
Loan shall bear interest on the unpaid principal amount thereof from the Closing
Date through maturity (whether by acceleration or otherwise) in cash at a rate
per annum of 10%.

(b) Interest Payments. Subject to the provisions of Section 2.2(c), cash
interest on the Loans shall be payable in arrears on and to each Interest
Payment Date, upon any prepayment of the Loans (to the extent accrued on the
amount being prepaid) and at maturity (including the Maturity Date); provided,
however, so long as no Event of Default has occurred and is continuing,
(i) during calendar year 2012 and (ii) for each period thereafter so long as the
Company would have Qualified Cash of less than $20,000,000 immediately after the
making of such interest payment in cash (without giving effect to any payment of
the revolving loans under the Working Capital Facility and/or a Permitted ABL
Facility made in connection with such election), the Company may elect to pay,
in kind, a portion of such accrued and unpaid interest equal to 5% per annum
(any such interest paid in kind, the “PIK Interest”) due on any Interest Payment
Date by delivering a certificate executed by a Responsible Officer of the
Company to the Agent certifying that the Company has elected to make a payment
of interest with respect to the Loans utilizing PIK Interest. Such officer’s
certificate must be delivered to the Agent at least 5 Business Days prior to the
commencement of the applicable Fiscal Quarter. All interest due and payable
hereunder that the Company elects to pay in the form of PIK Interest shall be
capitalized, added to the then-outstanding principal amount of the Loans as
additional principal obligations hereunder on and as of such Interest Payment
Date and shall automatically constitute a part of the outstanding principal
amount of the Loans for all purposes hereof (including the accrual of interest
thereon at the rates applicable to the Loans generally). Any determination of
the principal amount outstanding under the Loans after giving effect to any
payment of PIK Interest hereunder or otherwise that is reasonably made by the
Agent or the Lenders in good faith shall be prima facie evidence of the
correctness of such determination in the absence of manifest error.

 

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Third Amended & Restated Credit Agreement

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(c) Computation of Interest. Interest on the Loans shall be computed on the
basis of a 360-day year, in each case for the actual number of days elapsed in
the period during which it accrues. In computing interest on any Loan, the date
of the making of such Loan or the first day of an Interest Period applicable to
such Loan, as the case may be, shall be included, and the date of payment of
such Loan or the expiration date of an Interest Period applicable to such Loan,
as the case may be, shall be excluded; provided that if a Loan is repaid on the
same day on which it is made, one day’s interest shall be paid on that Loan.

(d) Interest Act (Canada). Solely for purposes of the Interest Act (Canada),
(i) whenever any interest or fee under this Agreement is calculated using a rate
based on a year of 360 days or 365 days, as the case may be, the rate determined
pursuant to such calculation, when expressed as an annual rate, is equivalent to
(x) the applicable rate based on a year of 360 days or 365 days, as the case may
be, (y) multiplied by the actual number of days in the calendar year in which
the period for which such interest or fee is payable (or compounded) ends, and
(z) divided by 360 or 365, as the case may be, (ii) the principle of deemed
reinvestment of interest does not apply to any interest calculation under this
Agreement, and (iii) the rates of interest stipulated in this Agreement are
intended to be nominal rates and not effective rates or yields.

2.3. General Provisions Regarding Payments.

(a) Manner and Time of Payment. All payments by the Company of principal,
interest, fees and other Obligations shall be made in Dollars in same day funds,
without defense, setoff or counterclaim, free of any restriction or condition,
and delivered to the Lenders not later than 12:00 Noon (New York City time) on
the date due in accordance with Section 14 hereof; funds received by Agent after
that time on such due date shall be deemed to have been paid by the Company on
the next succeeding Business Day.

(b) Application of Payments to Principal and Interest. All payments in respect
of the principal amount of any Loan shall include payment of accrued interest on
the principal amount being repaid or prepaid, and all such payments (and, in any
event, any payments in respect of any Loan on a date when interest is due and
payable with respect to such Loan) shall be applied and apportioned in the
following order, subject to Sections 8.3 and 8.4:

(i) First, to the payment of interest in respect of the Loans, pro rata
according to the respective unpaid principal amounts of the Loans owed to the
Lenders; and

(ii) Second, to the payment of principal (including any applicable Prepayment
Premium) in respect of the Loans, pro rata according to the respective unpaid
principal amounts of the Loans owed to the Lenders.

(c) Payments on Business Days. Whenever any payment to be made hereunder shall
be stated to be due on a day that is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest hereunder.

2.4. Margin Regulations. No portion of the proceeds of any borrowing under this
Agreement shall be used by any Principal Company or any of its Subsidiaries in
any manner that

 

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might cause the borrowing or the application of such proceeds to violate
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.

3. CLOSING; FEES.

3.1. Closing. The restructuring of the Loans shall occur at the offices of
Schulte Roth & Zabel LLP, 919 Third Avenue, New York, NY 10022 at 10:00 a.m.,
New York time, at a closing (the “Closing”) to occur simultaneously with the
closing of the Restructuring (such date, the “Closing Date”). At the Closing,
the Company will deliver to each Lender the Notes evidencing the Loans extended
by such Lender in the form of a single Note (or such greater number of Notes in
denominations of at least $100,000 as such Lender may request) dated the date of
the Closing and registered in such Lender’s name (or in the name of any Lender
nominee). If at the Closing, any of the conditions specified in Section 4 shall
not have been fulfilled to any Lender’s satisfaction, such Lender shall, at its
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights such Lender may have by reason of such failure or
such non-fulfillment.

3.2. Expenses. Without limiting the provisions of Section 15.1, the Company will
pay to each Lender and the Agent the reasonable fees and disbursements of legal
counsel (including with respect to outstanding legal invoices incurred with
respect to the Original Agreement) and consultants and such other expenses,
including, without limitation, search fees, diligence fees and expenses,
documentation fees and filing fees, incurred by the Lenders and the Agent in
connection with the transactions contemplated herein, set forth in a statement
(accompanied by reasonable detail) delivered to the Company on or prior to the
Closing Date; provided, that reimbursement for business due diligence expenses
of the Lenders and the Agent shall be limited to $150,000, and thereafter the
Company will pay, promptly upon receipt of a supplemental statement therefor
(accompanied by reasonable detail), such additional reasonable fees and
expenses, if any, as the Lenders and the Agent may incur in connection with such
transactions.

3.3. Yield Enhancement Premium. The Company shall pay to the Lenders a yield
enhancement premium (the “Yield Enhancement Premium”) in connection with
entering into this Agreement; such Yield Enhancement Premium to be paid by the
issuance of warrants for common stock of the Parent to the Lenders in the
amounts set forth in, and pursuant to, the Related Agreements. The Yield
Enhancement Premium shall be fully earned and nonrefundable as of the Closing.

4. CONDITIONS TO CLOSING. Each Lender’s agreement to amend and restate the
Original Agreement on the terms and conditions set forth herein at the Closing
is subject to the fulfillment to such Lender’s satisfaction or written waiver,
on or before the Closing Date, of the following conditions:

4.1. Representations and Warranties. The representations and warranties of the
Loan Parties in each of the Loan Documents shall be true and correct when made
and at the time of the Closing.

 

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4.2. Performance; No Default. Each Loan Party shall have performed and complied
with all agreements and conditions contained in each of the Loan Documents
required to be performed or complied with by it prior to or at the Closing and
no Default or Event of Default shall have occurred and be continuing.

4.3. Officer’s Certificate. Each Principal Company shall have delivered to the
Agent an Officer’s Certificate, dated as of the Closing Date, certifying that
the conditions specified in Sections 4.1 and 4.2 have been fulfilled.

4.4. Certificates; Good Standing Certificates. On or before the Closing Date,
the Agent shall have received the following from or with respect to each Loan
Party:

(a) A certificate, dated the Closing Date and signed by the secretary or similar
officer of such Loan Party, certifying (i) that the attached copies of the
Organizational Documents of such Loan Party, and resolutions of the Governing
Body of such Loan Party approving and authorizing the execution, delivery and
performance of the Loan Documents to which it is a party and the transactions
contemplated hereby are all true, complete and correct and remain unamended and
in full force and effect as of the Closing Date, and (ii) the incumbency and
specimen signature of each officer of such Loan Party executing any Loan
Documents on the Closing Date to which it is a party or any other document
delivered in connection herewith and therewith on behalf of such Loan Party;

(b) Except to the extent (i) such Loan Party is organized in a jurisdiction
where the applicable Governmental Authority does not provide such certificates
or (ii) such Loan Party has previously delivered such certificates to the Agent,
a copy of a certificate of the Secretary of State or other applicable
Governmental Authority of the jurisdiction in which such Loan Party is
organized, dated reasonably near the Closing Date, listing the Organizational
Documents of such Loan Party and each amendment thereto on file in such office
and certifying that (A) such amendments are the only amendments to such Loan
Party’s Organizational Documents on file in such office, (B) such Loan Party has
paid all franchise taxes due and payable on or prior to the date of such
certificate and (C) such Loan Party is duly organized and in good standing under
the laws of such jurisdiction;

(c) Except to the extent such Loan Party is qualified to do business in a
jurisdiction where the applicable Governmental Authority does not provide such
certificates, a copy of a certificate of the Secretary of State or other
applicable Governmental Authority of each jurisdiction in which such Loan Party
has a principal place of business and is required to be qualified as a foreign
entity, dated reasonably near the Closing Date, stating that such Loan Party is
duly qualified and in good standing as a foreign corporation or entity in each
such jurisdiction and has filed all annual reports required to be filed to the
date of such certificate; and

(d) In the case of any Irish Loan Party, a certificate of such Irish Loan Party
dated the Closing Date and signed by a director or the secretary of such Irish
Loan Party, certifying that the attached copies of the statutory declarations of
a majority of the directors and the special resolutions passed by the sole
member or by all of the members, as the case may be, were in each case executed
pursuant to Section 60 of the Irish Companies Act of 1963 (as amended) and are
true, complete and correct and remain unamended and in full force and effect as
of the Closing Date.

 

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4.5. Loan Documents. On or before the Closing Date, each Principal Company
shall, and shall cause each other Loan Party to, have delivered to the Lenders,
each of the following duly executed and delivered by the party or parties
thereto and, unless otherwise noted, dated the Closing Date:

(a) The Notes evidencing the Loans in the form of Exhibit A; and

(b) Each of the other Loan Documents to be executed and delivered at the Closing
(including, without limitation, the joinder documents by Dialogic Japan, Inc.),
in each case in form and substance reasonably satisfactory to the Agent.

4.6. Opinions of Counsel. The Agent shall have received opinions in form and
substance satisfactory to the Agent, dated the Closing Date and addressed to the
Lenders and the Agent from (i) Davis Wright Tremaine LLP, special United States
counsel for the Loan Parties, (ii) Davies Ward Phillips & Vineberg LLP, special
Canadian counsel for the Loan Parties, (iii) Lawson Lundell LLP, special
Canadian counsel for the Loan Parties, (iv) McCann FitzGerald, special Irish
counsel for the Loan Parties, and (v) Gross, Kleinhendler, Hodak, Halevy,
Greenberg & Co., special Israeli counsel for the Loan Parties, in each case
covering such matters incident to the transactions contemplated hereby as the
Agent may reasonably request (and each Principal Company hereby instructs its
counsel to deliver such opinions to the Lenders and the Agent).

4.7. [Intentionally Omitted].

4.8. Changes in Corporate Structure. No Loan Party shall have (a) changed its

jurisdiction of formation, (b) been a party to any merger or consolidation or
(c) succeeded to all or any substantial part of the liabilities of any other
entity, in each case at any time since December 31, 2010.

4.9. Security Interests in Personal and Mixed Property. The Collateral Agent
shall have received evidence satisfactory to it that each Principal Company and
the other Loan Parties shall have taken or caused to be taken all such actions,
executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments, and made or caused to be made all such
filings and recordings that may be necessary or, in the opinion of the
Collateral Agent, desirable in order to create (or to maintain) in favor of the
Collateral Agent, for the benefit of the Secured Parties, a valid and perfected
First Priority security interest in the entire personal and mixed property
Collateral. Such actions shall include the following:

(a) Lien Searches and UCC Termination Statements. Delivery to the Collateral
Agent of (i) the results of a recent search, by a Person satisfactory to the
Collateral Agent, of all effective UCC financing statements and fixture filings,
all personal property security registry and Register of Personal and Movable
Real Rights (Quebec) filings and all judgment and tax lien filings which may
have been made with respect to any personal property of any Loan Party, together
with copies of all such filings disclosed by such search, and (ii) UCC
termination statements, personal property security registry filings and Register
of Personal and

 

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Movable Real Rights (Quebec) filings, in each case duly executed or authorized
by all applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements, fixture filings
personal property security registry filings and Register of Personal and Movable
Real Rights (Quebec) filings disclosed in such search (other than any such
filings in respect of Liens permitted to remain outstanding pursuant to the
terms of this Agreement);

(b) UCC Financing Statements and Fixture Filings. Delivery to the Collateral
Agent (to the extent not previously delivered and filed and the Collateral Agent
does not determine that new filings are necessary or desirable) of, where
appropriate, UCC financing statements, fixture filings, and personal property
security registry and Register of Personal and Movable Real Rights (Quebec)
filings, in each case duly executed or authorized by each applicable Grantor (if
required) with respect to all personal and mixed property Collateral of such
Grantor, for filing in all jurisdictions as may be necessary or, in the opinion
of the Collateral Agent, desirable to perfect (or maintain the perfection of)
the security interests created in such Collateral pursuant to the Collateral
Documents;

(c) Filings in Ireland, Brazil and Israel. With respect to Collateral located in
Ireland, delivery to the Collateral Agent (to the extent not previously
delivered and filed and the Collateral Agent does not determine that new filings
are necessary or desirable) of the documents or instruments required to be filed
with the Irish Companies Registration Office pursuant to Sections 99 and 111 of
the Irish Companies Act of 1963, as amended, in order to create (or maintain) or
perfect (or maintain the perfection of) Liens in respect of such Collateral.
With respect to Collateral located in Brazil and Israel, delivery to the
Collateral Agent (to the extent not previously delivered and filed and the
Collateral Agent does not determine that new filings are necessary or desirable)
of the documents or instruments required to be filed with the applicable filing
offices, in order to create (or maintain) or perfect (or maintain the perfection
of) Liens in respect of such Collateral; and

(d) PTO Cover Sheets, Etc. Delivery to the Collateral Agent (to the extent not
previously delivered and filed and the Collateral Agent does not determine that
new filings are necessary or desirable) of all cover sheets or other documents
or instruments required to be filed with the United States Patent and Trademark
Office, the United States Copyright Office and the Canadian Intellectual
Property Office in order to create (or maintain) or perfect (or maintain the
perfection of) Liens in respect of any IP Collateral.

4.10. Financial Statements. The Lenders shall have received the financial
statements referred to in Section 5.3(a).

4.11. Evidence of Insurance. The Collateral Agent shall have received a
certificate from each Principal Company’s insurance broker or other evidence
satisfactory to it that all insurance required to be maintained pursuant to
Section 9.3(b) is in full force and effect and that Collateral Agent on behalf
of the Secured Parties has been named as additional insured and/or loss payee
thereunder to the extent required under Sections 9.3(b) and 9.3(d).

4.12. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and the other
Loan Documents and the

 

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Related Agreements and all other agreements, documents and instruments incident
to such transactions shall be satisfactory to the Lenders and the Agent, and the
Lenders and the Agent shall have received all such counterpart originals or
certified or other copies of such documents as the Lenders or Agent may
reasonably request.

4.13. No Judgment or Orders; No Actions Pending.

(a) There shall not be any judgment or order of a court of competent
jurisdiction or any ruling of any Governmental Authority or any condition
imposed under any Applicable Law which would prohibit the extension of the Loans
hereunder or subject any Lender or the Agent to any onerous condition or any
penalty under or pursuant to any Applicable Law if the Loans were to be extended
hereunder; and

(b) There shall be no suit, action, investigation, inquiry or other proceeding
by any Governmental Authority or any other Person or any other legal or
administrative proceeding pending or, to any Principal Company’s knowledge,
threatened which questions the validity or legality of the transactions
contemplated by this Agreement or the other Loan Documents or which seeks
damages or injunctive or other equitable relief in connection therewith.

4.14. Purchase Permitted By Applicable Law, Etc. On the Closing Date the
extension of the Loans by the Lenders shall (a) be permitted by the laws and
regulations of each jurisdiction to which the Lenders are subject, (b) not
violate any Applicable Law (including, without limitation, Regulation U, T or X
of the Board of Governors of the Federal Reserve System), (c) not require
registration or qualification of the Notes under any Applicable Law (including,
without limitation, any applicable federal or state securities laws), and
(d) not subject the Lenders to any tax, penalty or liability under or pursuant
to any Applicable Law which was not in effect on the date hereof. If requested
by the Lenders or the Agent, the Lenders or the Agent shall have received an
Officer’s Certificate certifying as to such matters of fact as the Lenders or
Agent may reasonably specify to enable the Lenders or Agent to determine whether
such purchase is so permitted.

4.15. Solvency Certificate. The Agent shall have received an Officer’s
Certificate duly executed by the chief executive officer and Senior Financial
Officer of each Principal Company in substantially the form of Exhibit D (a
“Solvency Certificate”) to the effect that (a) each Principal Company will be
Solvent upon the consummation of the transactions contemplated herein and in the
other Loan Documents, (b) each Principal Company and its Subsidiaries, taken as
a whole, will be Solvent upon the consummation of the transactions contemplated
herein and in the other Loan Documents; and (c) containing such other statements
with respect to the solvency of the Principal Companies and their Subsidiaries
and matters related thereto as the Agent or the Lenders shall request.

4.16. Consents and Approvals. All consents, exemptions, authorizations, or other
actions by, or notices to, or filings with, Governmental Authorities and other
Persons in respect of all Applicable Law, necessary in connection with the
execution, delivery or performance (including, without limitation, the payment
of interest on any Loan) by the Loan Parties, or enforcement against any Loan
Party of the Loan Documents to which it is a party, shall have been obtained and
be in full force and effect, and the Agent shall have been furnished with
appropriate

 

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evidence thereof (including, with respect to all federal, state and local
regulatory filings, consents and approvals, opinions in form and substance
satisfactory to the Agent, dated as of the Closing Date, from outside counsel
for the Loan Parties reasonably satisfactory to the Agent covering the
foregoing), and all waiting periods related thereto shall have lapsed or expired
without extension or the imposition of any conditions or restrictions.

4.17. Related Agreements.

(a) All conditions to the closing of the Restructuring set forth in the Related
Agreements shall have been satisfied or waived with the consent of the Agent,
which consent shall not be unreasonably withheld, and the closing of the
Restructuring shall have occurred, or shall occur contemporaneously with the
Closing, in accordance with the terms of the Related Agreements.

(b) In respect of the Related Agreements executed prior to the Closing, the
Lenders and the Agent shall have received a fully executed or conformed copy of
each such Related Agreement, and each such Related Agreement shall be in full
force and effect and shall be in form and substance satisfactory to the Agent.
The Lenders and the Agent shall have received a copy, in substantially final
form, of each other Related Agreement, and each such Related Agreement shall be
in form and substance satisfactory to the Agent.

(c) Agent shall have received an Officer’s Certificate from each Principal
Company to the effect that (a) such Principal Company has performed in all
material respects all of its obligations in the Related Agreements required to
be performed by such party on or before the Closing Date and (b) the
representations and warranties of such Principal Company in the Related
Agreements and in any certificate or other writing delivered by such Principal
Company pursuant thereto (x) that are qualified by materiality or material
adverse effect are true, correct and complete on and as of the Closing Date to
the same extent as though made on and as of that date (or, if such
representation and warranty refers to an earlier date or time, such earlier date
or time), and (y) that are not qualified by materiality or material adverse
effect are true, correct and complete in all material respects on and as of the
Closing Date to the same extent as though made on and as of that date (or, if
such representation and warranty refers to an earlier date or time, such earlier
date or time) and (c) each Related Agreement is in full force and effect and no
provision thereof has been modified or waived in any material respect without
the consent of Agent.

(d) All conditions to the closing of the Restructuring set forth in the Related
Agreements to be performed at or prior to the closing of the Restructuring shall
have been or will contemporaneously be satisfied in all material respects or the
fulfillment of any such conditions shall have been waived with the consent of
Agent (which consent shall not have been unreasonably withheld).

4.18. Material Adverse Effect. With respect to a Principal Company and its
Subsidiaries, there shall have occurred no material adverse change in or effect
on the business, condition (financial or otherwise), assets, liabilities,
operations, management, performance, properties or prospects of such Principal
Company and its Subsidiaries, taken as a whole, since December 31, 2010 (it
being understood and agreed that no circumstance or change in the

 

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Principal Companies and its Subsidiaries that was disclosed in reports filed
with the SEC or otherwise in writing to the Agent and the Lenders during or
prior to the Fiscal Quarter ending December 31, 2011 will be deemed a material
adverse change) and there shall exist no action, suit, investigation, litigation
or proceeding pending or, to the knowledge of a Principal Company, threatened in
any court or before any arbitrator or governmental authority not disclosed
publicly or in writing to the Agent and the Lenders during or prior to the
Fiscal Quarter ending December 31, 2011 that could reasonably be expected to
constitute such a material adverse change.

4.19. Working Capital Facility Amendment. The Agent shall have received an
executed copy of the Consent and Seventeenth Amendment to the Working Capital
Facility, which consent and amendment shall be on terms reasonably satisfactory
to the Agent.

4.20. Existing Parent Indebtedness. The Agent shall have received evidence
satisfactory to it that all Indebtedness (other than (i) the Indebtedness under
the Working Capital Facility, (ii) Indebtedness of the Parent listed on Schedule
5.18(a); and (iii) corporate credit cards and other similar Indebtedness having
a maximum principal balance in each case of less than $55,000 of the Parent
(“Existing Parent Indebtedness”)) has been paid in full, all commitments to lend
or make other extensions of credit thereunder have been terminated and all Liens
securing the Existing Parent Indebtedness or other obligations thereunder have
been release and/or terminated.

5. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL COMPANIES.

In order to induce the Lenders and the Agent to enter into this Agreement, each
of the Principal Companies represents and warrants to each Lender and the Agent,
in each case after giving effect to the consummation of the closing (i) of the
Restructuring and (ii) of the Consent and Seventeenth Amendment to the Working
Capital Facility, (other than where a representation and warranty makes specific
reference to it being made prior to the closing of the Restructuring or the
Consent and Seventeenth Amendment to the Working Capital Facility), that:

5.1. Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.

(a) Organization and Powers. Each Principal Company and each of its Subsidiaries
is a corporation or limited liability company, as applicable, duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization or incorporation, as applicable, as specified in Schedule 5.1. Each
Principal Company and its Subsidiaries has all requisite power and authority to
own and operate its Properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents to which it is a
party and to carry out the transactions contemplated thereby.

(b) Qualification and Good Standing. Each Principal Company and each of its
Subsidiaries is qualified to do business and in good standing in every
jurisdiction where its Properties are located and wherever necessary to carry
out its business and operations, except in jurisdictions where the failure to be
so qualified or in good standing has not had and could not reasonably be
expected to result in a Material Adverse Effect.

 

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(c) Conduct of Business. Each Principal Company and its Subsidiaries are engaged
only in the businesses permitted to be engaged in pursuant to Section 10.9.

(d) Names; Capital Stock. Each Principal Company and its Subsidiaries as of the
Closing Date, their correct names and their jurisdictions of incorporation or
organization, together with each such Person’s directors are identified in
Schedule 5.1. The Capital Stock of the Company and each of the other
Subsidiaries of the Parent identified in Schedule 5.1 is duly authorized,
validly issued, fully paid and nonassessable, free and clear of any Lien, and
none of such Capital Stock constitutes Margin Stock. Schedule 5.1 correctly sets
forth, as of the Closing Date, the ownership interest of the Principal Companies
and each of their Subsidiaries in each of the Subsidiaries identified therein,
as well as the ownership interests of any other Persons therein. The authorized
Capital Stock of Parent consists of 200,000,000 shares of common stock, par
value $0.001 per share. As of March 19, 2012, 31,492,308 shares of common stock
of the Parent were issued and outstanding. The issued and outstanding shares of
common stock of the Parent have been duly authorized and validly issued, are
fully paid and nonassessable, and are free of preemptive rights. Each Subsidiary
of a Principal Company is a Wholly-Owned Subsidiary of such Principal Company.
Schedule 5.1 also sets forth each Affiliate of the Principal Companies as of the
Closing Date.

(e) Restrictions. No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than the Loan Documents, the Working Capital
Facility and customary limitations imposed by Applicable Law) restricting the
ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to any Principal Company or any of its
Subsidiaries that owns outstanding Capital Stock of such Subsidiary.

5.2. Authorization of the Transactions, Etc.

(a) Authorization of the Transactions. The execution, delivery and performance
of the Loan Documents have been duly authorized by all necessary action on the
part of each Loan Party (including, without limitation, all necessary action on
the part of each Loan Party’s Governing Body) that is a party thereto. Without
limitation, the Company and each other Loan Party specifically has directed the
attention of the members of its Governing Body to the provisions herein to the
effect that the Applicable Prepayment Premium is payable upon prepayment of the
Loans in accordance with Section 8.2, 8.3 or 8.4 hereof or upon the acceleration
of the Loans prior to their stated maturity in accordance with Section 12 hereof
and, in connection therewith, the respective Governing Bodies of the Company and
each other Loan Party specifically approved the provisions hereof relating to
such Prepayment Premium.

(b) No Conflict. The execution, delivery and performance by the Loan Parties of
the Loan Documents to which they are parties and the consummation of the
transactions contemplated by the Loan Documents do not and will not (i) conflict
with, violate or result in the breach of any provision of any Applicable Law
applicable to any Principal Company or any of its Subsidiaries, the
Organizational Documents of any Principal Company or any of its Subsidiaries or
any order, judgment or decree of any court or other Government Authority binding
on any Principal Company or any of its Subsidiaries, (ii) conflict with,
violate, result in a breach or termination of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of any
Principal Company or any of its Subsidiaries, (iii) result in or

 

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require the creation or imposition of any Lien upon any of the properties or
assets of any Principal Company or any of its Subsidiaries (other than any Liens
created under any of the Loan Documents in favor of Collateral Agent on behalf
of the Secured Parties), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of any
Principal Company or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Closing Date and disclosed in
writing to the Lenders and the Agent. Notwithstanding the foregoing, with
respect to the grant of a Lien in favor of the Collateral Agent on the Capital
Stock of any Non-Grantor Subsidiary, no Principal Company makes any
representation as to whether such grant conflicts with, violates or results in
the breach of any provision of any Applicable Law in the jurisdiction of such
Non-Grantor Subsidiary.

(c) Consents and Approvals, Governmental Authorizations, Etc. No consent,
approval or authorization of, or registration, filing or declaration with, any
Governmental Authority or any other Person, including, without limitation, all
federal, state and local regulatory filings, consents and approvals necessary in
connection with the Loan Documents, is required in connection with the
execution, delivery or performance by the Principal Companies and their
Subsidiaries of this Agreement or any other Loan Document to which such Person
is a party except (i) those set forth on Schedule 5.2(c), each of which has been
obtained or filed and are in full force and effect, with all applicable waiting
periods having lapsed without extension or the imposition of any conditions or
restrictions, (ii) necessary authorizations from the Governing Bodies of the
Loan Parties, each of which authorizations has been obtained as of the Closing
Date, (iii) as may be required, in connection with the disposition of any
Investments, by laws generally affecting the offering and sale of Securities in
connection with the exercise of remedies by the Collateral Agent or any of the
Secured Parties under the Collateral Documents, and (iv) applicable state and
federal regulatory consents relating to transfers of Securities or assets of
regulated entities in connection with the exercise of remedies by the Collateral
Agent or any of the Secured Parties under the Collateral Documents.
Notwithstanding the foregoing, with respect to the grant of a Lien in favor of
the Collateral Agent on the Capital Stock of any Non-Grantor Subsidiary, no
Principal Company makes any representation as to whether such grant requires the
consent, approval or authorization of, or registration, filing or declaration
with, any Governmental Authority in the jurisdiction of such Non-Grantor
Subsidiary.

(d) Binding Obligation. Each of the Loan Documents has been duly executed and
delivered by each Loan Party that is a party thereto and is the legally valid
and binding obligation of such Loan Party, enforceable against such Loan Party
in accordance with its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to
enforceability.

5.3. Financial Condition; SEC Filings.

(a) For the period ended September 30, 2011 (and additionally for the months
ended October 31, 2011, November 30, 2011 and December 31, 2011 with respect to
the Company and its Subsidiaries), the Principal Companies have heretofore
delivered to the Lenders and the Agent, at the Lenders’ and Agent’s request, the
financial statements and information set forth in Schedule 5.3. All such
statements were prepared in conformity with

 

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GAAP and fairly present, in all material respects, the financial position (on a
consolidated basis) of the entities described in such financial statements as at
the respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments (which will not be
material in amount and effect) and the absence of footnotes required by GAAP. No
Principal Company or any of its Subsidiaries has (and will not have following
the extension of the Loans) any Contingent Obligation, contingent liability or
liability for taxes, long-term lease or unusual forward or long-term commitment
that, as of the Closing Date, is not reflected in the foregoing financial
statements or the notes thereto and that, in any such case, is material in
relation to the business, operations, Properties, condition (financial or
otherwise) or prospects of such Principal Company or any of its Subsidiaries. No
Principal Company or any of its Subsidiaries has entered into any off-balance
sheet arrangements or transactions. During the past three years, no Principal
Company or any of its Subsidiaries have restated any of their financial
statements and no Principal Company or any of its Subsidiaries is aware of any
facts which may require such restatement.

(b) Except as set forth on Schedule 5.3, all statements, reports, schedules,
forms and other documents (the “SEC Documents”) required to have been filed or
furnished by any Principal Company with or to the SEC since April 4, 2007 have
been so filed or furnished on a timely basis. No Subsidiary of any Principal
Company is required to file or furnish any documents with or to the SEC. As of
the time it was filed with or furnished to the SEC as of the date of filing:
(i) each of the SEC Documents complied as to form in all material respects with
the applicable requirements of the Securities Act or the Exchange Act (as the
case may be); and (ii) none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except to the
extent corrected by the filing or furnishing of the applicable amending or
superseding SEC Document. Each of the certifications and statements relating to
SEC Documents required by: (1) the SEC’s Order dated June 27, 2002 pursuant to
Section 21(a)(1) of the Exchange Act (File No. 4-460); (2) Rule 13a-14 or 15d-14
under the Exchange Act; or (3) 18 U.S.C. §1350 (Section 906 of the
Sarbanes-Oxley Act) (collectively, the “Certifications”) is accurate and
complete, and complied as to form and content with all Applicable Laws in effect
at the time such Certification was filed with or furnished to the SEC.

5.4. Absence of Certain Developments. Except as set forth on Schedule 5.4 or
pursuant to the transactions contemplated hereunder or as disclosed in reports
filed with the SEC or otherwise in writing to the Agent and the Lenders during
or prior to the Fiscal Quarter ending December 31, 2011, since December 31,
2010:

(a) To the Knowledge of the Principal Companies, there has not occurred any
event, change or condition, or combination thereof, that has had, has, or could
reasonably be expected to have a Material Adverse Effect;

(b) except as set forth on Schedule 5.4(b), other than the transactions
contemplated hereunder and under the Related Agreements, there has not been any
declaration, setting a record date, setting aside or authorizing the payment of,
any dividend or other

 

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distribution in respect of any shares of Capital Stock or any repurchase,
redemption or other acquisition by the Company, of any of the outstanding shares
of Capital Stock or other equity securities of, or other ownership interest in,
the Company;

(c) there has not been any payment of interest or principal with respect to any
debt owed to an Affiliate of the Principal Companies, other than a Wholly-Owned
Subsidiary;

(d) except as contemplated in the Related Agreements or as set forth on Schedule
5.4(d) with respect to the Parent, no Principal Company or any of its
Subsidiaries has transferred, issued, sold or disposed of any shares of their
Capital Stock, or granted any options, warrants, calls or other rights to
purchase or otherwise acquire shares of their Capital Stock which are not
reflected on the current capitalization table, warrant table and stock option
table set forth on Schedule 5.1.

(e) except (i) in connection with the Related Agreements, (ii) in the ordinary
course of business and consistent with past practice, (iii) as set forth on
Schedule 5.4(e) or (iv) as required by Applicable Law, no Principal Company or
any of its Subsidiaries has (A) awarded or paid any bonuses to any Employees or
former Employees; or (B) entered into any Employee Program, employment deferred
compensation, severance or similar agreement (nor amended or terminated any such
agreement) or agreed to increase the compensation payable or to become payable
to any current or former Employees or agreed to increase the coverage or
benefits available under any severance pay, deferred compensation, bonus or
other incentive compensation, pension or other employee benefit plan, payment or
arrangement made to, for or with such current or former Employees;

(f) no Principal Company or any of its Subsidiaries has made, or agreed to, make
any material acquisition of any business or assets outside the ordinary course
of business or inconsistent with past practice;

(g) no Principal Company or any of its Subsidiaries has made, or agreed to make,
any loans or investments in any business of any Affiliate of any Principal
Company or any of its Subsidiaries;

(h) other than in the ordinary course of business and consistent with past
practice, no Principal Company or any of its Subsidiaries has transferred or
granted any rights under any Contractual Obligations, leases, licenses or
agreements used by any Principal Company or any of its Subsidiaries in their
business, or allowed any such rights to lapse or expire, which has had, has or
could result in a Material Adverse Effect;

(i) except as set forth on Schedule 5.4(i), there has not been any damage,
destruction or loss, whether or not covered by insurance, with respect to the
property of any Principal Company or any of its Subsidiaries having a
replacement cost of more than $50,000 for any single loss or $150,000 for all
such losses;

(j) other than in connection with the Loans and the Working Capital Facility or
as permitted hereunder or thereunder, no Principal Company or any of its
Subsidiaries has mortgaged, hypothecated, pledged or subjected to any Lien
(other than in the ordinary course of

 

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business and other than Permitted Encumbrances) any of its assets, or acquired
any assets or sold, assigned, transferred, conveyed, leased or otherwise
disposed of any assets of such Principal Company or any of its Subsidiaries,
except for assets acquired or sold, assigned, transferred, conveyed, leased or
otherwise disposed of in the ordinary course of business and consistent with
past practice;

(k) no Principal Company or any of its Subsidiaries has canceled or compromised
any debt or claim with a value exceeding $25,000 or canceled, terminated,
compromised, relinquished, or released any claim or right under any Material
Contract with a value exceeding $25,000;

(l) no Principal Company or any of its Subsidiaries has made any binding
commitment to make any capital expenditures or capital additions or betterments
in any such case obligating such Principal Company or any of its Subsidiaries to
pay an amount not in the ordinary course of business consistent with past
practice;

(m) to the Principal Companies’ Knowledge, there has not been any material
default under any Material Contract or the occurrence of any event, which with
notice or lapse of time or both, would result in a material default under any
such Material Contract;

(n) no Principal Company or any of its Subsidiaries has created, incurred,
assumed or guaranteed any debts, obligations or liabilities (including, without
limitation, obligations in respect of capital leases), whether due or to become
due, except current liabilities incurred in the ordinary course of business and
consistent with past practice;

(o) other than the Loan Documents and the Related Agreements, no Principal
Company or any of its Subsidiaries has entered into any material transaction
other in the ordinary course of business consistent with past practice;

(p) no Principal Company or any of its Subsidiaries has encountered any labor
difficulties or labor union organizing activities which could reasonably be
expected to result in a Material Adverse Effect;

(q) no Principal Company or any of its Subsidiaries has made any change in the
accounting principles, methods or practices followed by it, other than changes
adopted in accordance with changes to GAAP;

(r) no Principal Company or any of its Subsidiaries has encountered any
disagreements, that have not been resolved, with its independent public
accountants regarding any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure;

(s) except as set forth on Schedule 5.4(s), no Principal Company or any of its
Subsidiaries has allowed any rights to lapse with respect to, any Intellectual
Property Rights material to the business of such Principal Company or any of its
Subsidiaries, and except in the ordinary course of business and consistent with
past practice, no Principal Company or any of its Subsidiaries has sold or
transferred any Intellectual Property Rights;

 

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(t) except as set forth on Schedule 5.4(t), no Principal Company or any of its
Subsidiaries has suffered or experienced a material adverse change in the
relationship or course of dealings between (i) on the one hand, any Principal
Company or any of its Subsidiaries and (ii) on the other hand, either (A) any of
the four (4) largest (by cost of goods) suppliers of such Principal Company and
its Suppliers or (B) any of the ten (10) largest (by revenue) customers of such
Principal Company and its Subsidiaries;

(u) no Principal Company or any of its Subsidiaries has entered into, modified,
amended or terminated any Real Property Lease, except modifications or
amendments in connection with renewals of leases, terminations of leases or
entering into new Real Property Leases, in each case in the ordinary course of
business consistent with past practice;

(v) no Principal Company or any of its Subsidiaries has (i) been denied
insurance coverage; or (ii) cancelled or terminated any insurance policy naming
it as a beneficiary or a loss payable payee without obtaining comparable
substitute insurance coverage;

(w) no Principal Company or any of its Subsidiaries has amended its Articles of
Incorporation or Bylaws, or in the case of the Irish Loan Parties and the
Israeli Loan Party, their memorandum and Articles of Association, or in the case
of the Brazilian Loan Party, its Organizational Documents, except as
contemplated by the Loan Documents or the Related Agreements;

(x) except as set forth on Schedule 5.4(x) and as contemplated by the Loan
Documents or the Related Agreements, no Principal Company or any of its
Subsidiaries has made or changed any Tax election;

(y) no Principal Company or any of its Subsidiaries has agreed, whether in
writing or otherwise, to do any of the foregoing; and

(z) except as contemplated by the Related Agreements, no Principal Company or
any of its Subsidiaries has directly or indirectly declared, ordered, paid or
made, or set apart any sum or property for, any Restricted Junior Payment or
agreed to do so except as permitted by Section 10.5.

5.5. Title to Properties; Liens; Real Property; Intellectual Property.

(a) Real Property.

(i) Schedule 5.5(a) contains a true, accurate and complete list of the addresses
and specific locations (if less than an entire building is leased) of each
parcel of real property leased by each of the Loan Parties as lessee. The
portion of such real property which each such Loan Party leases and all
buildings, structures, facilities, fixtures and other improvements thereon are
collectively included in the definition herein of Leasehold Property. Schedule
5.5(a) lists each such lease (the “Real Property Leases”). The Real Property
Leases are valid, binding, enforceable and in full force and effect and have not
been modified. No Principal Company or any of its Subsidiaries is the owner or
feeholder of any real property interests.

 

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(ii) Except as disclosed on Schedule 5.5(a), each of the Loan Parties has a good
and indefeasible or marketable leasehold estate in the Leasehold Property that
it leases, free and clear of all sublease agreements, Liens and other exceptions
to title, other than Permitted Encumbrances, and is in sole possession of each
parcel of Leasehold Property that it leases.

(iii) Each Loan Party is in compliance in all material respects with each Real
Property Lease to which it is party, and no Loan Party has received any notice
of default that remains uncured.

(iv) Each Loan Party has adequate rights of ingress and egress with respect to
each Leasehold Property in which it has an interest. There are no condemnation
or appropriation proceedings pending or, to the Knowledge of the Principal
Companies, threatened against the Leasehold Properties.

(v) Each of the Leasehold Properties is in good operating condition and in a
state of good maintenance and repair, ordinary wear and tear excepted, and are
adequate and suitable for the purposes for which they are presently being used
consistent with industry standards. Except as set forth on Schedule 5.5(a)(v),
there are no planned or required capital improvements to the Leasehold
Properties which exceed $50,000 that are not already included in the rent under
the applicable Real Property Lease. No Loan Party has received any written
notice under any Real Property Lease or sublease agreement or from the holder of
any mortgage or from any insurance company which has issued a policy with
respect to any portion of such properties to repair or pay for any repair
related to the Leasehold Property with which such parties have not complied.

(b) Intellectual Property.

(i) Either a Principal Company or one of its Subsidiaries is the sole and
exclusive owner (free and clear of all Liens other than the transactions
contemplated by the Loan Documents), of Company-Owned IP Rights, or has the
relevant license to use, each of the components of the Company Intellectual
Property and Company Technology as such components are being used by such
Principal Company and its Subsidiaries immediately prior to the Closing Date.
The copyrights, trademarks and Trade Secrets constituting Company Intellectual
Property and, to the Knowledge of the Principal Companies, the patents
constituting the Company Intellectual Property, are sufficient for the conduct
of the business of each Principal Company and its Subsidiaries as such business
is conducted immediately prior to the Closing Date. The (i) use, practice or
other commercial exploitation of the Company Intellectual Property by each
Principal Company or any of its Subsidiaries, (ii) manufacturing, licensing,
marketing, importation, offer for sale, sale or use of the products and services
of each Principal Company or any of its Subsidiaries and (iii) operations of the
business of each Principal Company and its Subsidiaries immediately prior to the
Closing Date, do not infringe, constitute an unauthorized use of or
misappropriate any Intellectual Property Right of any third Person or breach any
Contractual Obligations, except for such infringements, unauthorized uses,
misappropriations or breaches, which individually or in the aggregate, would not
have a Material Adverse Effect. Other than as disclosed in Schedule 5.5(b), no
Principal Company or any of its Subsidiaries is, or during the last three years
before the Closing Date has been, a party to or the

 

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subject of any pending or, to the Knowledge of the Principal Companies,
threatened suit, action, investigation or proceeding which involves a claim
(i) against such Principal Company, or any of its Subsidiaries, of infringement,
unauthorized use, or violation of any Intellectual Property Rights or Technology
of any Person, or challenging the ownership, use, validity or enforceability of
any Company Intellectual Property or Company Technology; or (ii) contesting the
right of any Principal Company or any of its Subsidiaries to use, sell,
exercise, license, transfer or dispose of any Intellectual Property, or any
products, processes or materials covered thereby in any manner. To the Knowledge
of the Principal Companies, there are no specific facts or circumstances that
would form the basis for any claim against any Principal Company or any of its
Subsidiaries of infringement, unauthorized use, or violation of any Intellectual
Property Rights or rights in the Technology of any Person, or challenging the
ownership, use, validity or enforceability of any Company Intellectual Property
or Company Technology. Other than as disclosed in Schedule 5.5(b), none of the
Company-Owned IP Rights, or the products or services of any Principal Company or
any of its Subsidiaries, is subject to any proceeding or outstanding order or
stipulation: (i) restricting in any manner its use, development, manufacture,
marketing, license, sale, distribution, furnishing or disposition by such
Principal Company or any of its Subsidiaries or (ii) affecting its validity, use
or enforceability; and no Principal Company or any of its Subsidiaries is
subject to any proceeding or outstanding order or stipulation restricting the
conduct of its business in order to accommodate Intellectual Property Rights of
a third party.

(ii) To the Knowledge of the Principal Companies, none of the Employees are, and
to the Knowledge of the Principal Companies, no other Person (including former
employees of any Principal Company or any of its Subsidiaries) is, infringing,
violating, misappropriating, or otherwise misusing any Company Intellectual
Property. No Principal Company or any of its Subsidiaries has made any such
written claims against any Person in the three years prior to the Closing Date
(including Employees and former employees of such Principal Company and any of
its Subsidiaries) nor, to the Knowledge of the Principal Companies, is there any
basis for such a claim.

(iii) No Trade Secret or any other non-public proprietary information material
to the business of any Principal Company or any of its Subsidiaries as presently
conducted and as proposed to be conducted has been authorized to be disclosed or
has been actually disclosed by such Principal Company or any of its Subsidiaries
to any Employee or any third Person other than pursuant to a confidentiality or
non-disclosure agreement restricting the disclosure and use of the Company
Intellectual Property or Company Technology. Each Principal Company and its
Subsidiaries have taken all reasonably necessary and appropriate steps to
protect and preserve the confidentiality of all Trade Secrets and any other
confidential information of such Principal Company and its Subsidiaries.

(iv) Schedule 5.5(b) indicates (i) which Company-Owned IP Rights have been
registered with governmental authorities and (ii) which Company-Owned IP Rights
each Principal Company or any of its Subsidiaries have applied to register, and
the recorded owner of each registration or application. All issued patents and
registered trademarks and service marks owned by any Principal Company or any of
its Subsidiaries are currently in compliance with all legal requirements other
than (x) any requirement that, if not satisfied, with respect to a patent would
not result in a revocation or lapse or otherwise adversely affect its
enforceability, and with regard to a trademark or service mark would not result
in a cancellation

 

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of such registration or otherwise adversely affect the use, priority or
enforceability of the trademark or service mark or (y) with respect to any
trademarks or trademark applications that any Principal Company or any of its
Subsidiaries has decided to abandon in the ordinary course of its business. No
Principal Company or any of its Subsidiaries has engaged in any inequitable
conduct, patent misuse or fraud, or failed to disclose material prior art, in
connection with the prosecution of any patent application owned by such
Principal Company or any of its Subsidiaries or the enforcement or licensing of
any patent owned by such Principal Company or any of its Subsidiaries, in a
manner that would result in the abandonment or unenforceability of such patent
application or patent.

(v) All current Employees and consultants of or to any Principal Company or any
of its Subsidiaries, and all Employees and consultants of or to any Principal
Company or any of its Subsidiaries who were employed or engaged by the Principal
Companies or any of their Subsidiaries at any time during the three year period
prior to the Closing Date, who are or were involved in the creation or
preparation of Company-Owned IP Rights or Company Technology have executed and
delivered to and in favor of such Principal Company or any of its Subsidiaries
an agreement, the form of which has been provided to the Lenders, regarding the
protection of confidential and proprietary information and the assignment to
such Principal Company or any of its Subsidiaries of all Intellectual Property
Rights arising from the services performed for such Principal Company by such
persons. No Principal Company or any of its Subsidiaries has, in the last three
years, received written notice whereby a current or former Employee or
consultant of or to such Principal Company or any of its Subsidiaries claims any
rights in any product or work product of such Principal Company or any
Company-Owned IP Rights or Company Technology owned by such Principal Company or
any of its Subsidiaries.

(vi) All current consultants, independent contractors or other third parties
that created, prepared or delivered for or on behalf of any Principal Company or
any of its Subsidiaries works (including any materials and elements created,
prepared or delivered by such parties in connection therewith) and, to the
Knowledge of the Principal Companies, all former consultants, independent
contractors or other third parties that created, prepared or delivered such
works, have entered into agreements with such Principal Company, which
agreements have been signed by each such consultant, independent contractor and
third party substantially in the form or forms which have been provided to the
Lenders, specifying that (i) all right, title and interest in such works
(including any materials and elements created, prepare or delivered by such
parties in connection therewith) are otherwise assigned or such parties are
otherwise obligated to assign such works to such Principal Company without
additional consideration and (ii) such parties have waived all their
non-assignable rights (including moral rights) in such works.

(vii) To the Knowledge of the Principal Companies, no Employee or former
employee and no current or former consultant or independent contractor of any
Principal Company or any of its Subsidiaries: (i) is in material violation of
any term or covenant of any employment contract, patent disclosure agreement,
invention assignment agreement, nondisclosure agreement, non-competition
agreement or any other Contractual Obligations with any other party by virtue of
such employee’s, consultant’s or independent contractor’s being employed by, or
performing services for, such Principal Company or such Subsidiary or using
trade secrets or proprietary information of others without permission; or
(ii) has developed any

 

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Technology or other copyrightable, patentable or otherwise proprietary work for
such Principal Company or such Subsidiary that is subject to any Contractual
Obligations under which such consultant or independent contractor has assigned
or otherwise granted to any third party any rights (including Intellectual
Property Rights) in or to such Technology, or other copyrightable, patentable or
otherwise proprietary work.

(viii) Neither the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby, including the Related
Transactions, shall, in accordance with their terms, in and of itself:
(A) constitute a material breach of or default under any instrument, license or
other Contractual Obligations governing any Intellectual Property; (B) cause the
forfeiture or termination by any Principal Company or any Subsidiary of, or give
rise to a right of forfeiture or termination of, any Intellectual Property; or
(C) materially impair the right of any Principal Company or any Subsidiary to
use, make, market, license, sell, copy, distribute, or dispose of any
Intellectual Property or portion thereof.

(ix) With the exception of (i) certain computer source code licensed to third
parties and developed by the Company’s former subsidiary, Trisignal, none of
which (other than the code developed on the V34, V42bis or V90 standards) is
part of any currently shipping products of any Principal Company and its
Subsidiaries, (ii) small portions of the Company’s source code which the Company
intentionally provides to developers to allow them to create applications to
work with the Company’s products, the broad disclosure of which to such
developers the Company encourages, and (iii) Project DiaStar (an open source
project sponsored by the Company) whereby the Company provides certain open
source components to open source developers and encourages such developers to
develop solutions using the Company’s technology, Schedule 5.5(b) lists all
agreements in effect immediately prior to the Closing Date pursuant to which any
Principal Company, any of its Subsidiaries and any other party authorized to act
on their behalf has disclosed or delivered to any third party, or permitted the
disclosure or delivery to any escrow agent or other third party of, the source
code form of any Software owned or used by any Principal Company or any of its
Subsidiaries (“Source Code”).

(x) Each Principal Company and its Subsidiaries conducts the business of such
entity in compliance with all Applicable Laws and regulations regarding
encryption technology, including the import and export thereof.

(xi) Immediately prior to the Closing Date, no Software used or distributed by
any Principal Company or any of its Subsidiaries either by itself or as part of
any product is subject to any “copyleft” or other similar obligation or
condition (including any obligation or condition under any “open source” license
such as the GNU Public License, Lesser GNU Public License or Mozilla Public
License) that does: (i) require or condition the use or distribution of such
Software, Source Code, script or product on the disclosure, licensing or
distribution of any Source Code for any portion of such Software, Source Code or
script; or (ii) otherwise impose any limitation, restriction or condition on the
right or ability of any Principal Company or any of its Subsidiaries to use or
distribute any Software, Source Code, script or product.

(xii) The privacy policy or policies of each Principal Company and each of its
Subsidiaries are set forth on the Company Websites (as defined below) of each
such entity.

 

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The privacy practices of each Principal Company and each such Subsidiary
conform, and at all times during the past three years have conformed, and their
use, license, sublicense and sale of any personally identifiable information
collected from users at all Internet websites owned, maintained or operated by
such Principal Company and its Subsidiaries (collectively, the “Company
Websites”) have complied, in all material respects to the privacy policies of
such entities. Each Principal Company and each of its Subsidiaries have complied
in all material respects with all contractual obligations and Applicable Law
relating to (i) the privacy of users of the products and services of such
Principal Company and its Subsidiaries and all Company Websites, and (ii) the
collection, storage and transfer of any personally identifiable information
collected by such Principal Company, and of its Subsidiaries or by third parties
having authorized access to the books and records of such Principal Company or
its Subsidiaries. Each of the Company Websites and all materials distributed or
marketed by each Principal Company or any of its Subsidiaries have at all times
during the past three years made all disclosures to users or customers required
by Applicable Law, and none of such disclosures made or contained in any Company
Website or in any such materials are in violation of any Applicable Law. No
claims have been asserted to, or to the Knowledge of the Principal Companies,
have been threatened in writing against any Principal Company or any of its
Subsidiaries by any Person alleging a violation of such Person’s privacy,
personal or confidentiality rights under the privacy policies of such Principal
Company or any of its Subsidiaries.

(c) Tangible Personal Property. Except as set forth on Schedule 5.5(c) or for
property sold or otherwise disposed of in the ordinary course of business since
the date of the Balance Sheet, each Principal Company and its Subsidiaries own
free and clear of any Liens (other than Liens permitted under Section 10.2), all
of the personal property reflected as owned by such Principal Company and its
Subsidiaries on the Balance Sheet, and all other items of personal property
acquired by any such Person since that date. All material items of such personal
property are in good operating condition, normal wear and tear excepted.

5.6. Litigation; Adverse Facts. Except as set forth in Schedule 5.6 annexed
hereto, there are no Proceedings (whether or not purportedly on behalf of any
Principal Company or any of its Subsidiaries) at law or in equity, or before or
by any court or other Government Authority (including any Environmental Claims)
that are pending or, to the knowledge of the Principal Companies, threatened
against or affecting any Principal Company or any of its Subsidiaries or any
Property of such Principal Company or any of its Subsidiaries and that, if
adversely determined to or against any Loan Party, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
No Principal Company or any of its Subsidiaries (i) is in violation of any
Applicable Laws (including Environmental Laws) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or (ii) is subject to or in default with respect to any final judgments, orders,
writs, injunctions, decrees, rules or regulations of any court or other
Government Authority that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.

5.7. Payment of Taxes. Except as set forth in Schedule 5.7, all tax returns and
reports of each Principal Company and its Subsidiaries required to be filed by
any of them have been timely filed, and all taxes shown on such tax returns to
be due and payable and all assessments, fees and other governmental charges upon
such Principal Company and its Subsidiaries and upon their respective
Properties, income, businesses and franchises that are due and payable have been

 

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paid when due and payable, other than such taxes and charges being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted where (i) such reserve or other appropriate provision, if any, as is
required in conformity with GAAP has been made therefor and (ii) in the case of
a charge or claim which has or may become a Lien against any of the Collateral,
such proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such charge or claim. There is no tax assessment against
any Principal Company or any of its Subsidiaries that is not being actively
contested by such Principal Company or such Subsidiary in good faith and by
appropriate proceedings, and no Principal Company knows of any threatened tax
assessment against such Principal Company or any of its Subsidiaries, other than
those assessments in respect of which such reserve or other appropriate
provision, if any, as is required in conformity with GAAP has been made
therefor.

 

  5.8. Compliance with Agreements and Laws; Material Contracts.

(a) Each Principal Company and its Subsidiaries and all of their respective
Properties and Facilities have complied at all times and in all respects with
all federal, provincial, state, local and regional statutes, laws, ordinances
and judicial or administrative orders, judgments, rulings and regulations,
except, in any case, where failure to comply would not have a Material Adverse
Effect.

(b) Except as set forth on Schedule 5.8(b), the grant by the Grantors of
security interests in the Collateral as contemplated hereunder and under the
other Loan Documents will not conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material Contractual Obligation or material lease of any Principal Company or
any of its Subsidiaries.

(c) Each of the Material Contracts is valid, binding and enforceable against
each Principal Company or the applicable Subsidiary in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights and remedies generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there is no
material default under any Material Contract by any Principal Company, its
Subsidiaries or, to the Knowledge of the Principal Companies, by any other party
thereto, and to the Knowledge of the Principal Companies, no event has occurred
that with the lapse of time or the giving of notice or both would constitute a
material default thereunder.

(d) No previous or current party to any Material Contract has given written
notice to any Principal Company or any of its Subsidiaries of, or made a claim
with respect to, any breach or default thereunder that would have a Material
Adverse Effect that has not been cured and no Principal Company has any
Knowledge of any notice of, or claim with respect to, any such breach or default
that has not been cured.

(e) Each Principal Company and its Subsidiaries are and at all times during the
three year period prior to the Closing Date have been in compliance with all
Applicable Laws and orders, judgments or decrees promulgated by any Governmental
Authority applicable to such Principal Company and its Subsidiaries or to the
conduct of the business or operations of such Principal Company and its
Subsidiaries or the use of their properties (including any leased

 

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properties) and assets, except where such noncompliance would not have a
Material Adverse Effect. During the three year period prior to the Closing Date,
no Principal Company or any of its Subsidiaries has received any notices of a
violation or alleged violation of any such Applicable Law or order, judgment or
decree by any Governmental Authority, except where such noncompliance would not
have a Material Adverse Effect.

(f) Except as set forth on Schedule 5.8(f) and where failure to comply would not
have a Material Adverse Effect: (i) each Principal Company and each of its
Subsidiaries have all Permits necessary for the conduct of its respective
business; (ii) such Permits have been validly issued, and each Principal Company
and its Subsidiaries have complied in all material respect with all conditions
of such Permits applicable to them; (iii) no default or violation, or event that
with the lapse of time or giving of notice or both would become a default or
violation, has occurred in the due observance of any such Permit; (iv) all such
Permits are in full force and effect without further consent or approval of any
Person; and (v) no Principal Company or any of its Subsidiaries has received any
notice from any source to the effect that there is lacking any such Permit
required in connection with the current operations of such Principal Company and
its Subsidiaries.

5.9. Governmental Regulation. No Principal Company or any of its Subsidiaries is
subject to regulation under the Federal Power Act, the Interstate Commerce Act,
the ICC Termination Act, as amended, or the Investment Company Act of 1940, as
amended, or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or Contingent Obligations or which may
otherwise render all or any portion of the Obligations unenforceable.

5.10. Securities Activities.

(a) No Principal Company or any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.

(b) No part of the proceeds from the Loans hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any Margin Stock, or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve any Principal Company in a violation of Regulation X
of said Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin Stock does not constitute more
than 5% of the value of the consolidated assets of any Principal Company and its
Subsidiaries and no Principal Company has any present intention that Margin
Stock will constitute more than 5% of the value of such assets. As used in this
Section, the terms “purpose of buying or carrying” shall have the meanings
assigned to them in Regulation U of the Board of Governors of the Federal
Reserve System (12 CFR 221).

5.11. Employee Benefit Plans.

(a) Each Principal Company, each of its Subsidiaries and each of their
respective ERISA Affiliates are in compliance in all material respects with all
applicable provisions and requirements of ERISA, the Code and all other
applicable requirements with

 

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respect to each Employee Benefit Plan and Employee Program, and have performed
all their obligations under each Employee Benefit Plan and Employee Program.
Each Employee Benefit Plan that is intended to qualify for favorable tax
benefits is so qualified and has received all necessary approvals or
determinations to qualify for such treatment.

(b) No ERISA Event has occurred or is reasonably expected to occur.

(c) Except to the extent required under Section 4980B of the Code, no Employee
Benefit Plan or Employee Program provides health or welfare benefits (through
the purchase of insurance or otherwise) for any retired or former employee of
any Principal Company, any of its Subsidiaries or any of their respective ERISA
Affiliates.

(d) Neither Principal Company nor any of their respective ERISA Affiliates,
sponsors, maintains, contributes to, or has any liability with respect to, any
Pension Plans.

(e) Neither Principal Company nor any of their respective ERISA Affiliates,
sponsors, maintains, contributes to, or has any liability with respect to, any
Multiemployer Plans.

(f) All Foreign Plans are funded as required by Applicable Law, no failure to
make contributions has occurred with respect to any Foreign Plan sufficient to
give rise to a Lien affecting any Principal Company or any Subsidiary under any
Applicable Laws, and all contributions (including employee contributions made by
authorized payroll deductions or other withholdings) required to be made to the
appropriate funding agency in accordance with all Applicable Laws and the terms
of each Foreign Plan have been made.

(g) Schedule 5.11(g) sets forth an accurate, correct and complete list of every
Employee Program which is maintained, administered, sponsored or contributed to
by any Principal Company or any of its Subsidiaries, which covers any current or
former Employee of such Principal Company or any of its Subsidiaries or with
respect to which an obligation of such Principal Company or any of its
Subsidiaries to make any contribution exists. Except as set forth on Schedule
5.11(g), no Principal Company or any of its Subsidiaries has funded or unfunded,
registered or unregistered, pension, retirement, superannuation or other
Employee pension benefits plan or retirement income arrangements.

(h) Each Principal Company has made available to the Lenders with respect to
each Employee Benefit Plan accurate and complete copies of (i) all written
documents comprising such Employee Benefit Plan (including amendments,
individual agreements, service agreements, trusts and other funding agreements);
(ii) the three most recent audited financial statements and reports, if any,
pertaining to such Employee Benefit Plan; (iii) the summary plan description
currently in effect and all material modifications thereto, if any, for such
Employee Benefit Plan; (iv) any employee handbook which includes a description
of such Employee Benefit Plan; and (v) any other written communications to any
Employee, to the extent that the provisions of such Employee Benefit Plan
described therein differ materially from such provisions as set forth or
described in the other information or materials furnished under this subsection
(h).

 

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(i) Each Employee Benefit Plan has been maintained in all material respects in
accordance with its terms and with all Applicable Laws, and no failure to so
maintain any Employee Benefit Plan will result from the completion of the
transactions contemplated by this Agreement (either alone or upon the occurrence
of any additional or subsequent event or events). No Principal Company or any of
its Subsidiaries has any unsatisfied material liability, or any unpaid material
fine, penalty or tax, with respect to any Employee Benefit Plan or any other
Employee Program. No Principal Company has any Knowledge of any facts or
circumstances under which a material liability or a material fine, penalty or
tax with respect to any Employee Benefit Plan or any other Employee Program is
reasonably likely to be imposed on such Principal Company or any of its
Subsidiaries. There has been no prohibited transaction under Sections 4975 or
4980 of the Code or Section 406 of ERISA or breach of any duty under Title IV of
ERISA, with respect to any Employee Benefit Plan which could subject any
Principal Company or any of its Subsidiaries to material liability either
directly or indirectly (including, without limitation, through any obligation of
indemnification or contribution) for any damages, penalties, taxes or any other
loss or expense. Each Principal Company and its Subsidiaries have made full and
timely payment of all contributions required to be made by it to each Employee
Benefit Plan or Employee Program by the terms of such plan or program or under
Applicable Law, except that all contributions which are so required to be made
by such Principal Company or any of its Subsidiaries to each Employee Benefit
Plan or Employee Program for any period ending prior to the Closing, but which
are not due by the date of the Closing, shall be properly reserved or accrued in
the appropriate financial statements. Except as disclosed on Schedule 5.11(i),
there have been no violations of any reporting or disclosure requirements under
any Applicable Law with respect to any Employee Benefit Plan, including any
requirement to file an annual return.

(j) No litigation or written claim (other than routine claims for benefits), and
no governmental administrative proceeding, audit or investigation, is pending
or, to the Knowledge of the Principal Companies, threatened with respect to any
Employee Benefit Plan.

(k) All health and medical benefit coverage, and all death benefit coverage,
under each Employee Benefit Plan is provided solely through insurance. No
Principal Company or any of its Subsidiaries has any liability with respect to
any Employee Benefit Plan which is funded wholly or partly through an insurance
policy, in the nature of a retroactive rate adjustment, a loss sharing
arrangement or any other actual or contingent liability arising from any event
occurring on or before the Closing.

(l) No Employee or former employee of any Principal Company or any of its
Subsidiaries, or any other individuals, shall accrue or receive additional
benefits, additional credit for service, accelerated vesting or accelerated
rights to payment of any benefit under any Employee Benefit Plan or Employee
Program, or become entitled to any severance, termination allowance or similar
payments or to the forgiveness of any indebtedness, as a result of the execution
and delivery of, or the transactions contemplated by, this Agreement (either
alone or upon any additional or subsequent event or events). Such execution and
delivery, or the occurrence of such transactions, shall not result in any
increase in the contributions required to be made to or in respect of any
Employee Benefit Plan or Employee Program.

 

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(m) Except for the adoption of a plan amendment which is needed to bring the
plan documents into conformity with changes required under Applicable Laws, no
Principal Company or any of its Subsidiaries is under any obligation (express or
implied) to modify any Employee Benefit Plan, or to establish any new Employee
Benefit Plan which will cover any Employee of such Principal Company or any of
its Subsidiaries. Subject to Applicable Laws, each Principal Company or its
Subsidiaries has expressly reserved to itself the right to amend, modify or
terminate each Employee Benefit Plan (and any service or funding agreement or
arrangement for each Employee Benefit Plan), at any time without liability or
penalty to itself (other than routine expenses). Subject to Applicable Law, no
Employee Benefit Plan requires any Principal Company or any of its Subsidiaries
to continue to employ or use the services of any current Employee or former
employee.

(n) The pension, medical and other employee benefit expenses for the Employee
Benefit Plans are accurately reflected in the applicable financial statements of
each Principal Company and its Subsidiaries, and no material funding changes or
irregularities are reflected thereon which would cause such financial statements
to be not representative of prior fiscal years except for such changes that are
required under Applicable Laws. Except for changes or amendments required under
Applicable Laws, there has been no amendment, interpretation or announcement by
the Parent or any of its Subsidiaries relating to any Employee Benefit Plan
which would increase the expense of maintaining such plan above the level of
expense incurred with respect to that plan, plus increases in the ordinary
course of business consistent with past practice, as indicated in the applicable
financial statements, for its most recent fiscal year.

5.12. Financial Advisors. Except as set forth in Schedule 5.12, no agent,
broker, investment banker, finder, financial advisor or other Person is or will
be entitled to any broker’s or finder’s fee or any other commission or similar
fee from any Principal Company with respect to this Agreement or any of the
other Loan Documents or any of the transactions contemplated hereby, and each
Principal Company hereby, jointly and severally, indemnifies the Lenders and the
Agent against, and agrees that it will hold the Lenders and the Agent harmless
from, any claim, demand or liability for any such broker’s or finder’s fees
alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.

5.13. Environmental Protection. Except as set forth in Schedule 5.13:

(a) no Principal Company or any of its Subsidiaries or any of their respective
Properties or operations now or (to the Knowledge of such Principal Company)
formerly owned, leased or operated by any of them are subject to any outstanding
written order, consent decree or settlement agreement with any Person, and no
Principal Company or any of its Subsidiaries has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted raising
any claim against such Principal Company or any of its Subsidiaries or any of
their respective Properties or operations now or (to the Knowledge of such
Principal Company) formerly owned, leased or operated by any of them, alleging
or relating to (i) any Environmental Law, (ii) any Environmental Claim, or
(iii) any Hazardous Materials Activity;

 

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(b) no Principal Company or any of its Subsidiaries has received any letter or
request for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable
state law;

(c) there are and, to the Knowledge of each Principal Company, have been no
conditions, occurrences, or Hazardous Materials Activities that could form the
basis of an Environmental Claim against such Principal Company or any of its
Subsidiaries (whether with respect to any now or (to the Knowledge of such
Principal Company) formerly owned, leased or operated Properties or operations);

(d) compliance with all current or reasonably foreseeable future requirements
pursuant to or under Environmental Laws would not, individually or in the
aggregate, be reasonably expected to result in a Material Adverse Effect.

5.14. Labor Relations.

(a) Except as set forth on Schedule 5.14(a): (i) each Principal Company and its
Subsidiaries have performed all material obligations under all Contractual
Obligations with respect to their respective Employees and have paid or properly
accrued for such obligations in the Balance Sheet, including without limitation,
all wages, salaries, commissions, bonuses, severance pay, vacation pay, benefits
and other direct compensation for all services performed by them to the date
hereof and all amounts required to be reimbursed to such Employees; (ii) there
is no pending, or to the Knowledge of the Principal Companies, any threatened,
charge, complaint, allegation, application or other process against any
Principal Company or any its Subsidiaries before any Governmental Authority with
respect to labor relations; (iii) there is no labor strike, dispute, slowdown or
work stoppage or other job action pending, or to the Knowledge of the Principal
Companies, threatened against or otherwise affecting or involving any Principal
Company or its Subsidiaries; and (iv) none of the Employees are covered by any
collective bargaining agreements (other than customary national collective
bargaining agreements) and, to the Knowledge of the Principal Companies, no
effort is being made by any union to organize any of the Employees.

(b) Except as disclosed on Schedule 5.14(b), no Employee who earned a salary
(including bonuses) of over $100,000 in Fiscal Year 2011 is in breach of his or
her employment agreement and none has given notice of his or her intention to
terminate employment with any Principal Company.

5.15. Solvency.

(a) Each Principal Company is and, upon the incurrence of any Obligations by
such Principal Company on the Closing Date, will be, Solvent. The Loan Parties,
taken as a whole, are and, upon the incurrence of any Obligations by such Loan
Parties on any date on which this representation is made, will be, Solvent.

(b) No transfer of Property is being made any Principal Company or any of its
Subsidiaries and no obligation is being incurred by such Principal Company or
any of its Subsidiaries in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of such Principal Company and its
Subsidiaries.

 

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5.16. Matters Relating to Collateral.

(a) Creation, Perfection and Priority of Liens. The execution and delivery of
the Collateral Documents by the Grantors, together with the actions taken on or
prior to the date hereof pursuant to Sections 4.9, 9.7, 9.8 and 9.10, are
effective to create in favor of Collateral Agent for the benefit of the Secured
Parties, as security for the Obligations, a valid First Priority Lien on all of
the Collateral, and all filings and other actions necessary or desirable to
perfect and maintain the perfection and First Priority status of such Liens have
been duly made or taken and remain in full force and effect, other than the
filing of any UCC financing statements delivered to Collateral Agent for filing
(but not yet filed) and the periodic filing of UCC continuation statements in
respect of UCC or personal property search registry financing statements filed
by or on behalf of Collateral Agent. Notwithstanding the foregoing, with respect
to the grant of a Lien in favor of the Collateral Agent on the Capital Stock of
any Non-Grantor Subsidiary, no Principal Company makes any representation as to
whether such grant is effective under the Applicable Law of the jurisdiction of
formation of such Non-Grantor Subsidiary to create in favor of Collateral Agent
for the benefit of the Secured Parties, as security for the Obligations, a valid
First Priority Lien on such Capital Stock, or whether all filings and other
actions necessary or desirable to perfect and maintain the perfection and First
Priority status of such Lien under the Applicable Law of the jurisdiction of
formation of such Non-Grantor Subsidiary have been duly made or taken and remain
in full force and effect.

(b) Governmental Authorizations. No authorization, approval or other action by,
and no notice to or filing with, any Government Authority is required for either
(i) the pledge or grant by any Grantor of the Liens purported to be created in
favor of Collateral Agent pursuant to any of the Collateral Documents or
(ii) the exercise by Collateral Agent of any rights or remedies in respect of
any Collateral (whether specifically granted or created pursuant to any of the
Collateral Documents or created or provided for by applicable law), except, in
each case, for (x) filings or recordings contemplated by Section 5.16(a), (y) as
described in Sections 5.2(c)(iii) and 5.2(c)(iv) and (z) any such authorization,
approval, action, notice or filing required under Applicable Law with respect to
the grant of a Lien on the Capital Stock of any Non-Grantor Subsidiary.

(c) Absence of Third-Party Filings. Except such as may have been filed in favor
of Collateral Agent as contemplated by Section 5.16(a) and as otherwise
permitted pursuant to Section 10.2, (i) no effective UCC financing statement,
fixture filing, personal property security registry filing, Register of Personal
and Movable Real Rights (Quebec) filing or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or recording
office and (ii) no effective filing covering all or any part of the IP
Collateral is on file in the PTO or the Canadian Intellectual Property Office.

(d) Margin Regulations. The pledge of Capital Stock of the Loan Parties pursuant
to the Collateral Documents does not violate Regulation T, U or X of the Board
of Governors of the Federal Reserve System.

 

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(e) Information Regarding Collateral. All information supplied to Collateral
Agent by or on behalf of any Loan Party with respect to any of the Collateral
(whether pursuant to the Collateral Documents or otherwise and in each case
taken as a whole with respect to any particular Collateral) is accurate and
complete in all material respects.

5.17. Disclosure and Projections.

(a) Disclosure. All factual information (taken as a whole) furnished by or on
behalf of the Principal Companies and their Subsidiaries in writing to Agent or
any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents, or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of the Principal Companies or their Subsidiaries in writing to
Agent or any Lender will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
omitting to state any fact necessary to make such information (taken as a whole)
not misleading in any material respect at such time in light of the
circumstances under which such information was provided. No representation or
warranty of any Loan Party contained in any Loan Document or in any other
document, certificate or written statement furnished to the Agent or the Lenders
by or on behalf of the Principal Companies or any of their Subsidiaries for use
in connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact. There are no facts known (or which should
upon the reasonable exercise of diligence be known) to the Loan Parties (other
than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and that have not been disclosed herein or in such other documents, certificates
and statements furnished to the Agent and the Lenders for use in connection with
the transactions contemplated hereby.

(b) Projections. The Closing Date Projections have been diligently prepared on a
basis materially consistent with the financial statements delivered to the
Lenders and the Agent pursuant to Section 5.3, and are based on good faith
estimates and assumptions believed by management of the Principal Companies to
be reasonable as of the date of the Closing Date Projections, and there are no
statements or conclusions in any of the Closing Date Projections which are based
upon or include information known to any Loan Party or any of their Subsidiaries
to be misleading in any material respect or which fail to take into account
material information regarding the matters reported therein. On the Closing
Date, each Principal Company believes that the Closing Date Projections were
reasonable, it being recognized by the Lenders and the Agent, however, that
projections as to future events are not to be viewed as facts and that the
actual results during the period or periods covered by the Closing Date
Projections may differ from the projected results and such differences may be
material.

5.18. Existing Indebtedness and Contingent Obligations; Future Liens.

(a) Set forth on Schedule 5.18(a) is a true and complete list of all
Indebtedness of each Loan Party outstanding immediately prior to the Closing
that is to remain outstanding after the Closing Date (other than the Loans and
the Working Capital Facility) and such Schedule accurately reflects the
aggregate principal amount of such Indebtedness. Except as disclosed in Schedule
5.18(a), no Principal Company or any Subsidiary is in default, and no

 

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waiver of default is currently in effect, in the performance of any agreements
related to, or in the payment of any principal or interest on, any Indebtedness
and no event or condition exists with respect to any Indebtedness of any
Principal Company or any Subsidiary that would permit (or that with notice or
the lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.

(b) Set forth on Schedule 5.18(b) is a true and complete list of all Contingent
Obligations of each Loan Party outstanding immediately prior to the Closing that
is to remain outstanding after the Closing Date and such Schedule accurately
reflects the aggregate amount of such Contingent Obligations. No Principal
Company or any Subsidiary is in default under, and no waiver of default is
currently in effect with respect to, any Contingent Obligations or agreements
related thereto. No event or condition exists with respect to any Contingent
Obligations of any Principal Company or any Subsidiary that would permit (or
that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Contingent Obligations to become fixed, due and payable.

(c) Except as set forth on Schedule 5.18(c), no Principal Company or any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its Property, whether now owned
or hereafter acquired, to be subject to a Lien.

5.19. Subordinated Indebtedness; Ranking. All liabilities of each Principal
Company and its Subsidiaries under the Loan Documents constitute direct,
unconditional and general obligations of such Principal Company and its
Subsidiaries and rank in right of payment either pari passu or senior to all
other Indebtedness and Contingent Obligations of such Principal Company and its
Subsidiaries. The Obligations constitute senior indebtedness that is entitled to
the benefits of the subordination provisions, if any, of all Indebtedness and
Contingent Obligations of each Principal Company and its Subsidiaries.

5.20. Foreign Assets Control Regulations, Etc.

(a) Neither the borrowing of the Loans by the Company hereunder nor its use of
the proceeds thereof will violate (i) the United States Trading with the Enemy
Act, as amended, (ii) any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any enabling legislation or executive order relating thereto, (iii) Executive
Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of the
United States (Executive Order Blocking Property and Prohibiting Transactions
with Persons Who Commit, Threaten to Commit or Support Terrorism) (the
“Terrorism Order”) or (iv) the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT)
Act of 2001, Public Law 107-56 (October 26, 2001). No part of the proceeds from
the Loans will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

 

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(b) No Principal Company or any Subsidiary (i) is or will become a “blocked
person” as described in Section 1 of the Terrorism Order or (ii) engages or will
engage in any dealings or transactions, or is otherwise associated, with any
such blocked person or any such Person.

(c) Each Principal Company and its Subsidiaries and its Affiliates are in
compliance, in all material respects, with the Uniting And Strengthening America
By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA
PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001).

5.21. Representations of other Loan Parties. The representations and warranties
of each Subsidiary Guarantor contained in the Loan Documents to which it is a
party are true and correct as of the date they are made and shall be true and
correct at the time of the Closing.

5.22. Non-Grantor Subsidiaries. The aggregate fair market value of all Property
(other than any intercompany Indebtedness owed by a Principal Company or its
Subsidiaries) owned by Subsidiaries of any Principal Company that are not
Grantors does not exceed $5,000,000.

5.23. Passive Foreign Investment Company; Controlled Foreign Corporation. To the
Knowledge of the Principal Companies (but without consultation with any
Principal Company’s independent accountants), no Principal Company has had, for
any tax year beginning after September 30, 2005, (i) 75% or more of its gross
income from passive sources, as that term is defined in Section 1297 of the
Code, or (ii) 50% or more of its average assets which either produce passive
income or are held for the production of passive income, as determined in
accordance with Section 1297 of the Code.

5.24. Deposit Accounts; Securities Accounts. Set forth on Schedule 5.24 is a
listing of all of the Loan Parties’ Deposit Accounts and Securities Accounts as
of the Closing Date, including, with respect to each bank or securities
intermediary (a) the name and address of such Person, (b) the account numbers of
the Deposit Accounts or Securities Accounts maintained with such Person, and
(c) the relevant Loan Party or Loan Parties.

5.25. Loans to Officers and Directors. Except as set forth on Schedule 5.25,
there are no outstanding loans made by any Principal Company or any of its
Subsidiaries to any of their officers, directors or shareholders (directly or
indirectly) or any of such Persons’ Affiliates or guarantees or security
interests given by any Principal Company or any of its Subsidiaries in
connection with any loans to any of their officers, directors or shareholders
(directly or indirectly) or any of such Persons’ Affiliates.

5.26. Insurance. Schedule 5.26 sets forth a true, correct and complete list of
all insurance policies (including information on the premiums payable in
connection therewith, the deductible applicable thereunder, pending claims
thereunder, whether such deductible is per occurrence or in the aggregate, and
the scope and amount of the coverage provided thereunder) maintained by each
Principal Company or any of its Subsidiaries (the “Policies”), each of which is
in full force and effect unless otherwise indicated on Schedule 5.26 as being
terminated at the Closing Date. The Policies have been issued by insurers which,
to the Knowledge of the Principal Companies, (i) are reputable and financially
sound; and (ii) provide coverage for the operations

 

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conducted by each Principal Company and its Subsidiaries of a scope and coverage
consistent with customary practice in the industries in which such Principal
Company and its Subsidiaries operate. All insurance premiums currently due with
respect to the Policies have been paid and no Principal Company or any of its
Subsidiaries has failed to give any notice or present any claim under any Policy
in a due and timely manner. No Principal Company or any of its Subsidiaries has
received notice of cancellation or non-renewal of any Policy. No Principal
Company or any of its Subsidiaries is in material breach or default, and no
Principal Company or any of its Subsidiaries has taken any action or failed to
take any action which, with notice or the lapse of time, would constitute such a
material breach or default, or permit termination or modification, of any of the
Policies. The Policies are sufficient for compliance with all requirements of
Applicable Law and all agreements to which any Principal Company or any of its
Subsidiaries is a party. During the three years prior to Closing, no Principal
Company or any of its Subsidiaries has been denied or had revoked or rescinded
any policy of insurance. Neither the consummation of the Related Transactions
nor the consummation of the transactions contemplated hereby will, in and of
itself, cause the revocation, cancellation or termination of any Policy based on
the terms of such Policy (it being understood that notice and additional
payments may be required), and each of the Policies or substitute policies of
substantially similar scope and coverage applicable to the Parent and its
Subsidiaries shall remain in full force and effect following the consummation of
the Related Transactions and the transactions contemplated hereby.

5.27. Customers. Except as set forth on Schedule 5.27, no Principal Company or
any of its Subsidiaries has received any notice of termination of any Material
Contract between (a) on the one hand, such Principal Company or its Subsidiaries
and (b) on the other hand, any of the ten (10) largest customers of such
Principal Company and its Subsidiaries (based on revenues) during the
twelve-month period ended September 30, 2011 (“Major Customers”), nor to the
Knowledge of the Principal Companies has there been any indication that any such
Major Customer plans to cease purchasing, or to substantially reduce purchases,
from such Principal Company or its Subsidiaries.

5.28. Absence of Certain Practices. Except as set forth on Schedule 5.28, no
Principal Company or any of its Subsidiaries, or, to the Knowledge of the
Principal Companies, any director, officer, agent, Employee or other Person
acting on their behalf, has given or agreed to give any gift or similar benefit
of more than nominal value to any customer, supplier, governmental employee or
official or any other Person who is or may be in a position to help or hinder
any Principal Company or its Subsidiaries or assist any Principal Company or its
Subsidiaries in connection with any proposed transaction involving such
Principal Company or its Subsidiaries, which gift or similar benefit, induced
any party to do business with such Principal Company. No Principal Company or
any of its Subsidiaries, or, to the Knowledge of the Principal Companies, any
director, officer, agent, Employee or other Person acting on their behalf has
(i) used any corporate or other funds for unlawful contributions, payments,
gifts, or entertainment, or made any unlawful expenditures relating to political
activity to, or on behalf of, government officials or others; or (ii) accepted
or received any unlawful contributions, payments, gifts or expenditures.

5.29. Accounts and Notes Receivable; Accounts and Notes Payable.

 

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(a) Except as set forth in Schedule 5.29(a), all the accounts receivable and
notes receivable owing to any Principal Company or any of its Subsidiaries as of
the date hereof constitute valid and enforceable claims (without any previously
exercised rights of set off or compromise) arising from bona fide transactions
in the ordinary course of business, consistent with past practice, and, to the
Knowledge of the Principal Companies, there are no known or, to the Knowledge of
the Principal Companies, asserted claims, refusals to pay or other rights of
set-off against any thereof. Except as provided on Schedule 5.29(a), there is
(i) no account debtor or note debtor delinquent in its payment by more than
ninety days; (ii) no account debtor or note debtor that has refused (or, to the
Knowledge of the Principal Companies, threatened to refuse) to pay its
obligations for any reasons; (iii) to the Knowledge of the Principal Companies,
no account debtor or note debtor that is insolvent or bankrupt other than as set
forth on Schedule 5.29(a) and (iv) no account receivable or note receivable
which is hypothecated or pledged to any person (except in connection with the
Loans and the Working Capital Facility) by any Principal Company or any of its
Subsidiaries.

(b) All accounts payable and notes payable by any Principal Company or any of
its Subsidiaries to third parties as of the date hereof arise from bona fide
transactions in the ordinary course of business, consistent with past practice
and, except as set forth on Schedule 5.29(b), there is no such account payable
or note payable more than thirty-one (31) days delinquent in its payment, except
those contested in good faith.

5.30. Inventory. To the Knowledge of the Principal Companies, neither Principal
Company nor any of its Subsidiaries has sold products to customers within the
European Union for resale within the European Union that have not been in full
compliance with the Restriction of Hazardous Substances Directive (RoHS)
2002/95/EC since the directive first came into force on July 1, 2006 and no
notice of any violation thereof has been received.

5.31. Internal Controls. Each Principal Company and its Subsidiaries maintain a
system of internal control over financial reporting. Such internal controls over
financial reporting (a) provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP and (b) as to Parent are designed to ensure
that all material information concerning Parent and its Subsidiaries required to
be disclosed by Parent in the reports that it is required to file, submit or
furnish under the Exchange Act is recorded, processed, summarized and reported
on a timely basis to the individuals responsible for the preparation of such
reports. There is and has been no fraud, whether or not material, that involves
management or other Employees who have a significant role in any Principal
Company’s and/or its Subsidiaries’ internal controls. Schedule 5.31 lists, and
the Principal Companies have provided to the Lenders, accurate and complete
copies of, all formally written descriptions of, and all policies, manuals and
other documents promulgating, such internal controls and procedures.

5.32. Anti-Money Laundering. To the Knowledge of each Principal Company, it and
each of its Subsidiaries have not previously violated, any applicable anti-money
laundering laws and regulations. To the Knowledge of the Principal Companies,
none of (i) the funding of the Loans, (ii) the use of proceeds contemplated
hereby, (iii) the execution, delivery and performance of this Agreement and the
Loan Documents and the Related Agreements, or (iv) the consummation of any
transaction contemplated hereby or thereby, or the fulfillment of the terms
hereof or thereof, will result in a violation by any Principal Company or any of
its Subsidiaries of any applicable anti-money laundering laws.

 

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5.33. Foreign Corrupt Practices Act. Other than as set forth on Schedule 5.33,
no Principal Company, any of its Subsidiaries or any of their Affiliates or
Employees have made, directly or indirectly, any payment or promise to pay, or
gift or promise to give or authorized such a promise or gift, of any money or
anything of value, directly or indirectly to (i) any foreign official for the
purpose of influencing any official act or decision of such official or inducing
him or her to use his or her influence to affect any act or decision of a
Governmental Authority or (ii) any foreign political party or official thereof
or candidate for foreign political office for the purpose of influencing any
official act or decision of such party, official or candidate or inducing such
party, official or candidate to use his, her or its influence to affect any act
or decision of a foreign Governmental Authority, in the case of both (i) and
(ii) above in order to assist such Principal Company, any of its Subsidiaries or
any of their Affiliates to obtain or retain business for, or direct business to
such Principal Company, its Subsidiaries or any of their Affiliates, as
applicable. No Principal Company, any of its Subsidiaries or any of their
Affiliates has made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment of funds or received or retained any funds in violation
of any law, rule or regulation.

5.34. Transactions with Affiliates. Except: (i) as set forth on Schedule 5.34;
(ii) for transactions between any Principal Company and any Wholly-Owned
Subsidiary and transactions between Wholly-Owned Subsidiaries themselves;
(iii) for transactions under the Loan Documents and the Related Agreements and
(iv) for salary, bonuses and expense reimbursements in the ordinary course of
business, no Principal Company or any of its Subsidiaries has made any payment
to, or received any payment from, or made or received any investment in, or
entered into any transaction with, (A) any officer, director, shareholder
(directly or indirectly) or to the Knowledge of the Principal Companies, any
member of the immediate family of any officer, director or shareholder (directly
or indirectly) of any Principal Company; (B) any business affiliated with any
officer, director or to the Knowledge of the Principal Companies, any member of
the immediate family of any officer, director or shareholder (directly or
indirectly) of any Principal Company or (C) any Affiliate of any Principal
Company (other than a Wholly-Owned Subsidiary), including with respect to the
purchase, sale, lease encumbrance or exchange of property or assets or
securities or the rendering of any service.

5.35. Intercompany Loans. Veraz Networks S. de R.L. de C.V. has not made loans
to an Affiliate.

6. REPRESENTATIONS OF THE LENDERS. In order to induce the Loan Parties to enter
into this Agreement, each of the Lenders, severally and not jointly, represents
and warrants to each Principal Company that:

6.1. Due Authorization. The execution, delivery and performance of the Loan
Documents to which such Lender is a party have been duly authorized by all
necessary action on the part of the Lender.

6.2. Binding Obligation. Each of the Loan Documents to which a Lender is a party
has been duly executed and delivered by such Lender and is the legally valid and
binding

 

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obligation of such Lender, enforceable against such Lender in accordance with
its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability.

7. INFORMATION AS TO THE PRINCIPAL COMPANIES. Each Principal Company will
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP. The Parent
will deliver to each Lender and the Agent:

(a) Events of Default, Etc.: Promptly upon any officer of the Parent obtaining
knowledge (i) of any condition or event that constitutes a Default or an Event
of Default or, (ii) that any Person has given any notice to any Principal
Company or any of its Subsidiaries or taken any other action with respect to a
claimed default or event or condition of the type referred to in Section 11(f),
or (iii) of the occurrence of any event or change that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect, an Officer’s
Certificate specifying the nature and period of existence of such condition,
event or change, or specifying the notice given or action taken by any such
Person and the nature of such claimed Default, Event of Default, default, event
or condition, and what action such Principal Company or its Subsidiaries, as
applicable, has taken, is taking and proposes to take with respect thereto;

(b) Quarterly Financials: As soon as available and within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year, (i) the
consolidated balance sheet of the Parent and its Subsidiaries as at the end of
such fiscal period and the related consolidated statements of income,
stockholders’ equity and cash flows of the Parent and its Subsidiaries for such
fiscal period and for the period from the beginning of the then current Fiscal
Year to the end of such fiscal period, setting forth in each case in comparative
form the corresponding figures for the corresponding periods of the previous
Fiscal Year and the corresponding figures from the Financial Plan for the
current Fiscal Year, to the extent prepared for such fiscal period, all in
reasonable detail and certified by the chief financial officer of the Parent
that they were prepared in accordance with GAAP and fairly present, in all
material respects, the financial condition of the Parent and its Subsidiaries as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and normal
year-end adjustments, and (ii) a narrative report describing the operations of
the Parent and its Subsidiaries in the form prepared for presentation to senior
management for such fiscal period and for the period from the beginning of the
then current Fiscal Year to the end of such fiscal period;

(c) Year-End Financials: as soon as available and in any event within 120 days
after the end of each Fiscal Year, (i) the consolidated balance sheets of the
Parent and its Subsidiaries as at the end of such Fiscal Year and the related
consolidated statements of income, stockholders’ equity and cash flows of the
Parent and its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year and the
corresponding figures from the Financial Plan for the Fiscal Year covered by
such financial statements, all in reasonable detail and certified by the chief
financial officer of the Parent that they fairly present, in all material
respects, the financial condition of the Parent and

 

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its Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, (ii) a narrative report
describing the operations of the Parent and its Subsidiaries in the form
prepared for presentation to senior management for such Fiscal Year, and
(iii) in the case of such consolidated financial statements, a report thereon of
KPMG LLP or other independent certified public accountants of recognized
national standing selected by the Parent and satisfactory to Collateral Agent,
which report shall be unqualified, shall express no doubts about the ability of
the Parent and its Subsidiaries to continue as a going concern, and shall state
that such consolidated financial statements fairly present, in all material
respects, the consolidated financial position of the Parent and its Subsidiaries
as at the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such financial
statements) and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards;

(d) Compliance Certificates: Together with each delivery of financial statements
of the Parent and its Subsidiaries pursuant to clauses (b) and (c) of this
Section 7, (i) an Officer’s Certificate of the Parent stating that the signer
has reviewed the terms of this Agreement and have made, or caused to be made
under his supervision, a review in reasonable detail of the transactions and
condition of the Parent and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that the signer
does not have knowledge of the existence as at the date of such Officer’s
Certificate, of any condition or event that constitutes a Default or an Event of
Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Parent has taken, is
taking and proposes to take with respect thereto; and (ii) a Compliance
Certificate demonstrating in reasonable detail compliance during and at the end
of the applicable accounting periods with the restrictions contained in
Section 10, in each case to the extent compliance with such restrictions is
required to be tested at the end of the applicable accounting period;

(e) Reconciliation Statements: If, as a result of any change in accounting
principles and policies from those used in the preparation of the audited
financial statements referred to in Section 5.3, the consolidated financial
statements or forecasts of the Parent delivered pursuant to (b), (c) or (l) of
this Section 7 will differ in any material respect from the consolidated
financial statements that would have been delivered pursuant to such clauses had
no such change in accounting principles and policies been made, then the Parent
shall deliver (i) together with the first delivery of financial statements or
forecasts pursuant to clause (b), (c) or (l) of this Section 7 following such
change, consolidated financial statements of the Parent and its Subsidiaries for
(y) the current Fiscal Year to the effective date of such change and (z) the two
full Fiscal Years immediately preceding the Fiscal Year in which such change is
made, in each case prepared on a pro forma basis as if such change had been in
effect during such periods, and (ii) together with each delivery of financial
statements or forecasts pursuant to clause (b), (c) or (l) of this Section 7
following such change, subject to Section 1.2, a written statement of the Senior
Financial Officer of the Parent setting forth the differences (including,
subject to Section 1.2, any differences that would affect any calculations
relating to the Financial Covenants which would have resulted if such financial
statements had been prepared without giving effect to such change;

 

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(f) Accountants’ Certification: Together with each delivery of consolidated
financial statements of the Parent and its Subsidiaries pursuant to clause
(c) of this Section 7, a written statement by the independent public accountants
giving the report thereon (i) stating that their audit examination has included
a review of the terms of this Agreement and the other Loan Documents as they
relate to accounting matters, (ii) stating whether, in connection with their
audit examination, any condition or event that constitutes a Default or an Event
of Default with respect to a Financial Covenant has come to their attention and,
if such a condition or event has come to their attention, specifying the nature
and period of existence thereof; provided that such accountants shall not be
liable by reason of any failure to obtain knowledge of any such Default or Event
of Default that would not be disclosed in the course of their audit examination,
and (iii) stating that based on their audit examination nothing has come to
their attention that causes them to believe that the information contained in
the certificates delivered therewith pursuant to clause (d) of this Section 7 is
not correct or that the matters set forth therein for the applicable Fiscal Year
are not stated in accordance with the terms of this Agreement;

(g) Accountants’ Reports: Promptly upon receipt thereof (unless restricted by
applicable professional standards), copies of all reports submitted to the
Parent by independent certified public accountants in connection with each
annual, interim or special audit of the financial statements of the Parent made
by such accountants, including any comment letter submitted by such accountants
to management in connection with their annual audit;

(h) Public Filings and Press Releases: Promptly upon their becoming available,
copies of (i) all financial statements, reports, notices and proxy statements
sent or made available generally by the Parent to its security holders or by any
Subsidiary of the Parent to its security holders (other than any Principal
Company or another Subsidiary of the Parent), (ii) all regular and periodic
reports and all registration statements (other than on Form S-8 or a similar
form) and prospectuses, if any, filed by the Parent or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange Commission or
any governmental or private regulatory authority, and (iii) all press releases
and other statements made available generally by the Parent or any of its
Subsidiaries to the public concerning material developments in the business of
the Parent or any of its Subsidiaries. Any document required to be delivered
pursuant to clause (b), (c), (f), (g) or (h) of this Section, to the extent such
document is included in materials filed with the Securities and Exchange
Commission (a “Filed Document”), shall be deemed delivered upon the filing of
such document with the Securities and Exchange Commission and any governmental
body or agency succeeding to the functions of the Securities and Exchange
Commission; provided that such Filed Document was timely filed and is available
on both websites of the Securities and Exchange Commission and the Parent;

(i) Litigation or Other Proceedings: (i) Promptly upon any officer of the Parent
obtaining knowledge of (A) the institution of, or non-frivolous threat of, any
Proceeding against or affecting the Parent or any of its Subsidiaries or any
Property of the Parent or any of its Subsidiaries not previously disclosed in
writing by the Parent to the Lenders and the Agent or (B) any material
development in any Proceeding that, in any case:

1. if adversely determined, has a reasonable possibility after giving effect to
the coverage and policy limits of insurance policies issued to the Parent and
its Subsidiaries of giving rise to a Material Adverse Effect; or

 

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2. seeks to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions occurring pursuant to
the Loan Documents;

written notice thereof together with such other information as may be reasonably
available to the Parent to enable the Lenders, the Agent and their counsel to
evaluate such matters; and (ii) within 20 days after the end of each Fiscal
Quarter, a schedule of all Proceedings (other than Proceedings previously
disclosed in a Filed Document so long as such Filed Document was timely filed
and is available on both websites of the Securities and Exchange Commission and
the Parent) involving an alleged liability of, or claims against or affecting,
the Parent or any of its Subsidiaries equal to or greater than $1,000,000, and
promptly after request by any Lender or the Agent such other information as may
be reasonably requested by such Lender or the Agent to enable such Lender, the
Agent and its counsel to evaluate any of such Proceedings;

(j) ERISA Events: Promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action the Parent, any of its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto;

(k) ERISA Notices: With reasonable promptness, copies of (i) all notices
received by the Parent, any of its Subsidiaries or any of their respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and
(ii) copies of such other documents or governmental reports or filings relating
to any Employee Benefit Plan or Employee Program as any Lender or the Agent
shall reasonably request;

(l) Financial Plans: As soon as practicable and in any event no later than 30
days prior to the beginning of each Fiscal Year, a consolidated plan and
financial forecast for such Fiscal Year (the “Financial Plan” for such Fiscal
Year), including (i) a forecasted consolidated balance sheet and forecasted
consolidated statements of income and cash flows of the Parent and its
Subsidiaries for each such Fiscal Year, together with a pro forma Compliance
Certificate for each such Fiscal Year and an explanation of the assumptions on
which such forecasts are based, (ii) forecasted consolidated statements of
income and cash flows of the Parent and its Subsidiaries for each month of each
such Fiscal Year, together with an explanation of the assumptions on which such
forecasts are based, (iii) the amount of forecasted unallocated overhead for
each such Fiscal Year, and (iv) such other information and projections as any
Lender or the Agent may reasonably request;

(m) Insurance: As soon as practicable after any material change in insurance
coverage maintained by the Parent and its Subsidiaries notice thereof to each
Lender and the Agent specifying the changes and reasons therefor;

(n) Damage or Destruction. The Parent will give each Lender and the Agent prompt
notice of any loss, damage, or destruction of Property in excess of $250,000,
whether or not covered by the insurance policies described in Section 9.3; and

 

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(o) Other Information: With reasonable promptness, such other information and
data with respect to the Parent or any of its Subsidiaries as from time to time
may be reasonably requested by any Lender or the Agent.

8. PREPAYMENT OF THE LOANS.

8.1. Maturity. The entire unpaid principal amount of the Loans, together with
interest on such principal amount accrued to such date, shall be due and payable
on the Maturity Date.

8.2. Optional Prepayments.

(a) Optional Prepayments of Loans with Applicable Prepayment Premium. The
Company may, at its option, upon notice as provided below, prepay at any time
all, or from time to time any part of, the Loans, at 100% of the principal
amount so prepaid, plus the prepayment premium set forth below (the “Applicable
Prepayment Premium”) determined for the prepayment date with respect to such
principal amount, plus accrued and unpaid interest thereon, if any, to the
applicable prepayment date:

 

If Prepaid:

   Prepayment Premium  

Following the Closing Date but on or prior to the first anniversary of the
Closing Date

     5.00 % 

After the first anniversary of the Closing Date but on or prior to the second
anniversary of the Closing Date

     2.00 % 

After the second anniversary of the Closing Date but prior to the Maturity Date

     0 % 

(b) Optional Prepayment of Loans with Proceeds of ABL Facility. The Company
shall have a one-time right from the Closing Date until prior to the Maturity
Date to prepay any of the Loans with the proceeds of one or more Permitted ABL
Facilities at 100% of the principal amount so prepaid, plus a prepayment premium
of 2.00% determined for the prepayment date with respect to such principal
amount, plus accrued and unpaid interest thereon, if any, to the applicable
prepayment date; provided, that, (i) the aggregate principal amount outstanding
under the Permitted ABL Facilities following such prepayment shall not be more
than $27,500,000 and (ii) the aggregate principal amount of Indebtedness of the
Parent and its Subsidiaries following such prepayment shall not be more than
$55,000,000.

(c) Prepayment Procedure. The Company will give each Lender written notice of
each optional prepayment under this Section 8.2 not less than 10 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Loans to be
prepaid on such date, the principal amount of each

 

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Loan owned by such Lender to be prepaid (determined in accordance with
Section 8.5), and the interest to be paid on the prepayment date with respect to
such principal amount being prepaid, and shall be accompanied by a certificate
of a Senior Financial Officer as to the estimated prepayment premium due in
connection with such prepayment (calculated as if the date of such notice were
the date of the prepayment), setting forth the details of such computation. Two
Business Days prior to such prepayment, the Company shall deliver to each Lender
and the Agent a certificate of a Senior Financial Officer specifying the
calculation of such prepayment premium as of the specified prepayment date.

8.3. Offers to Prepay in Connection with Asset Sales. (a) Within 15 Business
Days of receipt by the Parent or any of its Subsidiaries of any Net Asset Sale
Proceeds in respect of any Asset Sale, the Company shall make an offer to make a
prepayment of Loans with an aggregate prepayment price equal to such Net Asset
Sale Proceeds, at a prepayment price equal to 100% of the principal amount of
Loans prepaid, plus the Applicable Prepayment Premium determined for the
prepayment date with respect to such principal amount, plus accrued and unpaid
interest thereon, if any, to the applicable prepayment date, by delivering
written notice of such offer to the Agent and the Lenders (the “Asset Sale
Offer”); provided, however, that this Section 8.3(a) shall not apply to
(x) Asset Sales of the Specified IP and (y) Asset Sales (other than of the
Specified IP) (i) in any Fiscal Year the Net Asset Sale Proceeds from which do
not exceed $1,000,000 in the aggregate and (ii) since the Closing Date the Net
Asset Sale Proceeds from which do not exceed $3,000,000 in the aggregate.

(b) If the Company makes an Asset Sale Offer in respect of any Asset Sale, the
applicable written notice shall specify the date of prepayment and the aggregate
amount of Net Asset Sale Proceeds to be applied to such prepayment, and shall be
accompanied by a certificate of a Senior Financial Officer as to the estimated
principal, interest and Applicable Prepayment Premium due in connection with
such prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Each Lender shall
have the right to accept or decline the Asset Sale Offer by providing written
notice to the Company with a copy to the Agent within 30 days of receipt of
same. The failure of a Lender to notify the Company of its acceptance within
such 30 days shall be deemed to be a rejection of the Asset Sale Offer. If any
Lender accepts the Asset Sale Offer, three Business Days after such 30-day
notice period terminates, the Company shall prepay accepting Lenders’ Loans with
an aggregate prepayment price equal to such Net Asset Sale Proceeds. The
principal amount of the Loans to be prepaid shall be allocated among each
accepting Lender’s portion of the Loans at the time outstanding in proportion,
as nearly as practicable, to the respective unpaid principal amounts of all
accepting Lenders’ Loans not theretofore called for prepayment. Two Business
Days prior to any such prepayment, the Company shall deliver to each
participating Lender and the Agent a certificate of a Senior Financial Officer
specifying the calculation of such Applicable Prepayment Premium as of the
specified prepayment date.

8.4. Offers to Prepay in Connection with Issuances of Capital Stock.

(a) Substantially simultaneously with (and in any event not later than the tenth
Business Day next following) receipt by any Principal Company or any of its
Subsidiaries of any Net Equity Proceeds in respect of any issuance of Capital
Stock (other than Net Equity Proceeds arising from (i) the Restructuring,
(ii) the issuance of Capital Stock to officers, directors,

 

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employees or contractors of the Parent or its Subsidiaries in transactions
directly relating to compensation for services to the Parent or its
Subsidiaries), and (iii) other issuances of Capital Stock (x) in a Fiscal Year
up to $1,500,000 in the aggregate and (y) since the Closing Date up to
$3,000,000 in the aggregate), the Company shall make an offer to make a
prepayment of Loans with an aggregate prepayment price equal to 50% of such Net
Equity Proceeds, at a prepayment price equal to 100% of the principal amount of
Loans prepaid, plus the Applicable Prepayment Premium determined for the
prepayment date with respect to such principal amount, plus accrued and unpaid
interest thereon, if any, to the applicable prepayment date, by delivering
written notice of such offer to the Agent and the Lenders (the “Capital Stock
Offer”); provided, that in the case of the receipt by any Principal Company or
any of its Subsidiaries of (i) any Net Equity Proceeds in an aggregate amount up
to $35,000,000 in respect of any issuance of Capital Stock at a price of $1.25
per share or more, the Applicable Prepayment Premium in connection with such
Capital Stock Offer shall be zero (0) and (ii) any Net Equity Proceeds in excess
of $35,000,000 in respect of any issuance of Capital Stock at a price of $1.25
per share or more, the Applicable Prepayment Premium set forth in this Agreement
in connection with such Capital Stock Offer shall be applicable.

(b) If the Company makes a Capital Stock Offer in respect of any issuance of
Capital Stock, the applicable written notice shall specify the date of
prepayment and the aggregate amount of Net Equity Proceeds to be applied to such
prepayment, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated principal, interest and Prepayment Premium due in
connection with such prepayment (calculated as if the date of such notice were
the date of the prepayment), setting forth the details of such computation. Each
Lender shall have the right to accept or decline the Capital Stock Offer by
providing written notice to the Company with a copy to the Agent within 30 days
of receipt of same. The failure of a Lender to notify the Company of its
acceptance within such 30 days shall be deemed to be a rejection of the Capital
Stock Offer. If any Lender accepts the Capital Stock Offer, three Business Days
after such 30-day notice period terminates, the Company shall prepay accepting
Lenders’ Loans with an aggregate prepayment price equal to such Net Equity
Proceeds. The principal amount of the Loans to be prepaid shall be allocated
among each accepting Lender’s portion of the Loans at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid principal amounts
of all accepting Lenders’ Loans not theretofore called for prepayment. Two
Business Days prior to any such prepayment, the Company shall deliver to each
participating Lender and the Agent a certificate of a Senior Financial Officer
specifying the calculation of such Prepayment Premium as of the specified
prepayment date.

8.5. Allocation of Partial Prepayments. In the case of each partial prepayment
of the Loans, the principal amount of the Loans to be prepaid shall be allocated
among each Lender’s portion of the Loans pursuant to the provisions of
Section 2.3(b).

8.6. Maturity; Surrender, Etc. In the case of each prepayment of Loans pursuant
to this Section 8, the principal amount of each Loan to be prepaid shall mature
and become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued and unpaid to such date and the
Prepayment Premium. From and after such date, unless the Company shall fail to
pay such principal amount when so due and payable, together with the interest
and Prepayment Premium, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note evidencing a Loan paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Loan.

 

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8.7. Purchase of Loans by the Company. No Principal Company will, and will not
permit any Subsidiary to, purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any of the outstanding Loans except upon the payment or
prepayment of the Loans in accordance with the terms of this Agreement and the
Notes. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Loans pursuant to
any provision of this Agreement, no Loans may be made in substitution or
exchange for such repaid, prepaid or purchased Loans and no Notes may be issued
in substitution or exchange for any such Notes.

8.8. Applicable Prepayment Premium.

(a) If the Loans are accelerated in accordance with the provisions of this
Agreement for any reason, including, without limitation, because of default,
sale, transfer or encumbrance (including by operation of law or otherwise) or if
the Loans are repaid for any reason (including, without limitation, pursuant to
a plan of reorganization or otherwise as part of any insolvency, bankruptcy or
similar proceeding) following the occurrence of an Event of Default or otherwise
and whether or not the Loans are accelerated, the Applicable Prepayment Premium
above will also be due and payable as though said indebtedness was voluntarily
prepaid and shall constitute part of the Obligations, in view of the
impracticability and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of the Lenders’
lost profits as a result thereof. The Applicable Prepayment Premium shall be
presumed to be the liquidated damages sustained by the Lenders as the result of
the early termination and the Company agrees that it is reasonable under the
circumstances currently existing. THE COMPANY EXPRESSLY WAIVES THE PROVISIONS OF
ANY PRESENT OR FUTURE STATUTE OR LAW WHICH PROHIBITS OR MAY PROHIBIT THE
COLLECTION OF THE FOREGOING APPLICABLE PREPAYMENT PREMIUM IN CONNECTION WITH ANY
SUCH ACCELERATION.

(b) The Company expressly agrees that: (i) the Applicable Prepayment Premium
provided for herein is reasonable; (ii) the Applicable Prepayment Premium shall
be payable notwithstanding the then prevailing market rates at the time payment
is made; (iii) there has been a course of conduct between the Lenders and the
Company giving specific consideration in this transaction for such agreement to
pay the Applicable Prepayment Premium; and (iv) the Company shall be estopped
hereafter from claiming differently than as agreed to in this paragraph. The
Company expressly acknowledges that its agreement to pay the Applicable
Prepayment Premium to the Lenders as herein described is a material inducement
to the Lenders to make the Loans.

 

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9. AFFIRMATIVE COVENANTS. Each Principal Company covenants that so long as any
of the Loans are outstanding and until the payment in cash and performance in
full of all Obligations, each Principal Company will perform, and will cause
each of its Subsidiaries to perform, all covenants in this Section 9:

9.1. Existence, Etc. Except as permitted under Section 10.6, each Principal
Company will, and will cause each of its Subsidiaries to, at all times preserve
and keep in full force and effect its existence and all rights and franchises
material to its business; provided, however that no Principal Company or any of
its Subsidiaries shall be required to preserve any such right or franchise if
the Governing Body of such Principal Company or any such Subsidiary shall
determine that the preservation thereof is no longer required in the conduct of
the business of such Principal Company or such Subsidiary, as the case may be,
and that the loss thereof is not disadvantageous in any material respect to such
Principal Company, such Subsidiary, the Lenders or the Agent. Notwithstanding
the foregoing, the Company may dissolve any Subsidiary that is not a Material
Subsidiary at any time.

9.2. Payment of Taxes and Claims; Tax.

(a) Each Principal Company will, and will cause each of its Subsidiaries to, pay
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its income, businesses or
franchises before any interest or penalty accrues thereon, and pay all claims
(including claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a Lien upon any
of its properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such charge or claim need be
paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (i) such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor and (ii) in the case of a charge or claim which
has or may become a Lien against any of the Collateral, such proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such charge or claim.

(b) The Parent will not, and will not permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than the Parent and its Subsidiaries).

9.3. Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds.

(a) Maintenance of Properties. Each Principal Company will, and will cause each
of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
Properties (including all Intellectual Property) required in the business or
materially beneficial to the business of such Principal Company (as determined
in good faith by such Principal Company) and its Subsidiaries and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof; provided that such Principal Company and any Subsidiary
may discontinue the operation and maintenance of and not replace any of its
Properties if such discontinuance is not materially detrimental to the conduct
of the business of such Principal Company and its Subsidiaries.

 

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(b) Insurance. Each Principal Company will maintain or cause to be maintained,
with financially sound and reputable insurers, such public liability insurance,
third party property damage insurance, business interruption insurance and
casualty insurance with respect to liabilities, losses or damage in respect of
the Properties and businesses of such Principal Company and its Subsidiaries as
may customarily be carried or maintained under similar circumstances by Persons
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
Persons similarly situated in the industry. Without limiting the generality of
the foregoing, each Principal Company will maintain or cause to be maintained
replacement value casualty insurance on the Collateral under such policies of
insurance, with such insurance companies, in such amounts, with such
deductibles, and covering such risks as are at all times satisfactory to the
Collateral Agent in its commercially reasonable judgment. Each such policy of
insurance shall (1) name the Collateral Agent for the benefit of the Secured
Parties as an additional insured thereunder as its interests may appear and
(2) in the case of each business interruption and casualty insurance policy,
contain a loss payable clause or endorsement, satisfactory in form and substance
to the Collateral Agent, that names the Collateral Agent for the benefit of the
Secured Parties as the loss payee thereunder for any covered loss in excess of
$1,000,000 and provides for at least 30 days’ prior written notice to the
Collateral Agent of any modification or cancellation of such policy.

(c) Application of Net Insurance/Condemnation Proceeds.

(i) Business Interruption Insurance. Upon receipt by any Principal Company or
any of its Subsidiaries of any business interruption insurance proceeds, (1) so
long as no Default or Event of Default shall have occurred and be continuing,
such Principal Company or such Subsidiary may retain and apply such proceeds for
working capital purposes, and (2) if a Default or an Event of Default shall have
occurred and be continuing, such Principal Company shall, subject to the
Intercreditor Agreement, deliver such proceeds to the Collateral Agent to hold
as Collateral for the Obligations, such proceeds to be thereafter released to
such Principal Company or applicable Subsidiary for use in accordance with
clause (1) above at such time as no Default or Event of Default has occurred and
is then continuing.

(ii) Net Insurance/Condemnation Proceeds Received by the Principal Companies.
Upon receipt by any Principal Company or any of its Subsidiaries of any Net
Insurance/ Condemnation Proceeds (other than from business interruption
insurance) in excess of $1,000,000, such Principal Company will, or will cause
the Subsidiary recipient to, subject to the Intercreditor Agreement, promptly
pay such Net Insurance/Condemnation Proceeds over to the Collateral Agent (and
the Collateral Agent is hereby authorized to collect all such insurance and
condemnation proceeds directly) to be held by the Collateral Agent as Collateral
for the Obligations and to be disbursed to such Principal Company under a
schedule reasonably satisfactory to the Collateral Agent for application to the
cost of repairs, replacements, or restorations of the Property to which such
proceeds relate; provided, that the Collateral Agent shall disburse such
proceeds to such Principal Company (or such other relevant Loan Party) (under a
schedule as provided above) so long as (i) no Default or Event of Default shall
have occurred and be continuing, (ii) the affected Loan Party shall provide the
Collateral Agent with reasonably detailed plans respecting the costs and methods
of repairs, replacements or restoration, and (iii) all such restored, replaced
or restored Property shall be Collateral subject to

 

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a First Priority Lien in favor of the Collateral Agent for the benefit of the
Secured Parties. Until the Collateral Agent applies any such Net
Insurance/Condemnation Proceeds as set forth in the immediately preceding
sentence, the Collateral Agent shall continue to hold such Net
Insurance/Condemnation Proceeds as Collateral for the Obligations.

(iii) Net Insurance/Condemnation Proceeds Received by the Collateral Agent. Upon
receipt by the Collateral Agent of any Net Insurance/Condemnation Proceeds as
loss payee or otherwise, such Net Insurance/Condemnation Proceeds shall be
available to each Principal Company and its Subsidiaries in accordance with
Section 9.3(c)(ii) as if directly received by such Principal Company or its
Subsidiaries (and, to the extent consistent with such clauses, the Collateral
Agent shall either hold such Net Insurance/Condemnation Proceeds in the
Collateral Account as Collateral for the Obligations or deliver such Net
Insurance/Condemnation Proceeds to such Principal Company or its Subsidiaries).

(iv) Repair, Replacement and Restoration. Any repairs, replacements, or
restorations undertaken in accordance with Section 9.3(c) with Net
Insurance/Condemnation Proceeds shall be effected with reasonable promptness and
shall, to the extent commercially feasible, be of a quality and value at least
equal to the quality and value of the respective Property prior to the damage or
destruction of such Property giving rise to such Net Insurance/Condemnation
Proceeds.

(d) Separate Insurance. No Principal Company will, and will not suffer or permit
its Subsidiaries to, take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under
Section 9.3(b), unless the Collateral Agent is included thereon as set forth in
Section 9.3(b). The Principal Companies immediately shall notify the Collateral
Agent whenever such separate insurance is taken out, specifying the insurer
thereunder and full particulars as to the policies evidencing the same, and
copies of such policies promptly shall be provided to the Collateral Agent.

9.4. Inspection Rights; Lender Meeting.

(a) Inspection Rights. The Parent will, and will cause each of its Subsidiaries
to, permit any authorized representatives designated by any Lender or the Agent:

(i) No Default. If no Default or Event of Default then exists, at the reasonable
expense of the Parent and upon reasonable prior notice to the Parent or the
Company, as the case may be, to visit the principal executive office of either
Principal Company, to discuss the affairs, finances and accounts of such
Principal Company and its Subsidiaries with such Principal Company’s officers,
and (with the consent of such Principal Company, which consent will not be
unreasonably withheld) its independent public accountants, and (with the consent
of such Principal Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of such Principal Company and each
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing in each case, to the extent that such Principal Company or
any such Subsidiary is not prohibited from revealing any such information
pursuant to any obligation of confidentiality in relation to such material owed
by such Principal Company or such Subsidiary to any third party entered into on
normal commercial terms and not in contemplation of this Section; provided that
the Parent’s obligation to pay the costs of any

 

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inspections made pursuant to this Section 9.4(a)(i) shall be limited to (i) two
inspections per year for the Parent, plus (ii) one inspection per year for the
Company, plus (iii) any inspections made in connection with a request by the
Parent or the Company for a consent, waiver or amendment with respect to the
Loan Documents; and

(ii) Default. If a Default or Event of Default then exists, at the reasonable
expense of the Parent, to visit and inspect any of the offices or properties of
the Parent or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, prospects, finances and accounts with their
respective officers and independent public accountants (and by this provision
the Parent authorizes said accountants to discuss the affairs, finances and
accounts of the Parent and its Subsidiaries), all at such times and as often as
may be requested in each case, to the extent that the Parent or any such
Subsidiary is not prohibited from revealing any such information pursuant to any
obligation of confidentiality in relation to such material owed by the Parent or
such Subsidiary to any third party entered into on normal commercial terms and
not in contemplation of this Section.

(b) Lender Meeting. Without duplication with Section 9.4(a), the Principal
Companies will, upon the request of the Required Lenders or the Agent and at the
expense of the Principal Companies, participate in a meeting of the Lenders and
the Agent once during each Fiscal Year to be held at the Parent’s principal
offices (or at such other location as may be agreed to by the Principal
Companies and the Agent) at such time as may be agreed to by the Principal
Companies and the Agent.

9.5. Compliance with Laws, Etc.

(a) Compliance. Each Principal Company will comply, and will cause each of its
Subsidiaries and all other Persons on or occupying any Facilities to comply,
with the requirements of all Applicable Laws (including all Environmental Laws),
noncompliance with which could reasonably be expected to result in, individually
or in the aggregate, a Material Adverse Effect.

(b) SEC Filings. The Parent will file or furnish, on a timely basis in
accordance with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be), all statements, reports, schedules, forms and
other documents (other than any immaterial Form 3, 4, 5 or 8-K filings or any
filings relating solely to benefit plans), required to be filed or furnished
with or to the SEC.

9.6. Environmental Matters.

(a) Environmental Disclosure. Each Principal Company will deliver to the
Collateral Agent and each Lender:

(i) Environmental Audits and Reports. As soon as practicable following receipt
thereof, copies of all environmental audits, investigations, analyses and
reports of any kind or character, whether prepared by personnel of such
Principal Company or any of its Subsidiaries or by independent consultants,
Governmental Authorities or any other Persons, with

 

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respect to significant environmental matters at any Facility that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect or with respect to any Environmental Claims that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect;

(ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly upon the
occurrence thereof, written notice describing in reasonable detail (A) any
Release required to be reported to any federal, provincial, state or local
governmental or regulatory agency under any applicable Environmental Laws,
(B) any remedial action taken by such Principal Company or any other Person in
response to (1) any Hazardous Materials Activities the existence of which could
reasonably be expected to result in one or more Environmental Claims having,
individually or in the aggregate, a Material Adverse Effect, or (2) any
Environmental Claims that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, and (C) such Principal
Company’s or any Subsidiary’s discovery of any occurrence or condition on any
real property adjoining or in the vicinity of any Facility that could cause such
Facility or any part thereof to be subject to any material restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws;

(iii) Written Communications Regarding Environmental Claims, Releases, Etc. As
soon as practicable following the sending or receipt thereof by such Principal
Company or any of its Subsidiaries, a copy of any and all written communications
with respect to (A) any Environmental Claims that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
(B) any Release required to be reported to any federal, state or local
governmental or regulatory agency, and (C) any request for information from any
governmental agency that suggests such agency is investigating whether such
Principal Company or any of its Subsidiaries may be potentially responsible for
any Hazardous Materials Activity; and

(iv) Notice of Certain Proposed Actions Having Environmental Impact. Prompt
written notice describing in reasonable detail (A) any proposed acquisition of
stock, assets, or property by such Principal Company or any of its Subsidiaries
that could reasonably be expected to (1) expose such Principal Company or any of
its Subsidiaries to, or result in, Environmental Claims that could reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect or (2) affect the ability of such Principal Company or any of its
Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective
operations and (B) any proposed action to be taken by such Principal Company or
any of its Subsidiaries to modify current operations in a manner that could
reasonably be expected to subject such Principal Company or any of its
Subsidiaries to any additional obligations or requirements under any
Environmental Laws that could reasonably be expected to result in, individually
or in the aggregate, a Material Adverse Effect.

(b) The Principal Companies’ Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental Laws.

(i) Remedial Actions Relating to Hazardous Materials Activities. Each Principal
Company will, in compliance with all applicable Environmental Laws, promptly

 

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undertake, and will cause each of its Subsidiaries promptly to undertake, any
and all investigations, studies, sampling, testing, abatement, cleanup, removal,
remediation or other response actions necessary to remove, remediate, clean up
or abate any Hazardous Materials Activity on, under or about any Facility that
is in violation of any Environmental Laws or that presents a material risk of
giving rise to a material Environmental Claim.

(ii) Actions with Respect to Environmental Claims and Violations of
Environmental Laws. Each Principal Company will promptly take, and will cause
each of its Subsidiaries promptly to take, any and all actions necessary to
(A) cure any violation of applicable Environmental Laws by such Principal
Company or its Subsidiaries that could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect and (B) make an
appropriate response to any Environmental Claim against such Principal Company
or any of its Subsidiaries and discharge any obligations it may have to any
Person thereunder where failure to do so could reasonably be expected to result
in, individually or in the aggregate, a Material Adverse Effect.

9.7. Execution of Subsidiary Guaranty and Personal Property Collateral Documents
After the Closing Date.

(a) Execution of Subsidiary Guaranty and Personal Property Collateral Documents.
In the event that any Person becomes a Material Subsidiary of any Principal
Company after the date hereof or any Non-Grantor Subsidiary becomes a Material
Subsidiary, such Principal Company will (i) promptly notify the Lenders and the
Agent of that fact, and (ii) except to the extent (A) such Principal Company
delivers satisfactory evidence to the Agent that the granting of a Guaranty of
the Obligations by such Subsidiary and the granting of a Lien on the Property of
such Subsidiary to secure the Obligations (1) would result in a material
increase in the tax liability of any Principal Company and its Subsidiaries
(based on the amount of pre-tax income at the time of determination) or
(2) would be prohibited by Applicable Law or (B) in the case of a Non-U.S.
Subsidiary, in the reasonable determination of the Collateral Agent, the cost of
obtaining or perfecting such Lien is excessive in relation to the value of the
security afforded thereby, cause such Subsidiary to execute and deliver to the
Lenders and the Collateral Agent a Subsidiary Guaranty Joinder and a Security
Agreement Joinder (to the extent required by the terms of the Security
Agreements) and to take all such further actions and execute all such further
documents and instruments (including actions, documents and instruments
comparable to those described in Section 4.9) as may be necessary or, in the
opinion of the Collateral Agent, desirable to create in favor of the Collateral
Agent, for the benefit of the Secured Parties, a valid and perfected First
Priority Lien on all of the personal and mixed Property of such Subsidiary
described in the applicable forms of Collateral Documents. In addition, as
provided in the Security Agreements but subject to Section 9.7(b), each
Principal Company will, or will cause the Subsidiary Guarantor that owns the
Capital Stock of any Person that becomes a Subsidiary of such Principal Company
or Subsidiary Guarantor to, execute and deliver to the Collateral Agent a
supplement to the applicable Security Agreements and to deliver to Collateral
Agent all certificates representing such Capital Stock of such Person
(accompanied by irrevocable undated stock powers, duly endorsed in blank).

(b) Non-U.S. Subsidiaries of U.S. Subsidiaries. In the event that any Person
becomes a Non-U.S. Subsidiary of a U.S. Subsidiary of any Principal Company
after the date

 

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hereof, such Principal Company will promptly notify the Lenders and the
Collateral Agent of that fact and, if such Non-U.S. Subsidiary is directly owned
by a U.S. Subsidiary of such Principal Company, cause such Non-U.S. Subsidiary
to execute and deliver to the Lenders and the Collateral Agent such documents
and instruments and take such further actions (including actions, documents and
instruments comparable to those described in Section 4.9) as may be necessary
or, in the reasonable opinion of the Collateral Agent, desirable to create in
favor of the Collateral Agent, for the benefit of the Secured Parties, a valid
and perfected First Priority Lien on 66% of the Capital Stock of such Non-U.S.
Subsidiary.

(c) Subsidiary Organizational Documents, Legal Opinions, Etc. In the event that
any Subsidiary is required to become a Loan Party pursuant to Section 9.7(a),
the applicable Principal Company will deliver to each Lender and the Collateral
Agent, together with such Loan Documents described in this Section 9.7,
(i) certified copies of such Subsidiary’s Organizational Documents, together
with, if such Subsidiary is a Canadian Subsidiary or U.S. Subsidiary, a good
standing certificate from the Secretary of State or equivalent of the
jurisdiction of its organization and, if reasonably required by the Agent, each
other state or province in which such Person is qualified to do business and, to
the extent generally available, a certificate or other evidence of good standing
as to payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such jurisdictions, each to be dated a recent date
prior to their delivery to the Lenders and the Collateral Agent, (ii) a
certificate executed by the secretary or similar officer of such Subsidiary as
to (A) the fact that the attached resolutions of the Governing Body of such
Subsidiary approving and authorizing the execution, delivery and performance of
such Loan Documents are in full force and effect and have not been modified or
amended and (B) the incumbency and signatures of the officers of such Subsidiary
executing such Loan Documents, (iii) an executed supplement to the applicable
Security Agreements evidencing the pledge of the Capital Stock of such
Subsidiary by such Principal Company or a Subsidiary of such Principal Company
that owns such Capital Stock, accompanied by a certificate evidencing such
Capital Stock, together with an irrevocable undated stock power duly endorsed in
blank and satisfactory in form and substance to the Collateral Agent, and (iv) a
favorable opinion of outside counsel to such Subsidiary, from such counsel and
in form and substance reasonably satisfactory to the Collateral Agent, as to
(A) the due organization and good standing of such Subsidiary, (B) the due
authorization, execution and delivery by such Subsidiary of such Loan Documents,
(C) the enforceability of such Loan Documents against such Subsidiary and
(D) such other matters (including matters relating to the creation and
perfection of Liens in any Collateral pursuant to such Loan Documents) as the
Collateral Agent may reasonably request, all of the foregoing to be satisfactory
in form and substance to the Collateral Agent.

(d) Notwithstanding the foregoing provisions of this Section 9.7, no Principal
Company shall be required to grant or perfect a Lien against the Capital Stock
of any Non-Grantor Subsidiary under the law of the jurisdiction in which such
Non-Grantor Subsidiary is organized to the extent (A) the Principal Company
delivers satisfactory evidence to the Agent that the granting of a charge or
security interest in the Capital Stock of such Non-Grantor Subsidiary under the
law of the jurisdiction of its organization (1) would result in a material
increase in the tax liability of any Principal Company and its Subsidiaries
(based on the amount of pre-tax income at the time of determination) or
(2) would be prohibited by Applicable Law or (B) in the reasonable determination
of the Collateral Agent, the cost of obtaining or perfecting such Lien under
such law is excessive in relation to the value or the security afforded thereby.

 

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9.8. Matters Relating to Additional Real Property Collateral.

(a) Additional Mortgages, Etc. From and after the Closing Date, in the event
that (i) any Principal Company or any Grantor acquires any Real Property Asset
located in the United States, Canada or Ireland in fee interest or (ii) at the
time any Person becomes a Grantor, such Person owns or holds any Real Property
Asset located in the United States, Canada or Ireland in fee interest, in the
case of clause (ii) above excluding any such Real Property Asset the
encumbrancing of which requires the consent of any then-existing senior
lienholder, where such Principal Company and its Subsidiaries have attempted in
good faith, but are unable, to obtain such senior lienholder’s consent (any such
non-excluded Real Property Asset described in the foregoing clause (i) or
(ii) being an “Additional Mortgaged Property”), such Principal Company or such
Grantor will deliver to the Lenders and the Collateral Agent, as soon as
practicable after such Person acquires such Additional Mortgaged Property or
becomes a Grantor, as the case may be, a fully executed and notarized Mortgage
(an “Additional Mortgage”), in proper form for recording in all appropriate
places in all applicable jurisdictions, encumbering the interest of such Loan
Party in such Additional Mortgaged Property; and such opinions, appraisal,
documents, title insurance, environmental reports as may be reasonably required
by the Collateral Agent.

(b) Landlord Consents, Estoppels and Collateral Access Agreements. From and
after the Closing Date, in the event that (i) any Principal Company or any
Grantor acquires any Material Leasehold Property in the United States, Canada or
Ireland or (ii) at the time any Person becomes a Grantor, such Person owns or
holds any Material Leasehold Property in the United States, Canada or Ireland,
and in either case the Collateral Agent reasonably requests that such Principal
Company deliver a fully executed Landlord Consent, Estoppel and Collateral
Access Agreement with respect to such Material Leasehold Property, such
Principal Company or such Grantor will deliver to the Lenders and the Collateral
Agent, as soon as practicable after such Person acquires such Material Leasehold
Property or becomes a Subsidiary Guarantor, as the case may be, a fully executed
Landlord Consent, Estoppel and Collateral Access Agreement; provided that no
Principal Company or any Grantor shall be required to deliver a Landlord
Consent, Estoppel and Collateral Access Agreement in respect of any such
Material Leasehold Property where such Principal Company and its Subsidiaries
have attempted in good faith, but are unable, to obtain such lessor’s agreement
to enter into a Landlord Consent, Estoppel and Collateral Access Agreement.

9.9. Deposit Accounts, Securities Accounts and Cash Management Systems.

(a) Each Principal Company will, and will cause each of its Subsidiaries to, use
and maintain its Deposit Accounts, Securities Accounts and cash management
systems in a manner reasonably satisfactory to the Lenders and the Collateral
Agent.

 

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(b) No Principal Company or other Grantor will establish or maintain any Deposit
Accounts (except Permitted Unperfected Accounts) or Securities Accounts unless:

(i) Such Principal Company or such other Grantor, as the case may be, has
(A) delivered to the Lenders and the Collateral Agent an agreement, satisfactory
in form and substance to the Collateral Agent and executed by the financial
institution at which such Deposit Account or Securities Account is maintained,
pursuant to which such financial institution confirms and acknowledges the
Collateral Agent’s security interest in such Deposit Account or Securities
Accounts and, except in respect of its right to receive ordinary course banking
and administration fees, waives its rights to set-off with respect to amounts in
such Deposit Account or Securities Account and (B) taken all other steps
necessary or, in the opinion of the Collateral Agent, desirable to ensure that
the Collateral Agent has a perfected security interest in such Deposit Account
or Securities Account; provided that if such Principal Company or such other
Grantor is unable to obtain such agreement from such financial institution such
Principal Company will, or will cause such other Grantor to, within 30 days
after receiving a written request by any Lender or the Collateral Agent to do
so, transfer all amounts in the applicable Deposit Account or Securities Account
to a Deposit Account or Securities Account maintained at a financial institution
from which such Principal Company or such Grantor has obtained such an
agreement; or

(ii) such Deposit Account or Securities Account is held with an institution
located in a jurisdiction where an agreement of the type contemplated by
Section 9.9(b)(i) is not required to perfect a security interest in such Deposit
Account or Securities Account and where the Collateral Agent has a perfected
security interest in such Deposit Account or Securities Account.

Notwithstanding the foregoing provisions of this Section 9.9(b) and in addition
to any Permitted Unperfected Account, Non-Grantor Subsidiaries may maintain
balances not in excess of $200,000 (and, in the case of Deposit Accounts with
respect to Subsidiaries formed in (A) France not in excess of $1,500,000,
(B) India not in excess of $1,500,000 and (C) Russia not in excess of $2,500,000
in aggregate for all Subsidiaries formed in each such country) in Deposit
Accounts that are general operating accounts not subject to a perfected security
interest in favor of the Collateral Agent.

9.10. Further Assurances; Additional Collateral.

(a) Each Principal Company will and will cause its Subsidiary Guarantors to do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, financing statements
and continuations thereof, termination statements, notices of assignment,
transfers, certificates, assurances and other instruments the Collateral Agent
or any Lender may reasonably require from time to time in order to (i) carry out
the purposes of this Agreement or any other Loan Document, (ii) subject any of
the Properties, rights or interests covered by any of the Collateral Documents
to the Liens created by any of the Collateral Documents, (iii) perfect and
maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby and the First Priority
nature thereof and (iv) assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Collateral Agent or the Lenders the rights granted or
now or hereafter intended to be granted to the Collateral Agent or any Lenders
under any Loan Document or under any other document executed in connection
therewith.

 

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(b) With respect to any Property acquired by any Principal Company or a
Subsidiary Guarantor after the Closing Date as to which the Collateral Agent,
for the benefit of the Secured Parties, does not have a perfected First Priority
security interest pursuant to the Collateral Documents (other than Property
expressly excluded from the Collateral pursuant to the Loan Documents and
subject to Section 9.7 with respect to new Subsidiaries and Section 9.8 with
respect to new Real Property Assets), promptly execute and deliver to the
Collateral Agent such amendments to the Collateral Documents or such other
documents as the Collateral Agent deems necessary or advisable to grant to the
Collateral Agent, for the benefit of the Secured Parties, a security interest in
such Property and take all other actions necessary or advisable to grant to the
Collateral Agent, for the benefit of the Secured Parties, a perfected First
Priority security interest in such Property, including, without limitation, the
filing of UCC financing statements.

9.11. Ranking. Each Principal Company will and will cause each of its Subsidiary
Guarantors to ensure that, at all times, all liabilities of such Principal
Company and its Subsidiary Guarantors under this Agreement or the other Loan
Documents shall rank in right of payment either pari passu or senior to all
other Indebtedness and Contingent Obligations of such Principal Company and its
Subsidiary Guarantors.

9.12. Use of Proceeds. The Loan Parties shall use the proceeds from the Loans
for general corporate and working capital purposes of the Company and the
Subsidiary Guarantors.

9.13. Assignability of Contracts. Each Principal Company will use commercially
reasonable efforts to exclude from all agreements or documents entered into
after the Closing Date, any term or provision that would prevent such Principal
Company or a Subsidiary Guarantor from granting a Lien in such agreements or
documents to the Collateral Agent under the Collateral Documents.

9.14. Agent for Service of Process. Each Principal Company will at all times
either (a) maintain Dialogic Research Inc.’s qualification to do business in the
State of New York, or (b) maintain an agent in New York, New York for service of
process of summons, complaint and other legal process related to the Loan
Documents, and in the event such an agent is appointed, each Principal Company
agrees to provide written notice of such appointment to the Agent and the
Lenders.

10. NEGATIVE COVENANTS. Each Principal Company covenants that so long as any of
the Loans are outstanding, such Principal Company will perform, and will cause
each of its Subsidiaries to perform, all covenants in this Section 10:

10.1. Indebtedness. No Principal Company shall, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:

(a) each Principal Company may become and remain liable with respect to the
Obligations;

 

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(b) the Grantors may become and remain liable with respect to Indebtedness
(including in respect of Capital Leases and Synthetic Leases) secured by Liens
permitted pursuant to Section 10.2(a)(ii) aggregating not in excess of
$2,000,000 at any one time outstanding;

(c) each Principal Company may become and remain liable with respect to
Indebtedness to any of its Wholly-Owned Subsidiaries, and any Wholly-Owned
Subsidiary of any Principal Company may become and remain liable with respect to
Indebtedness to any Principal Company or any other Wholly-Owned Subsidiary;
provided that (i) all such intercompany Indebtedness shall be evidenced by
promissory notes, (ii) Indebtedness of Non-Grantor Subsidiaries to the Principal
Companies and the other Grantors shall be limited to (A) Indebtedness described
in Schedule 5.18(a) hereto, (B) Indebtedness of Non-Grantor Subsidiaries arising
from advances (x) to pay rent, payroll and other business expenses, including
Contingent Obligations permitted under Section 10.4(c) and (y) arising from the
provision of services or sales or licenses of inventory or Intellectual Property
in the ordinary course of business and consistent with past practices,
(C) Indebtedness in the form of advances to capitalize newly formed Subsidiaries
that are not required to become Guarantors in an amount not to exceed $1,500,000
in the case of any one Subsidiary and $4,000,000 in the case of all such
Subsidiaries, (D) Indebtedness to fund capital expenditures permitted under
Section 10.3(d) and (E) additional Indebtedness at any time outstanding not to
exceed $3,000,000 in the aggregate for all Non-Grantor Subsidiaries to the
Grantors; (iii) the principal amount of Indebtedness of all Grantors to
Non-Grantor Subsidiaries at any time outstanding shall not exceed $2,500,000 in
the aggregate; and (iv): so long as Veraz Networks S. de R.L. de C.V. has not
executed and delivered to the Agent a joinder to the Intercompany Subordination
Agreement, the Parent shall not permit Veraz Networks S. de R.L. de C.V. to make
loans to an Affiliate;

(d) each Principal Company and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness outstanding as of the Closing Date described
in Schedule 5.18(a) (or any Permitted Refinancing Indebtedness in respect of
such Indebtedness);

(e) Indebtedness under the Working Capital Facility and any refinancing thereof,
in each case to the extent permitted by the Intercreditor Agreement and not in
excess of the Revolver Cap (as defined in the Intercreditor Agreement);

(f) Indebtedness under each Permitted ABL Facility and any refinancing thereof,
in each case to the extent permitted by the relevant intercreditor agreement and
not in excess of the maximum amount permitted by the definition of “Permitted
ABL Facility” hereunder and such intercreditor agreement;

(g) Each Principal Company or a Subsidiary of such Principal Company may become
and remain liable with respect to Indebtedness of any Person assumed in
connection with any acquisition of such Person permitted under Section 10.3 (or
any Permitted Refinancing Indebtedness in respect thereof) and a Person that
becomes a direct or indirect Wholly-Owned Subsidiary of any Principal Company as
a result of any acquisition permitted under Section 10.3 may remain liable with
respect to Indebtedness existing on the date of such acquisition (or any
Permitted Refinancing Indebtedness in respect thereof); provided that such
Indebtedness is not created in anticipation of such acquisition; and

 

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(h) the Principal Companies and their Subsidiaries may become and remain liable
with respect to (X) unsecured Indebtedness in an aggregate amount not to exceed
$4,000,000 at any one time outstanding, and (Y) Subordinated Indebtedness in an
aggregate amount not to exceed $7,000,000 at any one time outstanding.

Notwithstanding the foregoing, the Principal Companies will not permit the
Principal Companies and their Subsidiaries to be liable with respect to
Indebtedness incurred under subsections (a), (b), (e), (f) and (h) of this
Section 10.1 in an aggregate amount greater than $130,000,000 at any one time.

10.2. Liens and Related Matters.

(a) Prohibition on Liens. No Principal Company will, and no Principal Company
will permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any Property of any
kind (including any document or instrument in respect of goods or accounts
receivable) of any Principal Company or any of its Subsidiaries, whether now
owned or hereafter acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement,
mortgage, deed of trust or other similar notice of any Lien with respect to any
such Property, income or profits under the UCC or under any similar recording or
notice statute, except:

(i) Permitted Encumbrances;

(ii) Liens on any asset existing at the time of acquisition of such asset by a
Grantor (including in respect of Capital Leases and Synthetic Leases), or Liens
to secure the payment of all or any part of the purchase price of any asset upon
the acquisition of such asset by a Grantor or to secure any Indebtedness
permitted hereby incurred by a Grantor at the time of or within 90 days after
the acquisition of such asset, which Indebtedness is incurred for the purpose of
financing all or any part of the purchase price of such asset; provided,
however, that the Lien shall apply only to the asset so acquired and the
proceeds of Disposition thereof and the principal amount of Indebtedness secured
thereby is not increased; and provided, further, that all such Liens do not in
the aggregate secure Indebtedness in excess of $2,000,000 at any time;

(iii) Liens on assets of a Person that becomes a direct or indirect Subsidiary
of any Principal Company after the date of this Agreement in accordance with
Section 10.3 hereof, provided, however, that such Liens exist at the time such
Person is acquired or becomes a Subsidiary and are not created in anticipation
thereof and that such Liens shall apply only to the assets of such acquired
Person;

(iv) Liens in existence as of the Closing Date described in Schedule 10.2
annexed hereto;

(v) Liens on the Revolver Collateral (as defined in the Intercreditor Agreement)
securing Indebtedness under the Working Capital Facility;

(vi) Liens on the collateral (as defined in the relevant intercreditor
agreement) securing Indebtedness under each Permitted ABL Facility; and

 

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(vii) Other Liens securing Indebtedness and Contingent Obligations in an
aggregate amount not to exceed $2,000,000 at any time outstanding.

(b) Equitable Lien in Favor of Lenders. If any Principal Company or any of its
Subsidiaries will create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of Section 10.2(a), it will make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness or Contingent Obligations secured
thereby as long as any such Indebtedness or Contingent Obligations shall be so
secured; provided that, notwithstanding the foregoing, this covenant will not be
construed as a consent by the Required Lenders to the creation or assumption of
any such Lien not permitted by the provisions of Section 10.2(a).

(c) No Further Negative Pledges. No Principal Company nor any of its
Subsidiaries will enter into any agreement (other than in connection with the
Working Capital Facility or any Permitted ABL Facility and then only to the
extent permitted by the Intercreditor Agreement or any intercreditor agreement
relating to the Permitted ABL Facility) prohibiting the creation or assumption
of any Lien upon any of its Properties, whether now owned or hereafter acquired,
except with respect to (i) specific Property to be sold pursuant to an executed
agreement with respect to an Asset Sale, (ii) customary prohibitions relating to
specific Property subject to a Capital Lease or Synthetic Lease, (iii) customary
restrictions on Intellectual Property licensed to any Principal Company or any
of its Subsidiaries so long as such restrictions relate solely to such
Intellectual Property, or (iv) customary restrictions relating to specific
Property subject to Liens permitted under Sections 10.2(a)(ii) and 10.2(a)(iii).

(d) No Restrictive Agreements. Except in connection with the Working Capital
Facility or any Permitted ABL Facility and then only to the extent permitted by
the Intercreditor Agreement or any intercreditor agreement relating to the
Permitted ABL Facility, no Principal Company will, and no Principal Company will
permit any of its Subsidiaries to, create or otherwise cause or suffer to exist
or become effective any consensual encumbrance, condition, prohibition or
restriction of any kind on such Principal Company’s or such Subsidiary’s right
to: (a) incur or repay Indebtedness (whether owing to a Principal Company, any
Subsidiary of a Principal Company or otherwise); (b) guarantee the Obligations
pursuant to the Subsidiary Guaranty; (c) amend, modify, extend or renew any
agreement evidencing Indebtedness; (d) repay any obligations owed to any
Principal Company or any Subsidiary; (e) make loans or advances to any Principal
Company or any Subsidiary; (f) pay dividends or make any other distributions on
any Subsidiary’s Capital Stock owned by any Principal Company or any other
Subsidiary of a Principal Company; or (g) transfer any of its Property to any
Principal Company or any Subsidiary, in each case except as provided in this
Agreement or the other Loan Documents and, in the case of clause (g), except
(i) with respect to specific Property to be sold pursuant to an executed
agreement with respect to an Asset Sale, (ii) with respect to Intellectual
Property licensed to any Principal Company or any of its Subsidiaries, or
(iii) customary restrictions relating to specific Property subject to Liens
permitted under Sections 10.2(a)(ii) and 10.2(a)(iii).

10.3. Investments; Acquisitions. No Principal Company will, and no Principal
Company will permit any of its Subsidiaries to, directly or indirectly, make or
own any

 

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Investment in any Person, including any Joint Venture, or acquire, by purchase
or otherwise, all or substantially all the business, Property or Capital Stock
of, or other ownership interest in any Person, or any division or line of
business of any Person except:

(a) such Principal Company and its Subsidiaries may make and own Investments in
Cash Equivalents;

(b) the Grantors may make and own additional equity Investments in their
respective Subsidiaries that are Grantors;

(c) such Principal Company and its Subsidiaries may make intercompany loans to
the extent permitted under Section 10.1(c);

(d) such Principal Company and its Subsidiaries may make Consolidated Capital
Expenditures consistent with the applicable Financial Plan, as modified in good
faith by the Parent’s Governing Body from time to time; provided that capital
expenditures made by Non-Grantor Subsidiaries in any Fiscal Year may not exceed
(u) $500,000 in aggregate in respect of all Non-Grantor Subsidiaries organized
in India, (v) $500,000 in aggregate in respect of all Non-Grantor Subsidiaries
organized in the United Kingdom, (w) $500,000 in aggregate in respect of all
Non-Grantor Subsidiaries organized in Germany (x) $500,000 in aggregate in
respect of all Non-Grantor Subsidiaries organized in France, (y) $500,000 in
aggregate in respect of all Non-Grantor Subsidiaries organized in Russia and
(z) in respect of each other country in which a Non-Grantor Subsidiary of any
Principal Company is organized, $100,000 in such country and $500,000 in the
aggregate for all such countries unless any capital expenditures over such
applicable maximum amount set forth in clauses (u) through (z) above have been
approved by the Parent’s Governing Body; provided further, that the acquisition
of licenses of Software permitted under this Section shall not be subject to the
limitations set forth in the first proviso to this Section 10.3(d);

(e) such Principal Company and its Subsidiaries may continue to own the
Investments owned by them and described in Schedule 10.3(e);

(f) the Grantors may acquire assets (including Capital Stock and including
Capital Stock of Subsidiaries formed in connection with any such acquisition)
having a fair market value not in excess of $5,000,000 in any one Fiscal Year
and $15,000,000 in the aggregate and continue to own such assets after the
acquisition thereof; provided that (i) immediately prior to and after giving
effect to any such acquisition, no Default or Event of Default shall have
occurred and be continuing, and (ii) such Principal Company shall, and shall
cause its Subsidiaries to, comply with the requirements of Sections 9.7 and 9.8
with respect to each such acquisition that results in a Person becoming a
Subsidiary;

(g) such Principal Company may acquire and hold obligations of one or more
officers or other employees of such Principal Company or its Subsidiaries in
connection with such officers’ or employees’ acquisition of shares of such
Principal Company’s common stock, so long as no cash is actually advanced by
such Principal Company or any of its Subsidiaries to such officers or employees
in connection with the acquisition of any such obligations;

 

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(h) the Grantors may (i) own Investments in Non-Grantor Subsidiaries in
existence on the Closing Date and described in Schedule 10.3(h) and (ii) make
and own additional Investments in Non-Grantor Subsidiaries (A) in the ordinary
course of business in order to fund such Non-Grantor Subsidiaries’ rent, payroll
and other business expenses, including Contingent Obligations permitted under
Section 10.4(c); (B) arising from the provision of services or sales or licenses
of inventory or Intellectual Property in the ordinary course of business and
consistent with past practices; (C) to capitalize newly formed Subsidiaries that
are not required to become Guarantors in an amount not to exceed $1,500,000 in
the case of any one Subsidiary and $4,000,000 in the case of all such
Subsidiaries; (D) to fund capital expenditures permitted under Section 10.3(d);
and (E) otherwise, at any time outstanding in an amount not to exceed $3,000,000
in aggregate for all Non-Grantor Subsidiaries; and

(i) the Grantors may (i) enter into licenses of Intellectual Property in the
ordinary course of business or (ii) acquire Intellectual Property having a fair
market value not in excess of $1,000,000 per Fiscal Year; provided that such
Intellectual Property is used in the ordinary course of business conducted as
provided in Section 10.9.

10.4. Contingent Obligations. No Principal Company will, and no Principal
Company will permit any of its Subsidiaries to, directly or indirectly, create
or become or remain liable with respect to any Contingent Obligation, except:

(a) Subsidiaries of such Principal Company may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary Guaranty and the
Parent may become and remain liable with respect to Contingent Obligations in
respect of the Parent Guaranty;

(b) such Principal Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations (i) in respect of customary
indemnification and purchase price adjustment obligations incurred in connection
with (A) Asset Sales or other sales of assets permitted under Section 10.6 or
(B) any acquisition permitted under Section 10.3, (ii) in respect of customary
indemnification obligations incurred in connection with license agreements in
the ordinary course of business or (iii) otherwise approved in writing by the
Agent;

(c) such Principal Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations (i) under guarantees in the ordinary
course of business of the obligations of or to suppliers, customers, franchisees
and licensees of such Principal Company and its Subsidiaries and (ii) to
financial institutions providing performance guarantees on behalf of such
Principal Company and its Subsidiaries for the benefit of suppliers, customers,
franchisees and licensees of such Principal Company and its Subsidiaries in an
aggregate amount not to exceed $3,000,000 in any fiscal year and $8,000,000 in
the aggregate outstanding at any time;

(d) such Principal Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of any Indebtedness of the
other Principal Company or any other Subsidiary or any Principal Company
permitted by Section 10.1; and

 

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(e) such Principal Company may become and remain liable with respect to
Contingent Obligations in respect of guaranties of obligations of its
Subsidiaries identified on Schedule 5.18(b) hereto.

10.5. Restricted Junior Payments. No Principal Company will, and no Principal
Company will permit any of its Subsidiaries to, directly or indirectly, declare,
order, pay, make or set apart any sum for any Restricted Junior Payment;
provided that (a) any Subsidiary may make Restricted Junior Payments to such
Principal Company or any Grantor (whether directly or indirectly through other
Subsidiaries), and (b) so long as no Default or Event of Default has occurred
and is continuing, such Principal Company and its Subsidiaries may (i) make
payments and repayments of intercompany Indebtedness pursuant to the
Intercompany Subordination Agreement and (ii) make regularly scheduled payments
of interest in respect of any Subordinated Indebtedness in accordance with the
terms of, and only to the extent required by, and subject to the subordination
provisions contained in, the indenture or other agreement pursuant to which such
Subordinated Indebtedness was issued, as such indenture or other agreement may
be amended from time to time to the extent permitted under Section 10.10(a).

10.6. Restriction on Fundamental Changes; Asset Sales. No Principal Company
will, and no Principal Company will permit any of its Subsidiaries to,
materially alter the organizational, capital or legal structure of such
Principal Company or any of its Subsidiaries, or enter into any transaction of
merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or
sublessor), transfer or otherwise Dispose of, in one transaction or a series of
transactions, all or any part of its business or Property (including its notes
or receivables and Capital Stock of a Subsidiary, whether newly issued or
outstanding), whether now owned or hereafter acquired, except:

(a) any Subsidiary of the Parent may be merged with or into either Principal
Company or any Wholly-Owned Subsidiary that is a Grantor, or be liquidated,
wound up or dissolved, or all or any part of its business or Property may be
conveyed, sold, leased, transferred or otherwise Disposed of, in one transaction
or a series of transactions, to such Principal Company or any Wholly-Owned
Subsidiary that is a Grantor; provided that, in the case of such a merger, such
Principal Company or such Wholly-Owned Subsidiary that is a Grantor,
respectively, shall be the continuing or surviving Person;

(b) any Non-Grantor Subsidiary of such Principal Company may be merged with or
into any Non-Grantor Subsidiary, or be liquidated, wound up or dissolved, or all
or any part of its business or Property may be conveyed, sold, leased,
transferred to otherwise Disposed of, in one transaction or a series of
transactions, to any Non-Grantor Subsidiary;

(c) such Principal Company and its Subsidiaries may sell or otherwise Dispose of
assets in transactions that do not constitute Asset Sales; provided that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof;

(d) such Principal Company and its Subsidiaries may Dispose of (i) obsolete,
worn out or surplus property in the ordinary course of business or (ii) subject
to compliance with Section 8.3, any Property that becomes surplus or duplicative
of or redundant with other Property of the Parent or any of its Subsidiaries and
is no longer necessary for the conduct of the business of the Parent and its
Subsidiaries;

 

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(e) such Principal Company and its Subsidiaries may make Asset Sales of assets
having a fair market value not in excess of $1,000,000 in the aggregate in any
Fiscal Year; provided that (i) the consideration received for such assets shall
be in an amount at least equal to the fair market value thereof; (ii) the sole
consideration received shall be cash; and (iii) the proceeds of such Asset Sales
shall be applied in accordance with the provisions of Section 8.3 hereof;

(f) in order to resolve disputes that occur in the ordinary course of business,
such Principal Company and its Subsidiaries may discount or otherwise compromise
for less than the face value thereof, notes or accounts receivable;

(g) such Principal Company or a Subsidiary may sell or Dispose of shares of
Capital Stock of any of its Subsidiaries in order to qualify members of the
Governing Body of the Subsidiary if required by Applicable Law or in the
formation of Joint Ventures to the extent (i) such Joint Ventures constitute
Investments permitted pursuant to Section 10.3 hereof or (ii) the sale or
Disposition of shares of Capital Stock in connection with the formation of such
Joint Ventures constitute Asset Sales subject to the provisions of
Section 10.6(e) hereof;

(h) any Person may be merged with or into such Principal Company or any
Subsidiary if the acquisition of the Capital Stock of such Person by such
Principal Company or such Subsidiary would have been permitted pursuant to
Sections 10.1, 10.2 and 10.3; provided that (i) in the case of such Principal
Company, such Principal Company shall be the continuing or surviving Person,
(ii) if a Subsidiary is not the surviving or continuing Person, the surviving
Person becomes a Wholly-Owned Subsidiary that is a Grantor and complies with the
provisions of Sections 9.7 and 9.8 and (iii) no Default or Event of Default
shall have occurred or be continuing after giving effect thereto; and

(i) such Principal Company and its Subsidiaries may make Asset Sales
constituting Permitted Asset Sales; provided that (i) the consideration received
for such assets shall be in an amount at least equal to the fair market value
thereof; (ii) the sole consideration received shall be cash; and (iii) the
proceeds of such Asset Sales shall be applied in accordance with the provisions
of Section 8.3 hereof.

10.7. Transactions with Affiliates. No Principal Company will, and no Principal
Company will permit any of its Subsidiaries to, directly or indirectly, enter
into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate of
such Principal Company, on terms that are less favorable to such Principal
Company or that Subsidiary, as the case may be, than those that might be
obtained at the time from Persons who are not an Affiliate; provided that the
foregoing restriction shall not apply to (i) any transaction between such
Principal Company and any of its Wholly-Owned Subsidiaries or between any of its
Wholly-Owned Subsidiaries, (ii) reasonable and customary fees paid to members of
the Governing Bodies of such Principal Company and its Subsidiaries,
(iii) transactions between such Principal Company or a Subsidiary and Tennenbaum
Capital Partners, LLC and its Affiliates or (iv) the Restructuring and any
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Related Agreements; provided, further that, other than as permitted pursuant to
clause (ii) above, in no event will such Principal Company or any of its
Subsidiaries pay, at any time, any fees (whether in the form of cash, equity
incentives or otherwise) to any Affiliates for management, consulting or similar
services.

10.8. Sales and Lease-Backs. No Principal Company will, and no Principal Company
will permit any of its Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as a guarantor or other surety with respect to any lease,
whether an Operating Lease, Synthetic Lease or a Capital Lease, of any property
(whether real, personal or mixed), whether now owned or hereafter acquired,
(a) that such Principal Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than such
Principal Company or any of its Subsidiaries) or (b) that such Principal Company
or any of its Subsidiaries intends to use for substantially the same purpose as
any other property that has been or is to be sold or transferred by such
Principal Company or any of its Subsidiaries to any Person (other than such
Principal Company or any of its Subsidiaries) in connection with such lease;
provided that such Principal Company and its Subsidiaries may become and remain
liable as lessee, guarantor or other surety with respect to any such lease if
and to the extent that such Principal Company or any of its Subsidiaries would
be permitted to enter into, and remain liable under, such lease pursuant to
Section 10.1, assuming the sale and lease back transaction constituted
Indebtedness in a principal amount equal to the gross proceeds of the sale.

10.9. Conduct of Business. No Principal Company will, and no Principal Company
will permit any of its Subsidiaries to, engage in any business if, as a result,
the general nature of the business in which such Principal Company and its
Subsidiaries, taken as a whole, would then be engaged would be substantially
changed from the general nature of the business in which such Principal Company
and its Subsidiaries, taken as a whole, are engaged on the Closing Date.

10.10. Amendments or Waivers of Documents Relating to Indebtedness.

(a) Amendments of Documents Relating to Indebtedness. Except in connection with
Permitted Refinancing Indebtedness, no Principal Company will, and no Principal
Company will permit any of its Subsidiaries to, amend or otherwise change the
terms of any Indebtedness, or make any payment consistent with an amendment
thereof or change thereto, if the effect of such amendment or change is to
increase the interest rate on such Indebtedness, change (to earlier dates) any
dates upon which payments of principal or interest are due thereon, change any
event of default or condition to an event of default with respect thereto (other
than to eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions thereof (or of any guaranty thereof), or
change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Indebtedness (or a trustee or other representative on their behalf) which would
be materially adverse to any Loan Party, the Lenders or the Agent.

(b) Amendments of Organizational Documents. No Principal Company will, and no
Principal Company will permit any of its Subsidiaries to, make any amendment,

 

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restatement, supplement or other modification to such Person’s Organizational
Documents in any manner adverse to the Lenders (as Lenders hereunder) or the
Agent without obtaining the prior written consent of the Required Lenders to
such amendment, restatement, supplement or other modification.

10.11. Fiscal Periods. No Principal Company will, and no Principal Company will
permit any of its Subsidiaries to, change (a) their fiscal years to end on a day
other than December 31 or (b) their fiscal quarters to end on days other than
March 31, June 30, September 30 and December 31.

10.12. Wholly-Owned Subsidiaries. No Principal Company will, and no Principal
Company will permit any of its Subsidiaries to, own, form or acquire any
Subsidiary other than Subsidiaries that are Wholly-Owned Subsidiaries of such
Principal Company; provided that such Principal Company or a Subsidiary may own,
form or acquire any Subsidiary that is not a Wholly-Owned Subsidiary to the
extent the ownership, formation or acquisition of such Subsidiary constitutes an
Investment permitted pursuant to Section 10.3 hereof.

10.13. Minimum Interest Coverage Ratio. For each period below, the Parent will
not permit the ratio of (i) Consolidated EBITDA for such period minus
Consolidated Capital Expenditures for such period (exclusive of Consolidated
Capital Expenditures made during such period to acquire capital assets that are
necessary to the operation of any business acquired either during or prior to
such period as a result of a Permitted Acquisition; provided that any
Consolidated Capital Expenditures so excluded shall not exceed $100,000 in the
aggregate for all Permitted Acquisitions) to (ii) Consolidated Interest Expense
for such period to be less than the correlative ratio indicated:

 

Period    Minimum Interest
Coverage Ratio

The four Fiscal Quarter period ending on or about March 31, 2013

   1.50 to 1.00

The four Fiscal Quarter period ending on or about June 30, 2013

   1.50 to 1.00

The four Fiscal Quarter period ending on or about September 30, 2013

   1.50 to 1.00

The four Fiscal Quarter period ending on or about December 31, 2013

   1.50 to 1.00

The four Fiscal Quarter period ending on or about March 31, 2014

   1.50 to 1.00

The four Fiscal Quarter period ending on or about June 30, 2014

   1.50 to 1.00

 

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The four Fiscal Quarter period ending on or about September 30, 2014

   1.50 to 1.00

The four Fiscal Quarter period ending on or about December 31, 2014

   1.50 to 1.00

The four Fiscal Quarter period ending on or about March 31, 2015

   1.50 to 1.00

10.14. Minimum EBITDA. For each period below, the Parent will not fail to
achieve Consolidated EBITDA of at least the required amount set forth in the
table directly below for the applicable period set forth opposite thereto:

 

Applicable Amount

    

Applicable Period

$ 15,000,000      

The four Fiscal Quarter period ending on or about March 31, 2013

$ 16,900,000      

The four Fiscal Quarter period ending on or about June 30, 2013

$ 17,100,000      

The four Fiscal Quarter period ending on or about September 30, 2013

$ 17,100,000      

The four Fiscal Quarter period ending on or about December 31, 2013

$ 18,100,000      

The four Fiscal Quarter period ending on or about March 31, 2014

$ 19,400,000      

The four Fiscal Quarter period ending on or about June 30, 2014

$ 20,900,000      

The four Fiscal Quarter period ending on or about September 30, 2014

$ 22,600,000      

The four Fiscal Quarter period ending on or about December 31, 2014

$ 24,700,000      

The four Fiscal Quarter period ending on or about March 31, 2015

 

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10.15. Maximum Consolidated Total Leverage Ratio. For each period below, the
Parent will not permit the Consolidated Total Leverage Ratio for such period to
be greater than the correlative ratio indicated:

 

Period    Maximum Consolidated
Total Leverage Ratio

The four Fiscal Quarter period ending on or about March 31, 2013

   4.40 to 1.00

The four Fiscal Quarter period ending on or about June 30, 2013

   3.90 to 1.00

The four Fiscal Quarter period ending on or about September 30, 2013

   3.80 to 1.00

The four Fiscal Quarter period ending on or about December 31, 2013

   3.90 to 1.00

The four Fiscal Quarter period ending on or about March 31, 2014

   3.60 to 1.00

The four Fiscal Quarter period ending on or about June 30, 2014

   3.40 to 1.00

The four Fiscal Quarter period ending on or about September 30, 2014

   3.20 to 1.00

The four Fiscal Quarter period ending on or about December 31, 2014

   2.90 to 1.00

The four Fiscal Quarter period ending on or about March 31, 2015

   2.70 to 1.00

10.16. Minimum Liquidity. The Parent will either (i) not permit Liquidity for
the Fiscal Quarter ending March 31, 2013 and each Fiscal Quarter thereafter to
be less than $15,000,000 as of the end of each such Fiscal Quarter or (ii) not
permit Qualified Cash for the Fiscal Quarter ending March 31, 2013 and each
Fiscal Quarter thereafter to be less than $10,000,000 as of the end of each such
Fiscal Quarter (it being understood that no Default or Event of Default shall be
deemed to have occurred so long as the Company is in compliance with either of
the foregoing clauses (i) or (ii)).

11. EVENTS OF DEFAULT. An “Event of Default” shall exist if any of the following
conditions or events shall occur and be continuing:

(a) the Company defaults in the payment of any principal, Prepayment Premium, if
any, on any Loan when the same becomes due and payable, whether at maturity or
at a date fixed for prepayment or by declaration or otherwise; or

(b) the Company defaults in the payment of any interest on any Loan for more
than three Business Days after the same becomes due and payable; or

 

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(c) any Loan Party defaults in the performance of or compliance with any term
contained in Sections 7(a), 9.5(a) or 10; or

(d) any Loan Party (i) defaults in the performance of or compliance with any
term contained in Sections 9.3(a), 9.3(b) or 9.9 (ii) defaults in the
performance of or compliance with any term contained in Section 9.2 in any
material respect or (iii) fails to make an Asset Sale or Capital Stock Offer, as
applicable, required to be made pursuant to Sections 8.3, 8.4, 10.6(e) and
10.6(i), and in any such case such default or failure is not remedied with 10
days of the earlier of (i) a Responsible Officer obtaining actual knowledge of
such default or failure and (ii) any Principal Company receiving written notice
of such default from any Lender or the Agent (any such written notice to be
identified as a “notice of default” and to refer specifically to this paragraph
(d) of Section 11); or

(e) any Loan Party defaults in the performance of or compliance with any term
contained herein (other than those referred to in paragraphs (a), (b), (c),
(d) or (f) of this Section 11) or in any other Loan Document to which such Loan
Party is a party, and such default is not remedied within 20 days after the
earlier of (i) a Responsible Officer obtaining actual knowledge of such default
and (ii) any Principal Company receiving written notice of such default from any
Lender or the Agent (any such written notice to be identified as a “notice of
default” and to refer specifically to this paragraph (e) of Section 11); or

(f) any material representation or warranty made in writing by or on behalf of
any Principal Company or any Subsidiary Guarantor or by any officer of such
Principal Company or any Subsidiary Guarantor in this Agreement or any other
Loan Document or in any writing furnished in connection with the transactions
occurring pursuant hereto or thereto proves to have been false or incorrect in
any material respect on the date as of which made; or

(g) (i) any Principal Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness or Contingent Obligations that
is outstanding in an aggregate principal amount of at least $500,000 beyond any
period of grace provided with respect thereto, or (ii) any Principal Company or
any Subsidiary is in default in the performance of or compliance with any term
of any evidence of any Indebtedness or Contingent Obligations in an aggregate
outstanding principal amount of at least $500,000 or of any mortgage, indenture
or other agreement relating thereto or any other condition exists, and as a
consequence of such default or condition such Indebtedness or Contingent
Obligations has become, or has been declared (or one or more Persons are
entitled to declare (but irrespective of whether such declaration is made) such
Indebtedness or Contingent Obligations to be), due and payable before its stated
maturity or before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurrence or continuation of any event or condition (other
than (A) the passage of time, (B) the right of the holder of Indebtedness or
Contingent Obligations to convert such Indebtedness or Contingent Obligations
into equity interests or (C) the sale of (1) Revolver Collateral (as defined in
the Intercreditor Agreement) or (2) collateral securing any Permitted ABL
Facility, which in either case gives rise to an obligation to make an offer to
purchase or prepay Indebtedness), (x) any Principal Company or any Subsidiary
has become obligated to purchase or repay Indebtedness or Contingent Obligations
before its regular maturity or before its regularly scheduled dates of payment
in an aggregate outstanding principal amount of at least $500,000, or

 

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(y) one or more Persons have the right to require any Principal Company or any
Subsidiary so to purchase or repay such Indebtedness or Contingent Obligations,
or (iv) there is an “Event of Default” (or similar term as defined in the
Working Capital Facility) or (v) there is an “Event of Default” (or similar term
as defined in any Permitted ABL Facility); or

(h) any Principal Company or any Material Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium, examinership or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, liquidator, trustee
or other officer with similar powers or, in the case of any Irish Loan Party,
presents a petition for the appointment to it of an examiner under Section 2 of
the Companies (Amendment) Act 1990 with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated or, in the case of any Irish Loan Party, the Israeli Loan Party or
the Brazilian Loan Party, an order is made or a resolution is passed (save for
any reorganization approved of in writing by the Agent on behalf of the Lenders)
for the winding up of any Irish Loan Party, the Israeli Loan Party or the
Brazilian Loan Party, or (vi) takes corporate action for the purpose of any of
the foregoing; or

(i) a court or governmental authority of competent jurisdiction enters an order
appointing, without consent by any Principal Company or any of its Material
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of any Principal Company or
any of its Material Subsidiaries, or any such petition shall be filed against
any Principal Company or any of its Material Subsidiaries and such petition
shall not be dismissed within 60 days; or

(j) any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $1,500,000 or
(ii) in the aggregate at any time an amount in excess of $1,500,000 (in either
case not adequately covered by insurance as to which a solvent and unaffiliated
insurance any Principal Company has acknowledged coverage) shall be entered or
filed against any Principal Company or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of 60 days; or

(k) if (i) any ERISA Event shall reasonably be expected to occur, (ii) the
aggregate “amount of unfunded benefit liabilities” (within the meaning of
Section 4001(a)(18) of ERISA) under all Pension Plans, determined in accordance
with Title IV of ERISA, shall exceed $500,000, (iii) any Principal Company or
any ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (iv) any Principal
Company or any Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that would
increase the liability of any Principal Company or any Subsidiary thereunder, or
(v) any event similar to those described in the

 

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preceding clauses (i) through (iv) above shall occur in respect of any Foreign
Plans; and any such event or events described in clauses (i) through (v) above,
either individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect; or

(l) the Parent Guaranty shall cease to be in full force and effect or the Parent
or any Person acting on behalf of the Parent shall contest in any manner the
validity, binding nature or enforceability of the Parent Guaranty; or

(m) the Subsidiary Guaranty with respect to any Subsidiary Guarantor shall cease
to be in full force and effect or any Subsidiary Guarantor or any Person acting
on behalf of any Subsidiary Guarantor shall contest in any manner the validity,
binding nature or enforceability of the Subsidiary Guaranty; or

(n) any of the Collateral Documents shall cease to be in full force and effect
or to be effective to grant a perfected Lien in favor of the Collateral Agent
for the benefit of the Secured Parties on the Collateral with the priority
purported to be created thereby; or

(o) if any material provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Loan Party, or a proceeding shall be commenced
by any Loan Party, or by any Governmental Authority having jurisdiction over any
Loan Party, seeking to establish the invalidity or unenforceability thereof, or
such Loan Party shall deny that such Loan Party has any liability or obligation
purported to be created under any material provision of any Loan Document; or

(p) any order, judgment or decree shall be entered against any Principal Company
or any of its Material Subsidiaries decreeing the dissolution or split up of
such Principal Company or such Material Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of 30 days; or

(q) any Principal Company or any of its Subsidiaries shall be convicted under
any criminal law that could lead to a forfeiture of any property of such Person
where either (i) the property subject to forfeiture has a fair market value of
$500,000 or more, or (ii) the forfeiture of such property could reasonably be
expected to have a Material Adverse Effect; or

(r) any event or change shall occur that has caused or evidences, either in any
case or in the aggregate, a Material Adverse Effect; or

(s) the consummation of the Restructuring shall be unwound, reversed or
otherwise rescinded in whole or in part for any reason; or

(t) there is an “Event of Default” (or similar term as defined in the Related
Agreements); or

(u) a Change in Control shall have occurred.

 

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As used in Section 11(k), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

12. REMEDIES ON DEFAULT, ETC.

12.1. Acceleration.

(a) If an Event of Default with respect to any Principal Company or its Material
Subsidiaries described in paragraph (h) or (i) of Section 11 has occurred, all
the Loans then outstanding shall automatically become immediately due and
payable.

(b) If any Event of Default other than an Event of Default described in
paragraph (a) or (b) of Section 11 has occurred and is continuing, the Agent
may, or at the request of the Required Lenders shall, by notice or notices to
the Principal Companies, declare all the Loans then outstanding to be
immediately due and payable.

(c) If any Event of Default described in paragraph (a) or (b) of Section 11 has
occurred and is continuing, the Agent may at any time, or at the request of any
holder or holders of Loans at the time outstanding affected by such Event of
Default shall, by notice or notices to the Principal Companies, declare all the
Loans held by such Lender or Lenders to be immediately due and payable.

Upon any Loans becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Loans will forthwith mature and the entire
unpaid principal amount of such Loans, plus (x) all accrued and unpaid interest
thereon and (y) the Applicable Prepayment Premium determined in respect of such
principal amount (to the full extent permitted by Applicable Law), shall all be
immediately due and payable in immediately available funds, in each and every
case without presentment, demand, protest or further notice and without setoff,
counterclaim or deduction of any kind, all of which are hereby waived. Each
Principal Company acknowledges, and the parties hereto agree, that each Lender
has the right to own its Loans free from repayment by the Company (except as
herein specifically provided for) and that the provision for payment of the
Applicable Prepayment Premium by the Company in the event that the Loans are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.

12.2. Other Remedies. If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Loans have become or have been
declared immediately due and payable under Section 12.1, any Lender may proceed
to protect and enforce the rights of such Lender by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein or in any other Loan Document (including, without
limitation, the Parent Guaranty and the Subsidiary Guaranty), or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.

12.3. Rescission. At any time after any Loans have been declared due and payable
pursuant to paragraph (b) or (c) of Section 12.1, the Agent may, or at the
request of the Required Lenders shall, by written notice to the Principal
Companies, rescind and annul any such

 

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declaration and its consequences if (a) the Company has paid all overdue
interest on the Loans, all principal of, Prepayment Premium, if any, on any
Loans that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal, Prepayment Premium, if
any, and (to the extent permitted by Applicable Law) any overdue interest in
respect of the Loans, at the Default Rate, (b) all Events of Default and
Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 18, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to any other Loan Document. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.

12.4. No Waivers or Election of Remedies, Expenses, Etc. No course of dealing
and no delay on the part of any Lender or the Agent in exercising any right,
power or remedy shall operate as a waiver thereof or otherwise prejudice such
holder’s rights, powers or remedies. No right, power or remedy conferred by this
Agreement or any other Loan Document upon any Lender or the Agent shall be
exclusive of any other right, power or remedy referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Company under Section 15, the Company will pay
to each Lender and the Agent on demand such further amount as shall be
sufficient to cover all costs and expenses of such Lender and the Agent incurred
in any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys’ fees, expenses and disbursements.

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF THE LOANS AND NOTES.

13.1. Loan Register. The Company shall keep at its principal executive office a
register for the registration and registration of transfers of the Loans and the
Notes evidencing such Loans. The name and address of each Lender of any portion
of the Loans, each transfer thereof and the name and address of each Transferee
of any portion of the Loans shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any portion
of the Loans shall be registered shall be deemed and treated as the Lender of
such portion of the Loans and the holder of the Notes evidencing such Loans for
all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary. The Company shall give to any Lender or the Agent
promptly upon request therefor, a complete and correct copy of the names and
addresses of all registered Lenders.

13.2. Transfer of Loans and Exchange of Notes. Notwithstanding anything else
herein to the contrary, any Lender, may from time to time, at its option, sell,
assign, transfer, negotiate or otherwise dispose of any portion of the Loans
owed to it (including the Lender’s interest in this Agreement and the other Loan
Documents) to any Person without the consent of any Loan Party or any other
Lender, but with the prior written consent of the Company (except after the
occurrence of an Event of Default which is continuing, where the consent of the
Company will not be required), which consent shall not be unreasonably withheld.
In the event of any such sale, transfer or other disposition, the Lender and
relevant Transferee shall execute and deliver to the Agent and the Company an
Assignment Agreement evidencing such sale, assignment, transfer or other
disposition substantially in the form of Exhibit C and the Company shall
thereafter promptly register the Transferee thereof as the registered Lender of
the transferred Loans in accordance

 

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with Section 13.1 (provided, that any such Transferee will be deemed a
registered Lender of the applicable portion of the Loans and a “Transferee”
hereunder in the event of the Company’s failure to so register any such
Transferee after it has received written notice of any such transfer) and
Schedule A shall be automatically amended to reflect such transfer and any new
Transferee and Loans owed thereto. Upon surrender of any Note at the principal
executive office of the Company for registration of transfer or exchange of the
Loan evidenced thereby (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered Lender of the portion of the Loans evidenced by such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such portion of the Loans or part thereof),
the Company shall execute and deliver, at the Company’s expense (except as
provided below), one or more new Notes (as requested by the holder thereof) in
exchange therefor, evidencing Loans with an aggregate principal amount equal to
the unpaid principal amount of the portion of the Loans evidenced by the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit A. Each new
Note shall be dated from the date of the surrendered Note, and the exchange of
Notes shall not change the date from which the underlying portion of the Loans,
evidenced by the new Note, bear interest. The Company may require payment of a
sum sufficient to cover any stamp tax or governmental charge imposed in respect
of any such transfer of Loans or Notes. Loans shall not be transferred in
amounts less than $2,000,000 without the prior consent of the Company, which
consent shall not be unreasonably withheld, provided that if necessary to enable
the registration of transfer by a Lender of all of its Loans, one Loan may be in
an amount of less than $2,000,000. Any Transferee, by its acceptance of a Loan
registered in its name (or the name of its nominee), shall be deemed to have
made the representations set forth in Section 6. For greater certainty, the
surrender of a Note and delivery of a new Note shall not result in a novation of
all or a portion of the Loan evidenced by the surrendered Note and the new Note
shall represent continuing evidence of the Loan (or portion thereof) formerly
evidenced by the surrendered Note.

13.3. Replacement of Notes. Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and

(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Lender or another Lender with a minimum net worth of at least
$10,000,000 in excess of the outstanding principal amount of the Loans evidenced
by such Note, such Person’s own unsecured agreement of indemnity shall be deemed
to be satisfactory), or

(b) in the case of mutilation, upon surrender and cancellation thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

 

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14. PAYMENTS ON LOANS.

14.1. Place of Payment. So long as any Loans remain outstanding to any Lender,
and notwithstanding anything contained in any Loan Document to the contrary, the
Company will pay all sums becoming due on the Loans for principal, Prepayment
Premium, if any, and interest by the method and at the address specified for
such purpose below such Lender’s name in Schedule A, or by such other method or
at such other address as such Lender shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of the Note evidencing such Loan or the making of any notation thereon, except
that upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full in immediately available funds of
any Loan, such Lender shall surrender the Note evidencing such Loans for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office. Prior to any sale or other disposition of any Loan
owed to a Lender or its nominee, such Lender will, at its election, either
endorse on the Note evidencing such Loan the amount of principal paid on such
Loan and the last date to which interest has been paid on such Loan or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to
Section 13.2.

15. EXPENSES, ETC.

15.1. Transaction Expenses. Whether or not the transactions contemplated hereby
shall be consummated, each Principal Company agrees, jointly and severally, to
pay promptly (a) all the actual and reasonable costs and expenses of
negotiation, preparation and execution of the Loan Documents and the Related
Agreements and any consents, amendments, waivers or other modifications thereto
(whether or not any such amendment, waiver or consents become effective);
provided, that reimbursement for all business due diligence expenses of the
Lenders and the Agent prior to the Closing Date shall be limited to $150,000;
(b) all the costs of furnishing all opinions by counsel for the Loan Parties
(including any opinions requested by the Collateral Agent, Agent or the Lenders
as to any legal matters arising hereunder) and of any Loan Party’s performance
of and compliance with all agreements and conditions on its part to be performed
or complied with under this Agreement and the other Loan Documents and the
Related Agreements including with respect to confirming compliance with
environmental, insurance and solvency requirements; (c) the reasonable fees,
expenses and disbursements of counsel to the Lenders and the Agent in connection
with the negotiation, preparation, execution and administration of the Loan
Documents and the Related Agreements and any consents, amendments, waivers or
other modifications thereto (whether or not any such amendment, waiver or
consents become effective) and any other documents or matters requested by any
Loan Party; (d) all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of the Collateral Agent on behalf of the Secured
Parties pursuant to any Collateral Document, including filing and recording
fees, expenses and taxes, stamp or documentary taxes, search fees, title
insurance premiums, and reasonable fees, expenses and disbursements of counsel
to the Collateral Agent and of counsel providing any opinions that the
Collateral Agent or the Lenders may request in respect of the Collateral
Documents or the Liens created pursuant thereto; (e) all the actual costs and
reasonable expenses (including the reasonable fees, expenses and disbursements
of any auditors, accountants or appraisers and any environmental or other
consultants, advisors and agents employed or retained by the Collateral Agent or
the Lenders or any of their counsel) of obtaining and reviewing any
environmental audits or reports provided for under Section 4.10, 9.6 or 9.8;
(f) the costs

 

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incurred by the Collateral Agent in connection with the custody or preservation
of any of the Collateral; (g) all costs and expenses, including reasonable
attorneys’ fees and costs of settlement, incurred by the Collateral Agent and
the Lenders in enforcing any Obligations of or in collecting any payments due
from any Loan Party hereunder or under the other Loan Documents or the Related
Agreements (including in connection with the sale of, collection from, or other
realization upon any of the Collateral or the enforcement of the Subsidiary
Guaranty) or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy proceedings; and (h) all costs and
expenses incurred by the Lenders in obtaining periodic appraisals and market
valuations of the Loans from time to time as required or otherwise desirable (as
determined by the applicable Lender in its reasonable discretion) pursuant to
any Contractual Obligation of a Lender. Each Principal Company will, jointly and
severally, pay, and will save each Lender and the Agent harmless from, all
claims in respect of any fees, costs or expenses if any, of brokers and finders
(other than those retained by a Lender or the Agent).

15.2. Survival. The obligations of the Principal Companies under this Section 15
will survive the payment or transfer of any Loan, the enforcement, amendment or
waiver of any provision of this Agreement or any other Loan Document, and the
termination of this Agreement.

16. INDEMNIFICATION.

(a) Each Principal Company will, jointly and severally, indemnify and hold
harmless each Lender, the Collateral Agent, the Agent, each person who controls
a Lender within the meaning of the Securities Act or the Exchange Act and each
of its Subsidiaries and each of their respective directors, officers, employees,
principals, members, agents, advisors and partners (any and all of whom are
referred to as the “Indemnified Party”) from and against any and all losses,
claims, damages, and liabilities not determined by a court of competent
jurisdiction in a final and non-appealable judgment to be resulting from the
gross negligence or willful misconduct of such Indemnified Party, whether joint
or several (including all legal fees or other expenses reasonably incurred by
any Indemnified Party in connection with the preparation for or defense of any
pending or threatened third party claim, action or proceeding, whether or not
resulting in any liability), to which such Indemnified Party may become subject,
under any Applicable Law or otherwise, caused by or arising out of, or allegedly
caused by or arising out of, (i) this Agreement, any other Loan Document, the
Related Agreements or any transaction contemplated hereby or thereby (including,
without limitation, any failure to extend Loans other than by reason of a breach
of this Agreement by the Indemnified Party), (ii) any enforcement of any of the
Loan Documents (including any sale of, collection from, or other realization
upon any of the Collateral or the enforcement of the Subsidiary Guaranty) or any
of the Related Agreements, or (iii) any Environmental Claim or any Hazardous
Materials Activity relating to or arising from, directly or indirectly, any past
or present activity, operation, land ownership, or practice of any Principal
Company or any of its Subsidiaries.

(b) Promptly after receipt by an Indemnified Party of notice of any claim,
action or proceeding with respect to which an Indemnified Party is entitled to
indemnity hereunder, such Indemnified Party will notify the Principal Companies
of such claim or the commencement of such action or proceeding, provided that
the failure of an Indemnified Party to give notice as provided herein shall not
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this Section 16 with respect to such Indemnified Party, except to the extent
that such Principal Company is actually prejudiced by such failure. The
Principal Companies will assume the defense of such claim, action or proceeding
and will employ counsel satisfactory to the Indemnified Party and will pay the
fees and expenses of such counsel. Notwithstanding the preceding sentence, the
Indemnified Party will be entitled, at the expense of the Principal Companies,
to employ counsel separate from counsel for the Principal Companies and for any
other party in such action if the Indemnified Party reasonably determines upon
advice of counsel that a conflict of interest or other reasonable basis exists
which makes representation by counsel chosen by the Principal Companies not
advisable.

(c) THE INDEMNIFICATION PROVISIONS IN THIS SECTION 16 SHALL BE ENFORCEABLE
REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS,
CLAIMS OR LAWS (INCLUDING ANY PAST, PRESENT OR FUTURE BULK SALES LAW,
ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW
OR PRODUCTS LIABILITY, SECURITIES OR OTHER LAW) AND REGARDLESS OF WHETHER ANY
PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR
PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE
PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY
IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.

(d) To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this Section 16 may be unenforceable in whole or in part
because they are violative of any Applicable Law or public policy, each
Principal Company shall, jointly and severally, contribute the maximum portion
that it is permitted to pay and satisfy under Applicable Law to the payment and
satisfaction of all indemnified liabilities incurred by Indemnified Parties or
any of them. The obligations of the Principal Companies under this Section 16
will survive the payment or transfer of any Loan, the enforcement, amendment or
waiver of any provision of this Agreement or any other Loan Document, and the
termination of this Agreement.

 

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17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein and in the other Loan Documents
shall survive the execution and delivery of this Agreement and the other Loan
Documents, the purchase or transfer by a Lender of any Loan or portion thereof
or interest therein and the payment of any Loan, and may be relied upon by any
subsequent Lender (including any Transferee), regardless of any investigation
made at any time by or on behalf of any Lender (including any Transferee). All
statements contained in any certificate or other instrument delivered by or on
behalf of any Principal Company pursuant to this Agreement or any other Loan
Document shall be deemed representations and warranties of such Principal
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the other Loan Documents embody the entire agreement and understanding
between the Lenders and each Principal Company and supersede all prior
agreements and understandings relating to the subject matter hereof.

18. AMENDMENT AND WAIVER.

18.1. Requirements. This Agreement and the other Loan Documents may be amended,
and the observance of any term hereof or of the other Loan Documents may be
waived (either retroactively or prospectively), with (and only with) the written
consent of the Principal Companies and the Required Lenders.

18.2. Solicitation of Lenders.

(a) Solicitation. Each Principal Company will provide each Lender (irrespective
of the amount of Loans then owed to it) and the Agent with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such Lender to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions of
this Agreement or of any other Loan Document. Each Principal Company will
deliver executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 18 to each Lender and the
Agent promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite Lenders.

(b) Payment. No Principal Company will directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any Lender as consideration for or
as an inducement to the entering into by any Lender of any waiver or amendment
of any of the terms and provisions of this Agreement or of any other Loan
Document unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each Lender then outstanding
even if such Lender did not consent to such waiver or amendment.

18.3. Binding Effect, Etc. Any amendment or waiver consented to as provided in
this Section 18 applies equally to all Lenders and the Agent and is binding upon
them and upon each future Lender and Agent (including Transferees) and upon each
Principal Company without regard to whether the Note evidencing a Lender’s Loan
has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
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right consequent thereon. No course of dealing between any Principal Company and
any Lender or the Agent nor any delay in exercising any rights under this
Agreement or under any other Loan Document shall operate as a waiver of any
rights of any Lender or the Agent.

18.4. Loan prepaid by the Company, Etc. Solely for the purpose of determining
whether the holders of the requisite percentage of the aggregate principal
amount of Loans then outstanding approved or consented to any amendment, waiver
or consent to be given under this Agreement or any other Loan Document, or have
directed the taking of any action provided in this Agreement or in any other
Loan Document to be taken upon the direction of the holders of a specified
percentage of the aggregate principal amount of Loans then outstanding, Loans
prepaid by the Company or any of its Affiliates shall be deemed not to be
outstanding.

19. NOTICES. All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid) or (d) by email if the sender obtains a confirmation of
receipt and the sender on the same day sends a confirming copy of such notice by
a recognized overnight delivery service (charges prepaid). Any such notice must
be sent:

(i) if to a Lender or its nominee, to such Lender or nominee at the address
specified for such communications in Schedule A, or at such other address as a
Lender (including any Transferee) or a nominee shall have specified to the
Company in writing,

(ii) if to the Agent, to the Agent at its address set forth below its signature
below, or

(iii) if to a Principal Company, to such Principal Company at its address set
forth below its signature below, or at such other address as such Principal
Company shall have specified to the Agent and the Lenders in writing.

Notices under this Section 19 will be deemed given only when actually received.

20. REPRODUCTION OF DOCUMENTS.

This Agreement, the other Loan Documents and all documents relating thereto,
including, without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by the Lenders or the Agent at the
Closing (except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to the
Lenders or the Agent, may be reproduced by the Lenders or the Agent by any
photographic, photo static, microfilm, micro card, miniature photographic or
other similar process and the Lenders may destroy any original document so
reproduced. Each Principal Company agrees and stipulates that, to the extent
permitted by Applicable Law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by the Lenders or the Agent in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.

 

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This Section 20 shall not prohibit any Principal Company or any Lender or the
Agent from contesting any such reproduction to the same extent that it could
contest the original, or from introducing evidence to demonstrate the inaccuracy
of any such reproduction.

21. CONFIDENTIAL INFORMATION.

For the purposes of this Section 21, “Confidential Information” means
information delivered to a Lender or the Agent by or on behalf of any Principal
Company or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by a
Lender or the Agent as being confidential information of such Principal Company
or such Subsidiary, provided that such term does not include information that
(a) was publicly known or otherwise known to such Lender or the Agent prior to
the time of such disclosure, (b) subsequently becomes publicly known through no
act or omission by such Lender or the Agent or any person acting on its behalf,
(c) otherwise becomes known to such Lender or the Agent other than through
disclosure by any Principal Company or any Subsidiary or (d) constitutes
financial statements delivered to such Lender or the Agent under Section 7 that
are otherwise publicly available. Each Lender and the Agent will maintain the
confidentiality of Confidential Information in accordance with procedures
adopted by it in good faith to protect confidential information of third parties
delivered to such Lender and the Agent, provided that such Lender and the Agent
may deliver or disclose Confidential Information to (i) its directors, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by such
Lender’s Loans), (ii) its financial advisors and other professional advisors who
agree to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 21, (iii) any other Lender or the
Agent, (iv) any Person to which such Lender assigns or offers to assign such
Loan or any part thereof or any participation therein (if such Person has agreed
in writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 21), (v) any Person from which such Lender offers
to purchase any security of any Principal Company (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the
provisions of this Section 21), (vi) any federal or state regulatory authority
having jurisdiction over such Lender or the Agent, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
such Lender’s investment portfolio or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Lender, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Lender or the Agent is a party or (z) if an Event of
Default has occurred and is continuing, to the extent such Lender or the Agent
may reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and remedies
under this Agreement or any other Loan Document.

 

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22. CERTAIN PAYMENTS.

22.1. Pro Rata Treatment.

(a) Except as otherwise provided herein, each payment of principal, interest and
Prepayment Premium, if any, on the Loans shall be made or shared among the
Lenders pro rata according to the respective unpaid principal amounts of the
Loans owed to such Lenders in accordance with the provisions of Section 2.3(b).

(b) The Lenders hereby agree among themselves that if any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of setoff, or otherwise) on account of the Loans owed to it, in excess of its
ratable share of payments on account of such Loans obtained by all Lenders
entitled to such payments, such Lender shall promptly (i) turn the same (in
kind) over to the other Lenders to the extent necessary so that each Lender has
received such payments in accordance with Section 22.1(a) or (ii) purchase,
without recourse or warranty, from the other Lenders such participation in the
Loans, as the case may be, as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each of them; provided, however, that
if all or any portion of such excess payment is thereafter recovered from such
purchasing party, such purchase shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefore
shall be returned to such purchasing party, but without interest except to the
extent that such purchasing party is required to pay interest in connection with
the recovery of the excess payment. Each Principal Company agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section 22.1(b) may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of the Company
in the amount of such participation.

22.2. Payments Due on Non-Business Days. Anything in this Agreement or the Loan
Documents to the contrary notwithstanding, any payment of principal of or
interest or Prepayment Premium on any Loan that is due on a date other than a
Business Day shall be made on the next succeeding Business Day, in any such case
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.

22.3. Net Payments; Taxes.

(a) All payments made by any Loan Party hereunder or under any Loan Document
will be made without setoff, counterclaim or other defense, each of which is
hereby waived. All such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax (including, without
limitation, franchise taxes) imposed on or measured by the net income or net
profits of a Lender pursuant to the laws of the United States of America, the
jurisdiction in which it is organized or the jurisdiction in which the principal
office of such Lender is located or any subdivision thereof or therein) and all
interest, penalties or similar liabilities with respect to such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as “Taxes”). If any Taxes are so levied or
imposed, the Company agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any Loan Document, after withholding or deduction
for or on account of any Taxes

 

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(including, without limitation, withholdings or deductions applicable to
additional amounts paid under this Section 22.3), will not be less than the
amount provided for herein or in such Loan Document. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, the Company agrees to
reimburse any Lender, upon the written request of such Lender, for taxes
(including, without limitation, franchise taxes) imposed on or measured by the
net income or net profits of the Lenders pursuant to the laws of the
jurisdiction in which the Lender is organized or in which the principal office
of such Lender is located or under the laws of any political subdivision or
taxing authority of any such jurisdiction in which such Lender is organized or
in which the principal office of such Lender is located and for any withholding
of taxes as such Lender shall determine are payable by, or withheld from, such
Lender, in respect of such amounts so paid to or on behalf of such Lender
pursuant to the preceding sentence and in respect of any amounts paid to or on
behalf of the Lender pursuant to this sentence. The Company will furnish to such
Lender within 45 days after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by the
Company. In addition, the Company agrees to pay any present or future stamp,
recording or documentary taxes and any other excise or property taxes, charges
or similar levies (not including income or franchise taxes) that arise under the
laws of Canada, any province or territory thereof, the United States of America,
the State of New York or any other state or jurisdiction where any Property of
the Loan Parties is located from any payment made hereunder or under any other
Loan Document or from the execution, delivery, filing, recordation or otherwise
with respect to this Agreement or any other Loan Document (hereinafter referred
to as “Other Taxes”). The Company agrees to indemnify and hold harmless each
Lender, and reimburse such Lender upon its written request, for the amount of
any Taxes or Other Taxes and any related liability (including penalties,
interest and expenses incurred in connection therewith) so levied or imposed and
paid by such Lender.

(b) If a Lender in its sole discretion determines that it has received a refund
of, or in respect of, any Taxes or Other Taxes for which the Company has paid
additional amounts pursuant to Section 22.3(a) or, after the payment of such
Taxes or Other Taxes or additional amounts, such Lender in its sole discretion
determines that it has received a tax credit, deduction or other benefit by
reason of the payment or accrual of such Taxes, such Lender shall within 120
days from the date of the receipt of such refund or realization of such credit,
deduction or benefit, pay to the Company an amount equal to such refund, credit,
deduction or tax benefit. Nothing in this Section 22.3 shall require any Lender
to disclose its tax returns to any Person.

(c) In respect of amounts paid or credited by a Loan Party that is resident in
Canada for purposes of the Income Tax Act (Canada) (the “ITA”) to or for the
benefit of a particular Lender that is an “authorized foreign bank” for purposes
of the ITA, the obligations under Section 22.3 to pay an additional amount shall
apply where the particular Lender is liable for tax under Part XIII of the ITA
in respect of such payment, even if the Loan Party is not required under the ITA
to deduct or withhold an amount in respect of taxes on such payment and
Section 22.3 shall apply, mutatis mutandis, as if the Loan Party was required to
withhold an amount in respect of such taxes.

22.4. Default Interest. Upon the occurrence of an Event of Default, to the
extent permitted by Applicable Law, interest on any principal of or interest or
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any Loan, in each case, at the Default Rate, shall be payable from and including
the date such Event of Default occurred (or, in the case of an Event of Default
under paragraph (b) of Section 11, the date on which the Company defaults in the
payment of such interest) until the earlier to occur of (i) the date such Event
of Default has been cured by the Company and (ii) the date such principal of or
interest or Prepayment Premium on any Loan is paid. Such interest on any such
amount shall be payable on the date such amount is paid or, at the option of the
Person to whom such amount is payable, from time to time upon demand by such
Person.

23. APPOINTMENT OF AGENT.

23.1. Appointment. Each of the Lenders hereby irrevocably appoints the Agent as
its agent hereunder and under the other Loan Documents, and to act as the
Collateral Agent on behalf of the Lenders hereunder and under the other Loan
Documents, and in each case authorizes the Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Agent by the terms
hereof or thereof, together with such actions and powers as are reasonably
incidental thereto. Any reference herein to the Agent shall include the Agent in
its capacity as Agent hereunder and as Collateral Agent (or fondé de pouvoir
where a Security Agreement is governed by the laws of the Province of Québec)
under any Loan Document. Each Lender does hereby make, constitute and appoint
the Agent its true and lawful attorney-in-fact with full powers of substitution
and resubstitution for such Lender and in its name, place and stead, in any and
all capacities, to execute for such Lender and on its behalf any document or
agreement for which the Agent is empowered to act on behalf of such Lender under
this Section 23, granting to the Agent full power and authority to do and
perform each act requisite and necessary to be done, as fully to all intents and
purposes as the Lender could do in person, provided that such power shall be
granted only to the extent necessary to undertake the actions permitted to be
done or taken by the Agent under this Section 23. Each of the Lenders hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Agent to take such action on
their behalf under the provisions of this Agreement, the other Loan Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental hereto and thereto.
The Agent may perform any of its duties hereunder by or through its officers,
directors, agents, employees or affiliates. The Agent shall not have, by reason
of this Agreement or any of the other Loan Documents, a fiduciary relationship
in respect of any Lender or any Principal Company, and nothing in this Agreement
or any of the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon the Agent any obligations in respect of
this Agreement or any of the other Loan Documents except as expressly set forth
herein or therein. Each Lender hereby accepts the pledges, mortgages and
fiduciary assignments created for its benefit under the Security Agreements and
empowers the Agent to enter into such agreements and act as Collateral Agent on
behalf and for the benefit of each Lender. The provisions of this Section 23 are
solely for the benefit of the Agent and the Lenders, and no Principal Company or
any of the Subsidiaries or Affiliates of such Principal Company shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Lenders and the Agent does not assume and shall not be
deemed to have assumed any fiduciary relationship or other obligation or
relationship of agency or trust with any Principal Company or for any of their
Subsidiaries or Affiliates.

 

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23.2. Rights of Agent. With respect to its obligation to extend Loans under this
Agreement, the Agent shall have the rights and powers specified herein for a
“Lender” and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term “Lenders,” “Required
Lenders,” “holders of Notes” or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity as
such (as the case may be). The Agent and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of banking, investment
banking, trust or other business with, or provide debt financing, equity capital
or other services (including financial advisory services) to, any Principal
Company or any of its Affiliates (or any Person engaged in similar business with
any Principal Company or any Affiliate thereof) as if they were not performing
the duties specified herein, and may accept fees and other consideration from
any Principal Company or any of its Affiliates for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.

23.3. Administration of the Collateral. The Agent as Collateral Agent shall
administer the Collateral and any Lien thereon for the benefit of the Lenders in
the manner provided herein and in the Security Agreements and in any other
related Loan Documents; provided, however, that in the event of conflict between
the provisions relating to administration of Collateral included in this
Agreement and those included in the Security Agreements, the latter shall
prevail. The Agent shall exercise such rights and remedies with respect to the
Collateral as are granted to it hereunder and as Collateral Agent under the
Security Agreements and related documents and Applicable Law and as shall be
directed by the Required Lenders. Upon payment in full in immediately available
funds of all Obligations under the Loan Documents, the Agent and its Affiliates
shall promptly release any and all Liens, Collateral and other security
arrangements entered into in connection with this Agreement, the Loan Documents
and the transactions contemplated hereby and thereby.

23.4. Application of Proceeds. Except as otherwise specifically provided herein
and in the other Loan Documents, the proceeds of any collection, sale,
disposition, foreclosure or other realization of all or any part of the
Collateral shall be applied by the Agent in the following order of priority:

(a) FIRST: to the payment of all costs, taxes and expenses of such collection,
sale, disposition, foreclosure or other realization, including reasonable
compensation to the Collateral Agent, the Agent, and their respective agents and
counsel in connection therewith, and all other expenses, liabilities and
advances made or incurred by the Agent or Collateral Agent in connection
therewith, and all amounts for which the Collateral Agent is entitled to
indemnification under any Collateral Document and all advances made by the
Collateral Agent under any Collateral Document for the account of any Loan
Party, and to the payment of all costs and expenses paid or incurred by the
Collateral Agent in connection with the exercise of any right or remedy under
any Collateral Document;

(b) SECOND: to the payment of any other amounts payable to the Agent under the
Loan Documents;

(c) THIRD: pursuant to the provisions of Section 2.3(b);

 

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(d) FOURTH: to the payment of all other unpaid Obligations, if any; and

(e) FIFTH: any surplus remaining after payment of the foregoing amounts shall be
paid to the Company by the Agent, subject, however, to the rights of the holder
of any then existing Lien of which the Agent has actual notice (without
investigation); it being understood that the Company shall remain liable to the
extent of any deficiency between the amount of the proceeds of the Collateral
and the aggregate amount of the sums referred to in clauses (a) through (e) of
this Section 23.4.

23.5. Duties of Agent. The Agent shall not have any duties or obligations except
those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, (a) the Agent shall not be subject to
any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents
that the Agent is required to exercise in writing by the Required Lenders, and
(c) except as expressly set forth herein and in the other Loan Documents, the
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to any Principal Company or any of
its Subsidiaries that is communicated to or obtained by the bank serving as
Agent or any of its Affiliates in any capacity. The Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders or in the absence of its own gross negligence or willful
misconduct. The Agent shall be deemed not to have knowledge of any Default
unless and until notice thereof is given to the Agent by any Principal Company
or a Lender, and the Agent shall not be responsible for or have any duty to
ascertain or inquire into (v) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (w) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (x) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein, (y) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, or (z) the satisfaction of any condition set forth
herein or therein, other than to confirm receipt of items expressly required to
be delivered to the Agent. In the event that the Agent receives such a notice,
the Agent shall give prompt notice thereof to the other Lenders and the
Principal Companies (if received from a Lender) or to the Lenders (if received
from any Principal Company).

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

23.7. Appointment of Sub-Agents. The Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Agent.

 

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The Agent and any such sub-agent may perform any and all its duties and exercise
its rights and powers through their respective Affiliates. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Affiliates of the Agent and any such sub-agent, an shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.

23.8. Resignation of Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, the Agent may resign at any time by notifying
the Lenders and the Principal Companies. Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Principal Companies, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
upon not less than ten days’ notice, on behalf of the Lenders, appoint a
successor Agent, which institution shall be a bank with an office in Los
Angeles, California or New York, New York, with a combined capital and surplus
of at least $500,000,000. Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring (or retired) Agent
and the retiring Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Company to a successor Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Company and such successor. After the Agent’s resignation hereunder, the
provisions of this Section shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as Agent.

23.9. Lender Non-Reliance. Independently and without reliance upon the Agent,
each Lender, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of each Principal Company and its Subsidiaries in connection with the
extension of the Loans and the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the creditworthiness of each Principal
Company and its Subsidiaries and, except as expressly provided in this
Agreement, the Agent shall not have any duty or responsibility, either initially
or on continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
extension of the Loans or at any time or times thereafter. The Agent shall not
be responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectability, priority or
sufficiency of this Agreement or any other Loan Document or the financial
condition of the Principal Companies or any Subsidiary or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Loan Document, or the
financial condition of the Principal Companies or any Subsidiary or the
existence or possible existence of any Default or Event of Default.

23.10. Indemnification. To the extent the Agent is not reimbursed and
indemnified by the Company, the Lenders will reimburse and indemnify the Agent
in proportion to their respective “percentage” as used in determining the
Required Lenders for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature (including fees and disbursements of any counsel or
financial advisor engaged by the Agent) which may be imposed on, asserted
against or incurred by

 

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the Agent in performing its duties hereunder or under any other Loan Document or
in any way relating to or arising out of this Agreement or any other Loan
Document; provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from such Agent’s gross
negligence or willful misconduct. If the indemnity furnished to any Agent by any
Lender for any purpose shall, in the opinion of such Agent be insufficient or
become impaired, such Agent may call for additional indemnity from such Lender
(but not any other Lender) and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished. The agreements
in this Section 23.10 shall survive the payment of all Obligations.

23.11. Lenders. The Agent may deem and treat the payee of any Loan as the Lender
thereof for all purposes hereof unless and until a written notice of the
assignment, transfer or endorsement thereof, as the case may be, shall have been
recorded in the register maintained by the Company in accordance with
Section 13.1. Any request, authority or consent of any Person who, at the time
of making such request or giving such authority or consent, is the Lender of any
portion of the Loans shall be conclusive and binding on any subsequent Lender,
transferee, assignee or endorsee, as the case may be, of such portion of the
Loans and of any Note evidencing such portion of the Loans.

23.12. Action by Agent. The Agent may take any action on behalf of the Required
Lenders that has been approved by the Required Lenders and any action that has
otherwise been specified herein or in any of the other Loan Documents. For the
avoidance of doubt, the Agent may, with the prior consent of the Required
Lenders (but not otherwise) consent to any amendment, restatement, supplement,
waiver or other modification under any of the Loan Documents.

23.13. Appointment of Collateral Agent as Security Trustee. Each of the Lenders
hereby irrevocably appoints (and the Principal Companies, the Irish Loan
Parties, the Israeli Loan Party and the Brazilian Loan Party) hereby acknowledge
the appointment of) the Agent to act as its trustee under and in relation to the
Debenture and the Share Charge and to hold the benefit of the Debenture and the
Share Charge as trustee for the Lenders on the terms contained in this Agreement
and the other Loan Documents to which the Agent is expressed to be a party and
each of the Lenders hereby irrevocably authorizes the Agent in its capacity as
security trustee to exercise such rights, powers and discretions as are
specifically delegated to the Agent by the terms of this Agreement (including,
without limitation, the rights, powers and discretions conferred on the Agent in
this Section 23.13) and the Loan Documents to which the Agent is expressed to be
a party together with all such rights, powers and discretions as are reasonably
incidental thereto. The rights, powers and discretions conferred on the Agent by
this Agreement shall be supplemental to the Trustee Act 1893 of Ireland and in
addition to any which may be vested in the Agent by this Agreement, the other
Loan Documents, general law or otherwise. Without prejudice to the provisions of
Section 24.6, the provisions of this Section 23.13 shall be governed by and
construed in accordance with, the laws of Ireland.

23.14. Intercreditor Agreement. Each of the Lenders hereby agrees to be bound by
the terms and provisions of the Intercreditor Agreement as a “Term Claimholder”
as if such Lender were a signatory thereto and hereby instructs Agent to enter
into the Intercreditor Agreement.

 

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24. MISCELLANEOUS.

24.1. Reaffirmation of the Loan Documents.

(a) Obligations Under Other Loan Documents. Each Loan Party hereby acknowledges
and reaffirms all of its obligations and duties under the other Loan Documents.

(b) Security for Obligations. Each Loan Party hereby acknowledges and reaffirms
that the Collateral Agent has and shall continue to have valid, secured Liens in
the Collateral, as set forth in the Loan Documents, securing all of the Loans.

(c) Guaranty of Obligations. Each Subsidiary Guarantor hereby acknowledges and
reaffirms all of its obligations and duties under the Subsidiary Guaranty.

(d) Parent Guaranty of Obligations. The Parent hereby acknowledges and reaffirms
all of its obligations and duties under the Parent Guaranty.

24.2. Successors and Assigns. All covenants and other agreements contained in
this Agreement by or on behalf of any of the parties hereto bind and inure to
the benefit of their respective successors and assigns (including, without
limitation, any Transferee) whether so expressed or not; provided, however, that
no Principal Company or its Subsidiaries may assign its rights or obligations
under the Loan Documents; provided, further, that any Lender may assign to one
or more other persons a portion of its Loans under this Agreement with the prior
written consent of the Company (except after the occurrence of an Event of
Default which is continuing, where the consent of the Company will not be
required), which consent shall not be unreasonably withheld. For the avoidance
of doubt, any Lender may sell participations in its Loans under this Agreement
without the consent of the Principal Companies or the Subsidiary Guarantors,
subject to customary voting limitations applicable to any participant.

24.3. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

24.4. Construction. Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other covenant
contained herein, so that (i) compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant, and (ii) if a particular action or condition is not permitted by
any of such covenants, the fact that it would be permitted by an exception to,
or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of an Event of Default or Default if such action is taken
or condition exists. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.

24.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

 

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24.6. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.

24.7. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES
TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS FINANCING
TRANSACTION OR THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH
WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
24.7 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

24.8. Usury Savings Clause. Notwithstanding any other provision herein, the
aggregate interest rate charged with respect to any of the Obligations,
including all charges or fees in connection therewith deemed in the nature of
interest under applicable law shall not exceed the Highest Lawful Rate. If the
rate of interest (determined without regard to the preceding sentence) under the
Loans at any time exceeds the Highest Lawful Rate, the outstanding amount of the
Loans extended hereunder shall bear interest at the Highest Lawful Rate until
the total amount of interest due hereunder equals the amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect. In addition, if when the Loans
extended hereunder are repaid in full the total interest due hereunder (taking
into account the increase provided for above) is less than the total amount of
interest which would have been due hereunder if the stated rates of interest set
forth in the in this Agreement had at all times been in effect, then to the
extent permitted by law, the Company shall pay to the Lenders an

 

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amount equal to the difference between the amount of interest paid and the
amount of interest which would have been paid if the Highest Lawful Rate had at
all times been in effect. Notwithstanding the foregoing, it is the intention of
the Lenders and the Company to conform strictly to any applicable usury laws.
Accordingly, if any Lender contracts for, charges, or receives any consideration
which constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be cancelled automatically and, if previously paid, shall at such
Lender’s option be applied to the outstanding amount of the Loans extended or
deemed purchased hereunder or be refunded to the Company.

24.9. Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default, each Lender and its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by any such
Lender or its Affiliates to or for the credit or the account of any Loan Party
against any and all of the Obligations now or hereafter existing, whether or not
any Lender shall have made any demand under this Agreement or the other Loan
Documents and although such Obligations may be unmatured. The rights of the
Lenders and their Affiliates under this Section 24.9 are in addition to the
other rights and remedies (including other rights of set-off) which such Persons
may have.

24.10. Marshalling; Payments Set Aside. No Lender shall be under any obligation
to marshal any assets in favor of any Loan Party or any other Person or against
or in payment of any or all of the Obligations. To the extent that any Loan
Party makes a payment or payments to the Agent, the Collateral Agent or any
Lender or the Agent, Collateral Agent or any Lender enforces any security
interests or exercise their rights of setoff, and such payment or payments or
the proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.

24.11. Limitation of Liability. THE LOAN PARTIES AGREE THAT NO INDEMNIFIED
PERSON SHALL HAVE ANY LIABILITY (WHETHER DIRECT OR INDIRECT, IN CONTRACT, TORT
OR OTHERWISE) TO ANY LOAN PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, EQUITY
HOLDERS OR CREDITORS FOR OR IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
HEREBY AND IN THE OTHER LOAN DOCUMENTS, EXCEPT TO THE EXTENT SUCH LIABILITY IS
FOUND IN A FINAL JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
PRIMARILY FROM SUCH INDEMNIFIED PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
IN NO EVENT, HOWEVER, SHALL ANY INDEMNIFIED PERSON BE LIABLE ON ANY THEORY OF
LIABILITY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES AND EACH
OF THE LOAN PARTIES HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH
CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.

 

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24.12. Submission to Jurisdiction; Waivers. Each Principal Company hereby
irrevocably and unconditionally:

(a) submits for itself and its Property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, (i) to such Principal
Company’s agent for service of process identified in Section 24.12(d) below with
a copy to such Principal Company at its address set forth below its signature
below or at such other address of which the Lenders and the Agent have been
notified pursuant to Section 19 hereof, or (ii) at such Principal Company’s
address set forth below its signature below or at such other address of which
the Lenders and the Agent have been notified pursuant to Section 19 hereof;

(d) hereby irrevocably designates, appoints and empowers Dialogic Research Inc.
as its designee, appointee and agent to receive, accept and acknowledge for and
on its behalf, and in respect of its Property, service of any and all legal
process, summons, notices and documents which may be served in any such action
or proceeding (with a copy of any such legal process, summons, notice or
document to be mailed to such Principal Company in accordance with
Section 24.12(c) above); and

(e) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.

24.13. Judgment Currency. The specification under this Agreement of Dollars is
of the essence. The Company’s obligations hereunder and under the other Loan
Documents to make payments in Dollars shall not be discharged or satisfied by
any tender or recovery pursuant to any judgment expressed in or converted into
any currency other than Dollars, except to the extent that such tender or
recovery results in the effective receipt by the Secured Parties of the full
amount of Dollars expressed to be payable to the Secured Parties under this
Agreement or the other Loan Documents. If, for the purpose of obtaining or
enforcing judgment in any court, it is necessary to convert into or from any
currency other than Dollars (such other currency being hereinafter referred to
as the “Judgment Currency”) an amount due in Dollars, the rate of exchange used
shall be that at which HSBC Bank Canada could, in accordance with normal banking
procedures, purchase Dollars with the Judgment Currency on the Business Day
preceding that on which final judgment is given. The obligation of the Company
in respect of any such sum due from it to the Agent or the Lenders hereunder
shall, notwithstanding any judgment in such Judgment Currency, be discharged
only to the extent that, on the Business Day immediately following the date on

 

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which Agent or such Lenders receive any sum adjudged to be so due in the
Judgment Currency, Agent or such Lenders may, in accordance with normal banking
procedures, purchase Dollars with the Judgment Currency. If the Dollars so
purchased are less than the sum originally due to Agent and/or such Lenders in
Dollars, the Company agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify Agent and/or such Lenders, as the case may be,
against such loss, and if the Dollars so purchased exceed the sum originally due
to Agent and/or Lenders in Dollars, Agent and/or the Lenders, as the case may
be, agree to remit such excess to the Company

24.14. Existing Events of Default under Original Agreement. Upon the
effectiveness of this Agreement, (i) all Events of Default (as defined under the
Original Agreement) existing under the Original Agreement immediately prior to
the Closing are hereby waived by the Agent and the Lenders and (ii) that certain
letter agreement, dated as of March 1, 2012, from the Agent and the Lenders to
the Company and the Parent with respect to forbearance of remedies is hereby
terminated.

[SIGNATURE PAGES TO FOLLOW]

 

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If each Lender and the Agent is in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this Agreement and return
it to the Principal Companies, whereupon the foregoing shall become a binding
agreement among each of the Lenders, the Agent and the Principal Companies.

 

Very truly yours,

DIALOGIC CORPORATION,

a British Columbia corporation,

as the Company

By  

/s/ Anthony Housefather

Name:   Anthony Housefather Title:   Director Notice Address:

9800 Cavendish Boulevard

5th floor

Montreal, Quebec, CANADA H4M 2V9

Attn: Anthony Housefather

Facsimile: (781) 433-5077

Email: Anthony.Housefather@dialogic.com

DIALOGIC INC.,

a Delaware corporation,

as the Parent

By  

/s/ Anthony Housefather

Name:   Anthony Housefather Title:   Secretary Notice Address:

9800 Cavendish Boulevard

5th floor

Montreal, Quebec, CANADA H4M 2V9

Attn: Anthony Housefather

Facsimile: (781) 433-5077

Email: Anthony.Housefather@dialogic.com

[Signature Page to Third Amended and Restated Credit Agreement]

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

SUBSIDIARY GUARANTORS

DIALOGIC DISTRIBUTION LIMITED,

(a company organized under the laws of Ireland)

SIGNED AND DELIVERED as a deed by  

/s/ Anthony Housefather

the lawfully appointed attorney for and on behalf of

DIALOGIC DISTRIBUTION LIMITED

in the presence of:

Witness (signature):  

/s/ Stephen Becker

Witness Name (print):  

Stephen Becker

Witness Address:  

9800 Cavendish Blvd., Suite 500

 

Montreal, Quebec, Canada

DIALOGIC MANUFACTURING LIMITED,

(a company organized under the laws of Ireland)

SIGNED AND DELIVERED as a deed by  

/s/ Anthony Housefather

the lawfully appointed attorney for and on behalf of

DIALOGIC MANUFACTURING LIMITED

in the presence of:

Witness (signature):  

/s/ Stephen Becker

Witness Name (print):  

Stephen Becker

Witness Address:  

9800 Cavendish Blvd., Suite 500

 

Montreal, Quebec, Canada

[Signature Page to Third Amended and Restated Credit Agreement]

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

DIALOGIC US HOLDINGS INC.,

a Delaware corporation

By:  

/s/ Anthony Housefather

Name:   Anthony Housefather Title:   Director

DIALOGIC (US) INC.

a Delaware corporation

By:  

/s/ Anthony Housefather

Name:   Anthony Housefather Title:   Secretary

DIALOGIC RESEARCH INC.

a Delaware corporation

By:  

/s/ Anthony Housefather

Name:   Anthony Housefather Title:   Secretary

CANTATA TECHNOLOGY, INC.

a Massachusetts corporation

By:  

/s/ Anthony Housefather

Name:   Anthony Housefather Title:   Director

DIALOGIC JAPAN, INC.

a Delaware corporation

By:  

/s/ Anthony Housefather

Name:   Anthony Housefather Title:   Director

[Signature Page to Third Amended and Restated Credit Agreement]

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

DIALOGIC NETWORKS (ISRAEL) LTD.

a company organized under the laws of Israel

By:  

/s/ Anthony Housefather

Name:   Anthony Housefather Title:   Director

DIALOGIC DO BRASIL COMERCIO DE EQUIPAMNETOS PARA

TELECOMUNICACAO LTDA (f/k/a Veraz Networks do Brasil Comercio de

Equipamentos Para Telecommunicacao Ltda)

a company organized under the laws of Brazil

By:  

 

Name:   Title:  

[Signature Page to Third Amended and Restated Credit Agreement]

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

DIALOGIC NETWORKS (ISRAEL) LTD.

a company organized under the laws of Israel

By:  

 

Name:   Title:  

DIALOGIC DO BRASIL COMERCIO DE EQUIPAMNETOS PARA

TELECOMUNICACAO LTDA (f/k/a Veraz Networks do Brasil Comercio de

Equipamentos Para Telecommunicacao Ltda)

a company organized under the laws of Brazil

By:  

/s/ Jobelino Vitoriano Locateli

Name:   Jobelino Vitoriano Locateli Title:   Legal Representative

[Signature Page to Third Amended and Restated Credit Agreement]

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

The foregoing is hereby agreed to as of the date hereof. OBSIDIAN, LLC, as Agent
By:  

/s/ Rajneesh Vig

Name:   Rajneesh Vig Title:   Authorized Signatory

Notice Address:

2951 28th Street, Suite 1000

Santa Monica, CA 90405

Attention: Raj Vig and General Counsel

Facsimile: (310) 899-4950

Email: raj.vig@tennenbaumcapital.com

[Signature Page to Third Amended and Restated Credit Agreement]

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

SPECIAL VALUE EXPANSION FUND, LLC,

as Lender

By:   Tennenbaum Capital Partners, LLC Its:   Investment Manager By:  

/s/ Rajneesh Vig

Name:   Rajneesh Vig Title:   Managing Partner SPECIAL VALUE OPPORTUNITIES FUND,
LLC, as Lender By:   Tennenbaum Capital Partners, LLC Its:   Investment Manager
By:  

/s/ Rajneesh Vig

Name:   Rajneesh Vig Title:   Managing Partner TENNENBAUM OPPORTUNITIES PARTNERS
V, LP, as Lender By:   Tennenbaum Capital Partners, LLC Its:   Investment
Manager By:  

/s/ Rajneesh Vig

Name:   Rajneesh Vig Title:   Managing Partner

[Signature Page to Third Amended and Restated Credit Agreement]

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SCHEDULE A

 

INFORMATION RELATING TO LENDERS   

Name of Lender

   SPECIAL VALUE EXPANSION FUND, LLC    (1)   Principal Amount of Loans
Extended:    $12,855,213.59 (2)   All payments by wire transfer of immediately
available funds, with sufficient information to identify the source and
application of such funds, to:    Bank: Wells Fargo Bank, NA      ABA #:
121-000-248      For Credit To: CDO Clearing      A/C #: 6355067033      For
Further Credit To: Special Value      Expansion Fund, LLC      A/C #: 18185401

(3)    

  All notices and other communications:    2951 28th Street, Suite 1000     
Santa Monica, CA 90405      Attention: Raj Vig and General Counsel      Email:
raj.vig@tennenbaumcapital.com SPECIAL VALUE OPPORTUNITIES FUND, LLC   

(1)    

  Principal Amount of Loans Extended:    $30,466,856.23

(2)    

  All payments by wire transfer of immediately available funds, with sufficient
information to identify the source and application of such funds, to:    Bank:
Wells Fargo Bank, NA      ABA #: 121-000-248      For Credit To: CDO Clearing  
   A/C #: 6355067033      For Further Credit To: Special Value     
Opportunities Fund, LLC      A/C #: 18169601 (3)   All notices and other
communications:    2951 28th Street, Suite 1000      Santa Monica, CA 90405     
Attention: Raj Vig and General Counsel      Email: raj.vig@tennenbaumcapital.com
TENNENBAUM OPPORTUNITIES PARTNERS V, LP   

(1)    

  Principal Amount of Loans Extended:    $49,510,936.93

(2)    

  All payments by wire transfer of    Bank: Wells Fargo Bank, NA

 

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Third Amended and Restated Credit Agreement

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  immediately available funds, with sufficient information to identify the
source and application of such funds, to:    ABA #: 121-000-248      For Credit
To: CDO Clearing      A/C #: 6355067033      For Further Credit To: Tennenbaum  
   Opportunities Partners V, LP      A/C #: 50953106 (3)   All notices and other
communications:    2951 28th Street, Suite 1000      Santa Monica, CA 90405     
Attention: Raj Vig and General Counsel      Email: raj.vig@tennenbaumcapital.com

 

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Third Amended and Restated Credit Agreement

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SCHEDULE B

DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

“Additional Mortgaged Property” has the meaning set forth in Section 9.8(a).

“Additional Mortgages” has the meaning set forth in Section 9.8(a).

“Agent” is defined in the first paragraph of this Agreement.

“Affiliate” means, at any time, and with respect to any Person, (a) any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of any
Principal Company or any Subsidiary or any corporation of which any Principal
Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
As used in this definition, “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an “Affiliate” is a reference to an Affiliate of any Principal
Company.

“Agreement” means this Credit Agreement dated as of March 22, 2012, as the same
may be amended, supplemented or otherwise modified from time to time.

“Applicable Law” means all laws, rules and regulations applicable to a Person,
its Property or a transaction, as the case may be, including but not limited to,
all applicable common law principles and all provisions of all applicable
Canadian and United States federal, provincial, state, local and foreign
constitutions, treatises, codes, statutes, rules, regulations, orders and
ordinances of any Governmental Authority; and writs, orders, judgments,
injunctions and decrees of all courts and arbitrators.

“Applicable Prepayment Premium” has the meaning given thereto in Section 8.2(a)
hereof.

“Asset Sale” means the Disposition by any Principal Company or any of its
Subsidiaries to any Person other than any Principal Company or any of its
Wholly-Owned Subsidiaries of (i) any of the Capital Stock of any of any
Principal Company’s Subsidiaries, (ii) substantially all of the Property of any
division or line of business of any Principal Company or any of its
Subsidiaries, or (iii) any other Property (whether tangible or intangible) of
any Principal Company or any of its Subsidiaries (other than (a) inventory sold
or leased in the ordinary course of business, (b) Dispositions of accounts in
the ordinary course of business for purposes of collection, (c) license of
Intellectual Property in the ordinary course of business and (d) any such other
Dispositions to the extent that the aggregate fair market value of such Property
Disposed of in any single transaction or related series of transactions is equal
to $125,000 or less).

 

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Third Amended and Restated Credit Agreement

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“Asset Sale Offer” has the meaning set forth in Section 8.3(a).

“Availability” means “Availability” as defined in the Working Capital Facility
as in effect on the Closing Date.

“Balance Sheet” means collectively, with respect to each Principal Company, the
unaudited consolidated balance sheet of such Principal Company and its
Subsidiaries as of September 30, 2011.

“Brazilian Loan Party” means Dialogic do Brasil Comércio de Equipamentos para
Telecomunicação Ltda (f/k/a Veraz Networks do Brasil Comércio de Equipamentos
para Telecomunicação LTDA), a company incorporated under the laws of Brazil.

“Brazilian Security Agreement” means (i) the Contrato de Penhor de Quotas, dated
as of November 12, 2010, by and among the Parent, the Brazilian Loan Party and
the Collateral Agent, (ii) the Contrato de Penhor de Quotas, dated as of
November 12, 2010, by and among the Israeli Loan Party, the Brazilian Loan Party
and the Collateral Agent and (iii) the Instrumento Particular de Constituicao de
Penhor de Ativos, dated as of November 12, 2010, between the Brazilian Loan
Party and the Collateral Agent.

“Business Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York City or Montreal are required or authorized to be
closed.

“Canadian Security Agreement” means that certain Deed of Hypothec on a
Universality of Property, entered into on December 5, 2008, among the Company,
the other Grantors party thereto from time to time, the Collateral Agent and the
Lenders.

“Canadian Subsidiary” means any Subsidiary of any Principal Company that is
incorporated or organized under the laws of Canada or any province or territory
thereof.

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

“Capital Stock” means the capital stock or other equity interests of a Person.

“Capital Stock Offer” has the meaning set forth in Section 8.4(a).

“Cash Equivalents” means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States or Canadian federal Government or (b) issued
by any agency of the United States or Canada the obligations of which are backed
by the full faith and credit of the United States or Canada, as applicable, in
each case maturing within one year after such date; (ii) marketable direct
obligations issued by any state of the United States of America or province of
Canada or any political subdivision of any such state or province or any public
instrumentality thereof, in

 

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Third Amended and Restated Credit Agreement

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each case maturing within one year after such date and having, at the time of
the acquisition thereof, the highest rating obtainable from either Standard &
Poor’s (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”); (iii) commercial
paper maturing no more than one year from the date of creation thereof and
having, at the time of the acquisition thereof, a rating of at least A-1 from
S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’
acceptances maturing within one year after such date and issued or accepted by
any Lender, by any Schedule I Canadian Chartered Bank (as named in the Bank Act
of Canada) or by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least “adequately capitalized” (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000; and (v) shares of any money market
mutual fund that (a) has at least 95% of its assets invested continuously in the
types of investments referred to in clauses (i) and (ii) above, (b) has net
assets of not less than $500,000,000, and (c) has the highest rating obtainable
from either S&P or Moody’s.

“Change in Control” means the occurrence of any of the following: (i) the direct
or indirect sale, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all
or substantially all of the properties or assets of any Principal Company and
its Subsidiaries taken as a whole to any “person” (as such term is used in
Section 13(d)(3) of the Exchange Act) other than Permitted Holders; (ii) the
adoption of a plan relating to the liquidation or dissolution of any Principal
Company; (iii) the failure at any time of the Parent to legally and beneficially
own and control 100% of the issued and outstanding shares of the Capital Stock
of the Company or the failure at any time of the Parent to have the ability to
elect all of the Governing Body of the Company; (iv) any “person” (as defined
above), other than Permitted Holders, or group of “persons” shall have acquired
beneficial ownership, directly or indirectly, of the Capital Stock of the Parent
(or other Capital Stock convertible into such Capital Stock) representing 30% or
more of the combined voting power of all Capital Stock of the Parent entitled to
vote in the election of members of the Governing Body of the Parent, other than
Capital Stock having such power only by reason of the happening of a
contingency; (v) as of any date, individuals who constitute the Continuing
Directors of the Parent cease for any reason to constitute at least a majority
of the Governing Body of the Parent; (vi) any Permitted Holder shall have
acquired beneficial ownership, directly or indirectly, of the Capital Stock of
the Parent (or other Capital Stock convertible into such Capital Stock)
representing 50% or more of the combined voting power of all Capital Stock of
the Parent entitled to vote in the election of members of the Governing Body of
the Parent; or (vii) a “Change of Control” has occurred under the Working
Capital Facility or a Permitted ABL Facility.

“Closing” is defined in Section 3.1.

“Closing Date” is defined in Section 3.1.

“Closing Date Projections” means the forecasted financial statements of the
Parent and its Subsidiaries, consisting of balance sheets, income statements and
cash flow statements for the Parent and its Subsidiaries after giving effect to
the consummation of the transactions contemplated by this Agreement, the other
Loan Documents and the Related Agreements, as delivered to the Agent on or prior
to the Closing Date.

 

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Third Amended and Restated Credit Agreement

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“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

“Collateral” means, collectively, all of the real, personal and mixed property
(including Capital Stock) in which Liens are, or are purported to be, granted
pursuant to the Collateral Documents as security for the Obligations.

“Collateral Account” is defined in the U.S. Security Agreement.

“Collateral Agent” means Obsidian, LLC or any successor thereto.

“Collateral Documents” means the Security Agreements, the Mortgages, the Foreign
Pledge Agreements, the Intercompany Subordination Agreement and all other
instruments or documents delivered by any Loan Party pursuant to this Agreement
or any of the other Loan Documents in order to grant to the Collateral Agent, on
behalf of the Secured Parties, a Lien on any real, personal or mixed property of
that Loan Party as security for the Obligations, in each case including any
financing statements, notices and the like filed, recorded or delivered in
connection therewith.

“Company” has the meaning set forth in the first paragraph hereof.

“Company Intellectual Property” means all Intellectual Property Rights used in
or necessary for the conduct of the business of any Principal Company or any of
its Subsidiaries, or owned or licensed for use in connection with, or reasonably
deemed necessary in the conduct of, the business of such Principal Company or
any of its Subsidiaries.

“Company-Owned IP Rights” means the Company Intellectual Property that any
Principal Company or any of its Subsidiaries own.

“Company Technology” shall mean all Technology used in or necessary for the
conduct of the business of any Principal Company or any of its Subsidiaries or
owned or licensed for use in connection with the business of such Principal
Company or any of its Subsidiaries.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit B.

“Confidential Information” is defined in Section 21.

“Consolidated Capital Expenditures” means, for any period, the sum of the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of the Parent and its
Subsidiaries) by the Parent and its Subsidiaries during that period that, in
conformity with GAAP, are included in “additions to property, plant or
equipment” or comparable items reflected in the consolidated statement of cash
flows of the Parent and its Subsidiaries. For purposes of this definition, the
purchase price of equipment that is purchased simultaneously with the trade-in
of existing equipment or with insurance proceeds shall be included in
Consolidated Capital Expenditures only to the extent of the gross amount of such
purchase price less the credit granted by the seller of such equipment for the
equipment being traded in at such time or the amount of such proceeds, as the
case may be.

 

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Third Amended and Restated Credit Agreement

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“Consolidated EBITDA” means, for any period, and with respect to each of the
following as determined on a consolidated basis for the Parent and its
Subsidiaries in accordance with GAAP:

(a) Consolidated Net Income, plus

(b) to the extent deducted in the calculation of Consolidated Net Income, the
sum, without duplication, of the amounts for such period of:

(i) Consolidated Interest Expense, plus

(ii) provisions for taxes based on income and for Québec tax on paid-up capital,
plus

(iii) total depreciation expense, plus

(iv) total amortization expense, plus

(v) non-cash stock-based compensation distributed by the Parent or its
Subsidiaries, plus

(vi) in connection with any Permitted Acquisition, (A) for the Fiscal Quarter in
which such Permitted Acquisition closes, transaction expenses in an amount not
to exceed $500,000, (B) non-cash in process research and development expenses
acceptable to the Agent in its reasonable discretion and (C) any non-cash
expense adjustments acceptable to the Agent in its reasonable discretion
resulting from the write-up of assets or write-down of liabilities in connection
with such Permitted Acquisition, plus

(vii) any charges or reserves in connection with the reorganization by the
Parent and its Subsidiaries of employees for any Fiscal Quarter, in an amount
that is acceptable to the Agent in its reasonable discretion, plus

(viii) realized and unrealized losses solely due to fluctuation in currency
values related to accounts on the consolidated balance sheet of the Parent and
its Subsidiaries, plus

(ix) in connection with the Restructuring, transaction fees and expenses paid in
cash, plus

(x) cash fees and expenses incurred in connection with any Proceeding by a
Governmental Authority pending as of the Closing Date, plus

(xi) non-recurring cash restructuring charges or other non-recurring cash
expenses incurred to restructure or improve productivity or cost effectiveness
of assets or operations, including facility or office closures, surrender of
leasehold interests, consolidation and integration costs and severance,
relocation and retention bonuses, in each case, approved by the Agent in its
reasonable discretion,

 

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Third Amended and Restated Credit Agreement

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(c) minus gains solely due to fluctuation in currency values related to accounts
on the consolidated balance sheet of the Parent and its Subsidiaries, but only
to the extent added in the calculation of Consolidated Net Income,

(d) minus capitalized research and development expenses.

“Consolidated Interest Expense” means, for any period, total interest expense
(including that portion attributable to Capital Leases in accordance with GAAP
and capitalized interest) of the Parent and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of the Parent and its
Subsidiaries, including all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers’ acceptance financing and net
costs under Interest Rate Agreements and all other debt issuance costs, but
excluding, however, any interest that accrues on any Indebtedness and is
paid-in-kind by being added to the outstanding principal amount of such
Indebtedness.

“Consolidated Net Income” means, for any period, the net income (or loss) of the
Parent and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period determined in conformity with GAAP; provided that there
shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of the Parent) in which any other Person (other than the Parent or
any of its Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to the Parent or any of
its Subsidiaries by such Person during such period, (ii) the income (or loss) of
any Person accrued prior to the date it becomes a Subsidiary of the Parent or is
merged into or consolidated with the Parent or any of its Subsidiaries or that
Person’s assets are acquired by the Parent or any of its Subsidiaries, (iii) the
income of any Subsidiary of the Parent to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any after-tax gains or losses
attributable to asset sales or returned surplus assets of any Pension Plan, and
(v) (to the extent not included in clauses (i) through (iv) above) any net
extraordinary or non-recurring gains or net non-cash extraordinary or
non-recurring losses.

“Consolidated Total Debt” means, as at any date of determination, the aggregate
stated balance sheet amount of all Indebtedness of the Parent and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.

“Consolidated Total Leverage Ratio” means, as of the last day of any Fiscal
Quarter, the ratio of (a) Consolidated Total Debt as at such day to
(b) Consolidated EBITDA for the consecutive four Fiscal Quarters ending on such
day.

“Contingent Obligation”, as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of that Person (i) with respect to any
Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of

 

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another that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any acceptance, letter of credit or surety bond or
similar facility issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings, or (iii) under Hedge
Agreements. Contingent Obligations shall include (a) the direct or indirect
Guaranty, endorsement (otherwise than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with recourse
by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (1) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (2) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (1) or (2) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Hedge Agreement shall be determined pursuant to the definition of “Swap”. The
amount of any other Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if less, the amount to which
such Contingent Obligation is specifically limited.

“Continuing Directors” means, as of any date of determination, any member of the
Governing Body of the Parent who: (1) was a member of the Governing Body of a
Principal Company on the Closing Date; or (2) was nominated for election or
elected to such Governing Body with the approval of a majority of the Continuing
Directors who were members of such Governing Body at the time of such nomination
or election, provided that, for purposes of this clause (2), the “approval” by a
majority of the Continuing Directors of a nominee or slate of nominees does not
preclude the Continuing Directors from also recommending or endorsing any other
nominee or slate of nominees in connection with the same election.

“Contractual Obligation”, as applied to any Person, means any provision of any
Security issued by that Person or of any material indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument to which that Person
is a party or by which it or any of its Properties is bound or to which it or
any of its Properties is subject.

“Currency Agreement” means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which any Principal Company or any of its
Subsidiaries is a party.

“Debenture” means the composite Irish law Debenture, dated as of October 1,
2010, among the Irish Loan Parties and the Collateral Agent.

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

“Default Rate” means 2.0% plus the rate stated in Section 2.2(a) herein.

 

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“Deposit Accounts” means a demand, time, savings, passbook or similar account
maintained with a Person engaged in the business of banking, including a savings
bank, savings and loan association, credit union or trust or as otherwise
defined in the UCC.

“Disposition” means, with respect to any Property, any sale, lease, sale and
leaseback, assignment, conveyance, grant of restriction, transfer or other
disposition thereof; and the terms “Dispose” and “Disposed of” shall have
correlative meanings.

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

“Employee” means any current officer, director, consultant, employee,
independent contractor, agent and other Person who renders services to any
Principal Company or any of its Subsidiaries.

“Employee Benefit Plan” means (i) any “employee benefit plan” as defined in
Section 3(3) of ERISA (whether or not such plan is subject to ERISA) which is or
was maintained or contributed to by any of any Principal Company’s U.S.
Subsidiaries and (ii) any Employee Program set forth on Schedule 5.11(g).

“Employee Program” means any employee benefit arrangement maintained or
contributed to by any Principal Company or any of its Subsidiaries which is
(i) the portion of any employment or consulting agreement which provide employee
benefits; (ii) an arrangement providing for insurance coverage or workers’
compensation benefits; (iii) an incentive bonus or deferred bonus arrangement;
(iv) a stock purchase or stock option arrangement, including any employee stock
ownership plan; (v) a death benefit arrangement; (vi) an arrangement providing
termination allowance, salary continuation, severance, retention compensation or
similar benefits; (vii) a change in control agreement; (viii) an equity
compensation or profit-sharing plan (ix) a deferred compensation plan; (x) an
employee relocation, a tuition reimbursement, psychiatric or other counseling,
dependent care assistance, or legal assistance plan or arrangement; (xi) a
fringe benefit arrangement (cash or noncash); (xii) a holiday or vacation plan
or policy; (xiii) any welfare, hospitalization, health, medical, vision, dental
plan; or (xiv) any other compensation policy or practice.

“Environmental Claim” means any investigation, notice, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any Government Authority or any other
Person, arising (i) pursuant to or in connection with any actual or alleged
violation of any Environmental Law, (ii) in connection with any Hazardous
Materials or any actual or alleged Hazardous Materials Activity, or (iii) in
connection with any actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment.

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

“ERISA Affiliate” as applied to any Person, means (i) any corporation that is a
member of a controlled group of corporations within the meaning of
Section 414(b) of the Code of which that Person is a member; (ii) any trade or
business (whether or not incorporated) that is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the Code
of which that Person is a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of a
Person or any of its Subsidiaries shall continue to be considered an ERISA
Affiliate of such Person or such Subsidiary within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of such
Person or such Subsidiary and with respect to liabilities arising after such
period for which such Person or such Subsidiary could be liable under the Code
or ERISA.

“ERISA Event” means (i) a “reportable event” within the meaning of Section 4043
of ERISA and the regulations issued thereunder with respect to any Pension Plan
(excluding those for which the provision for 30-day notice to the PBGC has been
waived by regulation); (ii) the failure to meet the minimum funding standard of
Section 412 of the Code with respect to any Pension Plan (whether or not waived
in accordance with Section 412(c) of the Code) or the failure to make by its due
date a required installment under Section 430(j) of the Code with respect to any
Pension Plan or the failure to make any required contribution to a Multiemployer
Plan; (iii) the provision by the administrator of any Pension Plan pursuant to
Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal
by any Principal Company, any of its Subsidiaries or any of their respective
ERISA Affiliates from any Pension Plan with two or more contributing sponsors or
the termination of any such Pension Plan resulting in liability pursuant to
Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of liability
on any Principal Company, any of its Subsidiaries or any of their respective
ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal of any
Principal Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by any Principal Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated
under Section 4041A or 4042 of ERISA; (viii) the assertion of a material claim
(other than routine claims for benefits) against any Employee Benefit Plan other
than a Multiemployer Plan or the assets thereof, or against any Principal
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in

 

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Third Amended and Restated Credit Agreement

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connection with any Employee Benefit Plan; (ix) receipt from the Internal
Revenue Service of notice of the failure of any Pension Plan (or any other
Employee Benefit Plan intended to be qualified under Section 401(a) of the Code)
to qualify under Section 401(a) of the Code, or the failure of any trust forming
part of any Pension Plan to qualify for exemption from taxation under
Section 501(a) of the Code; or (x) the imposition of a Lien pursuant to
Section 436(f)(1) or 430 of the Code or pursuant to ERISA with respect to any
Pension Plan.

“Event of Default” is defined in Section 11.

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

“Existing Accrued Interest” has the meaning given thereto in Section 2.1(a)
hereof.

“Existing Loans” means all Loans (as such term is defined in the Original
Agreement) made by the Lenders pursuant to the Original Agreement.

“Existing Parent Indebtedness” is defined in Section 4.20.

“Facilities” means any and all Real Property Assets (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by any Principal Company or any of its
Subsidiaries.

“Financial Covenants” means the covenants in Sections 10.13, 10.14, 10.15 and
10.16.

“Financial Plan” is defined in Section 7(l).

“First Priority” means, with respect to any Lien purported to be created in any
Collateral pursuant to any Collateral Document, that (i) such Lien is perfected
and has priority over any other Lien on such Collateral (other than Liens
permitted pursuant to Section 10.2(a)(ii), 10.2(a)(iii), 10.2(a)(iv), 10.2(a)(v)
and 10.2(a)(vi)) and (ii) such Lien is the only Lien (other than Liens permitted
pursuant to Section 10.2) to which such Collateral is subject.

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

“Fiscal Year” means the fiscal year of the Parent and its Subsidiaries (or, if
the context otherwise requires, of a Principal Company and its Subsidiaries)
ending December 31 of each calendar year.

“Foreign Plan” means any employee benefit plan maintained by any Principal
Company or any of its Subsidiaries that is mandated or governed by any law, rule
or regulation of any Government Authority other than the United States of
America, any state thereof or any other political subdivision thereof.

“Foreign Pledge Agreement” means each pledge agreement, including without
limitation the Share Charge, or similar instrument governed by the laws of a
country other than

 

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Third Amended and Restated Credit Agreement

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the United States, executed on the Closing Date or from time to time thereafter
in accordance with Section 9.7 by any Grantor that owns Capital Stock of one or
more Non-U.S. Subsidiaries organized in such country, in form and substance
satisfactory to the Collateral Agent.

“GAAP” means, subject to the limitations on the application thereof set forth in
Section 1.2, generally accepted accounting principles in United States as the
same are applicable to the circumstances as of the date of determination.

“Governing Body” means the board of directors or other body having the power to
direct or cause the direction of the management and policies of a Person that is
a corporation, partnership, trust or limited liability company.

“Governmental Authority” means any political subdivision or department thereof,
any other governmental or regulatory body, commission, central bank, board,
bureau, organ or instrumentality or any court, in each case whether federal,
state, local or foreign.

“Grantor” shall mean (i) each of the Loan Parties that is party to any of the
Security Agreements from time to time, and (ii) each Wholly-Owned Subsidiary of
any Principal Company that, after the date hereof, executes and delivers to the
Lenders and the Collateral Agent a Subsidiary Guaranty Joinder and takes the
actions and executes and delivers the documents, instruments and agreements
contemplated by Sections 9.7 and 9.8 hereof to create in favor of the Collateral
Agent, for the benefit of the Secured Parties, a valid and perfected First
Priority Lien on all of the personal and mixed Property of such Wholly-Owned
Subsidiary constituting Collateral.

“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

(i) to purchase such indebtedness or obligation or any property constituting
security therefor;

(ii) to advance or supply funds (x) for the purchase or payment of such
indebtedness or obligation, or (y) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;

(iii) to lease properties or to purchase properties or services primarily for
the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or obligation;
or

(iv) otherwise to assure the owner of such indebtedness or obligation against
loss in respect thereof.

 

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Third Amended and Restated Credit Agreement

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In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
any other substances that might pose a hazard to health or safety, the removal
of which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law (including,
without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

“Hazardous Materials Activity” means any past, current, proposed or threatened
activity, event or occurrence involving any Hazardous Materials, including the
use, manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, placement, generation, transportation,
processing, construction, treatment, abatement, removal, remediation, disposal,
disposition or handling of any Hazardous Materials, and any corrective action or
response action with respect to any of the foregoing.

“Hedge Agreement” means an Interest Rate Agreement or a Currency Agreement
designed to hedge against fluctuations in interest rates or currency values,
respectively, and not entered into for speculative purposes.

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that at
any time or from time to time may be contracted for, charged, or received under
the laws applicable to any Lender which are presently in effect or, to the
extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.

“Indebtedness” with respect to any Person means, at any time, without
duplication,

 

  a) its liabilities for borrowed money and its redemption obligations in
respect of Preferred Stock that is mandatorily redeemable at any time prior to
one year after the Maturity Date;

 

  b) its liabilities for the deferred purchase price of property acquired by
such Person (excluding accounts payable arising in the ordinary course of
business but including all liabilities created or arising under any conditional
sale or other title retention agreement with respect to any such property);

 

  c) all Synthetic Lease Obligations and all liabilities appearing on its
balance sheet in accordance with GAAP in respect of Capital Leases;

 

  d) all liabilities for borrowed money secured by any Lien with respect to any
property owned by such Person (whether or not it has assumed or otherwise become
liable for such liabilities); and

 

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Third Amended and Restated Credit Agreement

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  e) all its liabilities in respect of letters of credit or instruments serving
a similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for borrowed
money).

Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP. Indebtedness of any Person shall include
the Indebtedness of any partnership or Joint Venture in which such Person is a
general partner or a joint venturer, unless such Indebtedness is, by its terms,
non-recourse to the assets of such Person other than as a result of customary
exclusions. For the avoidance of doubt:

(x) Obligations under Interest Rate Agreements and Currency Agreements
constitute (1) in the case of Hedge Agreements, Contingent Obligations, and
(2) in all other cases, Investments, and in neither case constitute
Indebtedness; and

(y) Intercompany accounts arising from the provision of services or sales or
licenses of inventory or Intellectual Property by and among the Parent and its
Subsidiaries shall not constitute Indebtedness.

“Indemnified Party” is defined in Section 16(a).

“Institutional Investor” means (a) any original Lender, (b) any holder of a Note
holding more than 10% of the aggregate principal amount of the Loans then
outstanding, and (c) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.

“Intellectual Property” means all patents, trademarks, tradenames, copyrights,
Technology, Software, and Trade Secrets.

“Intellectual Property Rights” means all of the rights arising from or in
respect of the following, whether protected, created or arising under the
Applicable Laws of Canada, the United States of America or any foreign
jurisdiction: (a) patents, inventions (whether patentable or unpatentable and
whether or not reduced to practice), invention disclosures, development, patent
applications, any reissues, reexaminations, divisionals, continuations,
continuations-in-part and extensions thereof; (b) trademarks, service marks,
trade names (whether registered or unregistered), service names, industrial
designs, brand names, brand marks, trade dress rights, Internet domain names,
identifying symbols, logos, emblems, signs or insignia, and including all
goodwill associated with the foregoing; (c) copyrights, whether registered or
unregistered (including copyrights in computer Software programs), mask work
rights and registrations and applications therefore; (d) Trade Secrets; and
(e) all applications, registrations and permits related to any of the foregoing
clauses (a) through (d).

 

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Third Amended and Restated Credit Agreement

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“Intercompany Subordination Agreement” means the Amended and Restated
Intercompany Subordination Agreement, dated as of October 1, 2010, executed and
delivered by the Principal Companies and their Subsidiaries.

“Intercreditor Agreement” means that certain Amended and Restated Intercreditor
Agreement dated as of October 1, 2010 among the Agent, Wells Fargo Foothill
Canada ULC as Revolver Agent and the other parties thereto, as the same may be
amended, restated, supplemented or otherwise modified from time to time.

“Interest Payment Date” means (a) each March 31, June 30, September 30 and
December 31 commencing March 31, 2012, provided if any such day is not a
Business Day, such Interest Payment Date shall be extended to the next
succeeding Business Day and interest shall accrue for each day of such extension
and (b) the date of any payment of principal in accordance with this Agreement.

“Interest Period” means a period commencing on an Interest Payment Date and
ending on the day preceding the next succeeding Interest Payment Date determined
under clause (a) of the definition thereof; provided that (x) the first Interest
Period for any Loan shall commence on the Closing Date and end on the day
preceding the next succeeding Interest Payment Date, and (b) no Interest Period
with respect to any portion of the Loans shall extend beyond the Maturity Date.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement or other similar agreement or
arrangement to which the Company or any of its Subsidiaries is a party.

“Inventory” has the meaning given thereto in the UCC as in effect on the date
hereof.

“Investment” means (i) any direct or indirect purchase or other acquisition by
any Principal Company or any of its Subsidiaries of, or of a beneficial interest
in, any Securities of any other Person (including any Subsidiary of any
Principal Company), (ii) any direct or indirect redemption, retirement, purchase
or other acquisition for value, by any Subsidiary of any Principal Company from
any Person other than such Principal Company or any of its Subsidiaries, of any
equity Securities of such Subsidiary, (iii) any direct or indirect loan, advance
(other than (1) advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business, (2) advances (whether or not evidenced by promissory notes) to
customers in the ordinary course of business that are recorded as accounts
receivable on the balance sheet of any Principal Company or its Subsidiaries or
that are converted from accounts receivable in connection with the compromise or
settlement of the collection thereof in the ordinary course of business,
(3) deposits, prepayments and other credits to suppliers made in the ordinary
course of business consistent with the past practices of such Principal Company
and its Subsidiaries and (4) advances arising from the provision of services or
sales or licenses of inventory or Intellectual Property by and among the Parent
and its Subsidiaries) or other extension of credit or capital contribution (by
means of any transfer of cash or other Property to others or any payment for
Property or services for the account or use of others) by such Principal Company
or any of its Subsidiaries to any

 

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Third Amended and Restated Credit Agreement

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other Person (other than a Wholly-Owned Subsidiary of such Principal Company
that is a Grantor), including all indebtedness and accounts receivable from that
other Person that are not current assets or did not arise from sales or licenses
to that other Person in the ordinary course of business, or (iv) Interest Rate
Agreements or Currency Agreements not constituting Hedge Agreements. The amount
of any Investment shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment
(other than adjustments for the repayment of, or the refund of capital with
respect to, the original principal amount of any such Investment) plus, in the
case of Interest Rate Agreements or Currency Agreements, the obligations
thereunder as determined pursuant to the definition of “Swap”.

“IP Collateral” means, collectively, the Intellectual Property that constitutes
Collateral under the Security Agreements.

“Irish Loan Party” means, any Loan Party incorporated under the laws of Ireland
and collectively the “Irish Loan Parties”.

“Israeli Loan Party” means Dialogic Networks (Israel) Ltd. (formerly known as
Veraz Networks Ltd.), a company incorporated under the laws of Israel.

“Israeli Security Agreement” means (i) the Debenture – Floating and Fixed Charge
Unlimited in Amount, dated as of November 15, 2010 between the Israeli Loan
Party and the Collateral Agent and (ii) the Secured Debenture/Deed of Pledge,
dated as of November 15, 2010, between the Parent and the Collateral Agent.

“Joint Venture” means a joint venture, partnership or other similar arrangement,
whether in corporate, partnership or other legal form.

“Judgment Currency” is defined in Section 24.13.

“Knowledge of the Principal Companies” of a particular fact or other matter
means that any executive officer or director of any Principal Company or any of
its Subsidiaries, or any other officer or manager having responsibility relating
to the applicable matter, is actually aware of such fact or other matter, or
would have discovered or otherwise become aware of such fact or other matter in
the course of conducting a prudent inquiry or investigation as to the existence
of such fact or other matter, including inquiry of the employees of any
Principal Company and its Subsidiaries who, in the course of performing the
duties of such employment may reasonably be expected to have actual awareness of
such fact or other matter.

“Landlord Consent, Estoppel and Collateral Access Agreement”, with respect to
any Material Leasehold Property, means a letter, certificate or other instrument
in writing from the lessor under the related lease, satisfactory in form and
substance to the Collateral Agent, pursuant to which such lessor agrees (unless
otherwise agreed to by the Collateral Agent), for the benefit of the Collateral
Agent, (a) that without any further consent of such lessor or any further action
on the part of the Loan Party holding such Leasehold Property, such Leasehold
Property may be encumbered pursuant to a Mortgage and may be assigned to the
purchaser at a foreclosure sale or in a transfer in lieu of such a sale (and to
a subsequent third party assignee if

 

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Third Amended and Restated Credit Agreement

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the Collateral Agent, any Lender, or an Affiliate of either so acquires such
Leasehold Property), (b) that such lessor shall not terminate such lease as a
result of a default by such Loan Party thereunder without first giving the
Collateral Agent notice of such default and at least 30 days (or, if such
default cannot reasonably be cured by the Collateral Agent within such period,
such longer period as may reasonably be required) to cure such default, (c) that
the Collateral Agent and/or its designated representatives may have access to
all Collateral located on the Leasehold Property during reasonable business
hours, that such lessor will not hinder the Collateral Agent or any such
representatives in enforcing the Collateral Agent’s or the Secured Parties’
remedies with respect to the Collateral and that such lessor waives any rights,
claims, interest or liens with respect to such Collateral and (d) to such other
matters relating to such Leasehold Property as the Collateral Agent may
reasonably request.

“Leasehold Property” means any leasehold interest of any Loan Party as lessee
under any lease of real property.

“Lenders” is defined in the first paragraph of this Agreement.

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement, Capital Lease or Synthetic Lease, upon
or with respect to any Property of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements) or
other preferential arrangement having the practical effect of any of the
foregoing.

“Liquidity” means, at any time, the sum of (i) Availability plus (ii) Qualified
Cash, in each case, at such time.

“Loan” means any loan made by any Lender pursuant to this Agreement, together
with PIK Interest, if any.

“Loan Documents” means this Agreement, the Notes, the Parent Guaranty, the
Subsidiary Guaranty, the Intercreditor Agreement, the Intercompany Subordination
Agreement and each Collateral Document and any other agreement or document
entered into by the Collateral Agent, Agent or the Lenders (in such capacities)
in connection with the transactions contemplated by the Loan Documents.

“Loan Parties” means, collectively, the Principal Companies and the Subsidiary
Guarantors.

“Major Customers” has the meaning set forth in Section 5.27.

“Margin Stock” has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, condition (financial or otherwise), assets, liabilities,
management, performance, properties or prospects (as such prospects are then
contemplated by the Parent’s

 

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Third Amended and Restated Credit Agreement

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Governing Body) of the Loan Parties taken as a whole, or (b) the ability of any
Loan Party to perform its obligations under this Agreement or any other Loan
Document to which it is a party, or (c) the validity or enforceability of this
Agreement or any other Loan Document.

“Material Contract” means any of (i) this Agreement, (ii) the other Loan
Documents and (iii) any (A) Contractual Obligations not made in the ordinary
course of business, or involving a commitment to pay an amount, by any Principal
Company or any of its Subsidiaries in excess of $500,000 in any twelve-month
period following the Closing Date (whether or not in the ordinary course of
business) or where any Principal Company or any of its Subsidiaries actually
paid in excess of $500,000 during the twelve month period preceding the Closing
Date; (B) Contractual Obligations for a partnership or a joint venture or for
the acquisition, sale or lease of any assets or Capital Stock of any Principal
Company, its Subsidiaries or any other Person or involving a sharing of profits;
(C) mortgage, pledge, hypothec, conditional sales contract, security agreement,
factoring agreement or other similar Contractual Obligations with respect to any
tangible and/or intangible personal property of any Principal Company or its
Subsidiaries (other than in connection with trade payables incurred in the
ordinary course of business); (D) loan agreement, credit agreement, promissory
note, guarantee, subordination agreement, letter of credit or any other similar
type of Contractual Obligations (other than this Agreement or in connection with
trade payables incurred in the ordinary course of business); (E) Contractual
Obligations with any Government Authority other than in the ordinary course of
business; (F) Contractual Obligations which contain any provision that may
terminate such contract or require payments to be made by any Principal Company
or any of its Subsidiaries upon or following a “change of control”, if such
terminations or payments under such Contractual Obligations could individually
or in the aggregate have a Material Adverse Effect; (G) Contractual Obligation
with respect to Hazardous Materials Activity; or (H) material binding commitment
or agreement to enter into any of the foregoing types of agreements.

“Material Leasehold Property” means a Leasehold Property reasonably determined
by the Collateral Agent to be of material value as Collateral or of material
importance to the operations of any Principal Company or any of its
Subsidiaries; provided, however that, excepting any such Leasehold Properties
set forth on Schedule 5.5(a) annexed hereto, no Leasehold Property with respect
to which the aggregate amount of all rents payable during any one Fiscal Year
never exceeds $250,000 shall be a “Material Leasehold Property”.

“Material Subsidiary” means any Wholly-Owned Subsidiary of any Principal Company
that owns Property with a book value (determined in accordance with GAAP) of
more than $1,500,000; provided that all Property of Wholly-Owned Subsidiaries
that are not Material Subsidiaries shall not exceed in the aggregate a book
value (determined in accordance with GAAP) of $9,000,000. For the avoidance of
doubt, as of the Closing Date, the Brazilian Loan Party, the Israeli Loan Party
and each of the Subsidiary Guarantors are Material Subsidiaries.

“Maturity Date” means March 31, 2015.

“Mortgage” means (a) a security instrument (whether designated as a deed of
trust or a mortgage or by any similar title) executed and delivered by any Loan
Party in such form as may be reasonably satisfactory to the Collateral Agent, in
each case with such changes

 

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Third Amended and Restated Credit Agreement

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thereto as may be recommended by the Collateral Agent’s local counsel based on
local laws or customary local mortgage or deed of trust practices, or (b) at the
Collateral Agent’s option, in the case of an Additional Mortgaged Property, an
amendment to an existing Mortgage, in form reasonably satisfactory to the
Collateral Agent, adding such Additional Mortgaged Property to the Real Property
Assets encumbered by such existing Mortgage. “Mortgages” means all such
instruments, including any Additional Mortgages, collectively.

“Multiemployer Plan” means any employee benefit plan (as defined in Section 3(3)
of ERISA) to which any Principal Company, or any of its ERISA Affiliates, makes
contributions or has any liability and that is a “multiemployer plan” as defined
in Section 3(37) of ERISA.

“Net Asset Sale Proceeds”, with respect to any Asset Sale, means cash payments
(including any cash received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable within two years of the date of such
Asset Sale as a result of any gain recognized in connection with such Asset Sale
and (ii) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness (other than the Loans) that is secured by
a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such Asset Sale.

“Net Equity Proceeds” means the cash proceeds (including any cash received by
way of deferred payment pursuant to a note receivable, other non-cash
consideration or otherwise, but only as and when such cash is so received) in
connection with any issuance of Capital Stock (other than in connection with the
exercise of stock options) minus the reasonable fees, commissions and other
out-of-pocket expenses incurred by the Parent or any of its Subsidiaries in
connection with such issuance of Capital Stock (provided that any such fees,
commissions or expenses payable to an Affiliate of the Person issuing such
Capital Stock must be on terms no less favorable to the Person issuing such
Capital Stock than it would obtain in a comparable arm’s length transaction with
a Person not an Affiliate).

“Net Insurance/Condemnation Proceeds” means any cash payments or proceeds
received by any Principal Company or any of its Subsidiaries (a) under any
business interruption or casualty insurance policy in respect of a covered loss
thereunder or (b) as a result of the taking of any assets of any Principal
Company or any of its Subsidiaries by any Person pursuant to the power of
eminent domain, condemnation or otherwise, or pursuant to a sale of any such
assets to a purchaser with such power under threat of such a taking, in each
case net of any actual and reasonable documented costs incurred by any Principal
Company or any of its Subsidiaries in connection with the adjustment or
settlement of any claims of any Principal Company or such Subsidiary in respect
thereof.

“Non-Grantor Subsidiary” shall mean any Subsidiary of any Principal Company that
is not a Grantor.

“Non-U.S. Subsidiary” means any Subsidiary of any Principal Company that is not
a U.S. Subsidiary.

 

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Third Amended and Restated Credit Agreement

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“Note” and “Notes” have the meanings given to such terms in Section 2.1(b) of
the Agreement.

“Obligations” means all obligations of every nature of each Loan Party from time
to time owed to the Collateral Agent, the Agent, the Lenders or any of them
under the Loan Documents, whether for principal, interest (including, without
limitation, any PIK Interest and interest accruing after the commencement of any
bankruptcy case or insolvency proceeding involving a Loan Party, whether or not
such interest is an allowed claim in such case or proceeding), Prepayment
Premium, fees, expenses, indemnification or otherwise.

“Officer’s Certificate” means, with respect to a Principal Company, a
certificate of a Senior Financial Officer or of any other officer of such
Principal Company whose responsibilities extend to the subject matter of such
certificate.

“Operating Lease”, as applied to any Person, means any lease (including leases
that may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) that is not a Capital Lease other than any such lease under
which that Person is the lessor.

“Organizational Documents” means with respect to any Person, its charter,
certificate or articles of incorporation, bylaws, articles of organization,
operating agreement, members agreement, partnership agreement, voting trust, or
similar agreement or instrument governing the formation or operation of such
Person.

“Original Agreement” has the meaning set forth in the preambles hereof.

“Other Taxes” is defined in Section 22.3(a).

“Parent” has the meaning set forth in the first paragraph hereof.

“Parent Guaranty” means the Parent Guaranty, dated as of October 1, 2010,
executed and delivered by the Parent.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

“Pension Plan” means any employee benefit plan (as defined in Section 3(3) of
ERISA), other than a Multiemployer Plan, that is or was maintained or
contributed to by any Principal Company or its ERISA Affiliates and that is
subject to Section 412 of the Code or Section 302 of ERISA, and, solely for
purposes of Section 11(k), any Foreign Plan.

“Permit” means any approval, authorization, Consent, license, permit or
certificate by or of any Governmental Authority.

“Permitted ABL Facility” shall mean an asset based credit facility entered into
by any one or more of the Loan Parties after the Closing Date, and any
refinancing thereof, that satisfies the following terms and conditions:

 

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

 

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Third Amended and Restated Credit Agreement

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  b) The maximum principal amount of each Permitted ABL Facility shall not
exceed $27,500,000 minus (i) all repayments of any term loan portion of such
facility, (ii) all reductions of any revolving loan commitment of such facility
and (iii) the outstanding principal amount of the Working Capital Facility as of
the closing date of such Permitted ABL Facility;

 

  c) The all-in rate on each Permitted ABL Facility shall not be more than 7.5%;
and

 

  d) Such Loan Party(ies) shall cause the lenders (or an agent for such lenders)
under each Permitted ABL Facility to enter into an intercreditor agreement with
the Agent on customary market terms reasonably acceptable to the Agent.

“Permitted Acquisition” means an acquisition permitted by, and consummated
pursuant to, Section 10.3(f).

“Permitted Asset Sales” means the sale of the Company’s and/or its Subsidiaries’
(a) ISDN client line of products and assets directly associated therewith;
(b) VPN line of products and assets directly associated therewith; (c) X.25 line
of products and assets directly associated therewith, or (d) any combination of
or subset of (a) and/or (b) and/or (c).

“Permitted Encumbrances” means the following types of Liens (excluding any such
Lien imposed pursuant to Section 436(f)(1) or 430 of the Code or by ERISA, any
such Lien imposed by a Government Authority in connection with any Foreign Plan,
any such Lien relating to or imposed in connection with any Environmental Claim,
and any such Lien expressly prohibited by any applicable terms of any of the
Collateral Documents):

 

  e) Liens for taxes, assessments or governmental charges or claims the payment
of which is not, at the time, required by Section 9.2;

 

  f) statutory Liens of landlords, statutory Liens and rights of set-off of
banks (including but not limited to Liens on cash on deposit with such financial
institutions providing performance guarantees on behalf of a Principal Company
and its Subsidiaries pursuant to Section 10.4(c)(ii)), statutory Liens of
carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other
Liens imposed by law, in each case incurred in the ordinary course of business
(a) for amounts not yet overdue or (b) for amounts that are overdue and that (in
the case of any such amounts overdue for a period in excess of 5 days) are being
contested in good faith by appropriate proceedings, so long as (1) such reserves
or other appropriate provisions, if any, as shall be required by GAAP shall have
been made for any such contested amounts, and (2) in the case of a Lien with
respect to any portion of the Collateral, such contest proceedings conclusively
operate to stay the sale of any portion of the Collateral on account of such
Lien;

 

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Third Amended and Restated Credit Agreement

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  g) Liens incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money), so long as no foreclosure,
sale or similar proceedings have been commenced with respect to any portion of
the Collateral on account thereof;

 

  h) any attachment or judgment Lien not constituting an Event of Default under
Section 11(j);

 

  i) licenses (with respect to Intellectual Property and other property), leases
or subleases granted to third parties in accordance with any applicable terms of
the Collateral Documents and not interfering in any material respect with the
ordinary conduct of the business of any Principal Company or any of its
Subsidiaries or resulting in a material diminution in the value of any
Collateral as security for the Obligations;

 

  j) easements, rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the business of
any Principal Company or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations;

 

  k) any (a) interest or title of a lessor or sublessor under any lease not
prohibited by this Agreement, (b) Lien or restriction that the interest or title
of such lessor or sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any Lien or restriction
referred to in the preceding clause (b), so long as the holder of such Lien or
restriction agrees to recognize the rights of such lessee or sublessee under
such lease;

 

  l) Liens arising from filing UCC financing statements relating solely to
leases not prohibited by this Agreement;

 

  m) Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customs duties in connection with the importation of
goods;

 

  n) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;

 

  o) Liens granted pursuant to the Collateral Documents; and

 

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Third Amended and Restated Credit Agreement

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  p) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating leases, reciprocal easement or
similar agreements entered into in the ordinary course of business of any
Principal Company and its Subsidiaries.

“Permitted Holder” means each of Tennenbaum Capital Partners, LLC and its
Affiliates.

“Permitted Refinancing Indebtedness” means, with respect to any Indebtedness,
any extension, refinancing, renewal, replacement or refunding (each a
“refinancing”) of such Indebtedness, so long as such refinancing does not result
in any (a) increase in the aggregate principal amount of, or the interest rate
on, the Indebtedness being refinanced, (b) shorten the final maturity or average
life to maturity of, or require any payment of principal or interest to be made
earlier than the date originally scheduled on, the Indebtedness being
refinanced, (c) change any event of default or add any covenant with respect to
the Indebtedness being refinanced in a manner materially adverse to any
Principal Company and/or its Subsidiaries, or (d) change or amend any other term
if such change or amendment would materially increase the obligations of the
obligor, materially increase the collateral pool, if any, securing the
Indebtedness being refinanced or confer additional material rights on the holder
of the Indebtedness being refinanced in a manner materially adverse to any
Principal Company, any of its Subsidiaries or any Lender.

“Permitted Unperfected Account” means, with respect to any Grantor, any Deposit
Account (a) that is used solely, in the ordinary course of business, as a
payroll or related employee benefit account or employee payroll tax account and
each such Deposit Account shall not contain at any time more than the amounts
necessary to fund payroll or related employee benefits or employee payroll taxes
for the current period and past periods and shall not be funded in advance of
the time reasonably required, (b) that is a zero balance account, or (c) in
which such Grantor does not maintain more than $55,000 at any time so long as
the aggregate balances in all such Deposit Accounts under this clause (c) do not
exceed $250,000 at any time.

“Person” means and includes natural persons, corporations, limited partnerships,
general partnerships, limited liability companies, limited liability
partnerships, joint stock companies, Joint Ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.

“PIK Interest” shall have the meaning set forth in Section 2.2(b).

“Policies” has the meaning set forth in Section 5.26.

“Preferred Stock” means any class of capital stock of a corporation that is
preferred over any other class of capital stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.

“Prepayment Premium” means the Applicable Prepayment Premium.

 

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Third Amended and Restated Credit Agreement

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“Proceedings” means any action, suit, proceeding (whether administrative,
judicial or otherwise), governmental investigation or arbitration.

“Property” or “Properties” means, unless otherwise specifically limited, real,
personal or mixed assets or property of any kind, tangible or intangible, choate
or inchoate.

“PTO” means the United States Patent and Trademark Office or any successor or
substitute office in which filings are necessary or, in the opinion of the
Collateral Agent, desirable in order to create or perfect Liens on any IP
Collateral.

“Qualified Cash” means, as of any date of determination, (i) the amount of
unrestricted cash and Cash Equivalents of the Company and its Subsidiaries that
is in Deposit Accounts or in Securities Accounts, or any combination thereof,
and which such Deposit Account or Securities Account is the subject of a control
agreement in favor of the Collateral Agent minus (ii) to the extent cash
interest that is due and payable on any Interest Payment Date or any interest
payment date for the loans under the Working Capital Facility and/or any
Permitted ABL Facility (without giving effect to any cure periods contained in
this Agreement or the Working Capital Facility and/or any Permitted ABL
Facility) has not been paid on any Loan or loan under the Working Capital
Facility and/or any Permitted ABL Facility, the aggregate amount necessary to
make each such interest payment.

“Real Property Asset” means, at any time of determination, any interest then
owned (whether in fee, leasehold or otherwise) by any Loan Party in any real
property.

“Real Property Leases” has the meaning set forth in Section 5.5(a).

“Related Agreements” means the subscription agreement, the warrants and the
other material documents related to the Restructuring (including all schedules,
exhibits, amendments, supplements, modifications and assignments), in each case,
in form and substance satisfactory to the Required Lenders.

“Related Transactions” means the Restructuring and the other transactions
contemplated by the Related Agreements.

“Release” means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), including the movement
of any Hazardous Materials through the air, soil, surface water or groundwater.

“Required Lenders” means, at any time, the Lenders of more than 50% in principal
amount of the Loans at the time outstanding.

“Responsible Officer” means, with respect to each Principal Company, any Senior
Financial Officer and any other officer of such Principal Company with
responsibility for the administration of the relevant portion of this Agreement.

 

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Third Amended and Restated Credit Agreement

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“Restricted Junior Payment” means (i) any dividend or other distribution, direct
or indirect, on account of any shares of any class of Capital Stock of the
Company or any Subsidiary of any Principal Company now or hereafter outstanding,
except a dividend payable solely in shares of that class of stock to the holders
of that class, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of Capital Stock of the Company or any other Subsidiary of any
Principal Company now or hereafter outstanding, (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of Capital Stock of the Company or
any other Subsidiary of any Principal Company now or hereafter outstanding,
(iv) any prepayment of principal of, premium, if any, on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Indebtedness, including,
without limitation, any Subordinated Indebtedness or the Shareholder Loans, but
excluding Indebtedness under the Working Capital Facility and any Permitted ABL
Facility and (v) any payment of principal of, premium, if any, or cash interest
on, or redemption, purchase, retirement, defeasance (including in-substance or
legal defeasance), sinking fund or similar payment with respect to, any
Subordinated Indebtedness.

“Restructuring” has the meaning set forth in the preambles hereof.

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

“Secured Parties” is defined in the U.S. Security Agreement.

“Securities” means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated,
certificated or uncertificated, or otherwise, or in general any instruments
commonly known as “securities” or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

“Securities Accounts” is defined in the UCC.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Security Agreements” means the U.S. Security Agreement, the Canadian Security
Agreement, the Debenture, the Share Charge, the Brazilian Security Agreement and
the Israeli Security Agreement, as any such agreements may be amended, restated,
supplemented or otherwise modified from time to time.

“Security Agreement Joinder” shall mean a Joinder Agreement substantially in the
form of Annex 8 to the U.S. Security Agreement.

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of each Principal Company.

 

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Third Amended and Restated Credit Agreement

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“Share Charge” means the Irish law Share Charge, dated as of October 1, 2010
among the Company and the Collateral Agent pursuant to which the Company has
charged all of its shareholding in Dialogic Manufacturing Limited in favor of
the Collateral Agent.

“Shareholder Loans” means (i) the loan in the original principal amount of
$334,468.57 made on or about August 19, 2009 by EAS Series C Investments, L.P.
to the Company, (ii) the loan in the original principal amount of $450,000 made
on or about August 19, 2009 by Investcorp International Inc. to the Company,
(iii) the loan in the original principal amount of $1,542,244.80 made on or
about August 19, 2009 by DialMiNi ApS. to the Company, (iv) the loan in the
original principal amount of $415,130.53 made on or about August 19, 2009 by
Pierre McMaster to the Company, (v) the loan in the original principal amount of
$76,604.18 made on or about August 19, 2009 by Special Value Expansion Fund, LLC
to the Company, and (vi) the loan in the original principal amount of
$181,551.93 made on or about August 19, 2009 by Special Value Opportunities
Fund, LLC to the Company.

“Software” means computer programs, including any and all software
implementation of algorithms, models and methodologies whether in source code,
object code or other form, databases and compilations, including any and all
data and collections of data, descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing and all
documentation, including user manuals and training materials related to any of
the foregoing.

“Solvency Certificate” is defined in Section 4.15.

“Solvent”, with respect to any Person, means that as of the date of
determination both (i)(a) the then fair saleable value of the Property of such
Person is (1) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (2) not less than the amount that will be
required to pay the probable liabilities on such Person’s then existing debts as
they become absolute and due considering all financing alternatives and
potential asset sales reasonably available to such Person; (b) such Person’s
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (c) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (ii) such Person is
“solvent” within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.

“Source Code” is defined in Section 5.5(b)(ix).

“Specified IP” means U.S. patent numbers 5,812,819 and 5,598,536 and any
corresponding foreign patents directly related thereto.

“Subordinated Indebtedness” means Indebtedness owed to Persons other than a
Principal Company or its Subsidiaries that (a) does not have any scheduled
principal payment, mandatory principal prepayment, sinking fund payment or
similar payment due prior to the

 

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Third Amended and Restated Credit Agreement

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maturity date of the Loans, (b) is not secured by any Lien on any Property,
(c) is subordinated on terms and conditions reasonably satisfactory to the
Required Lenders and (d) is subject to such covenants and events of default as
may be reasonably acceptable to the Required Lenders.

“Subsidiary” means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries. Unless the context otherwise clearly requires, any reference to a
“Subsidiary” is a reference to a Subsidiary of each Principal Company after
giving effect to the transactions contemplated by the Related Agreements.

“Subsidiary Guarantor” means each Person that has executed and delivered the
Subsidiary Guaranty (whether as an original signatory thereto or pursuant to a
Subsidiary Guaranty Joinder) and shall include, without limitation, each
Canadian Subsidiary of any Principal Company, each U.S. Subsidiary of any
Principal Company and the Irish Loan Parties.

“Subsidiary Guaranty” means the Amended and Restated Subsidiary Guaranty, dated
as of October 1, 2010, executed and delivered by each of the Subsidiary
Guarantors.

“Subsidiary Guaranty Joinder” shall mean the Joinder Agreement substantially in
the form of Annex 1 to the Subsidiary Guaranty.

“Synthetic Lease” means (a) a so-called synthetic, off-balance sheet or tax
retention lease, or (b) an agreement for the use or possession of property
creating obligations which do not appear on the balance sheet of such Person but
which, upon the insolvency or bankruptcy of such Person, would be characterized
as the Indebtedness of such Person (without regard to accounting treatment).

“Synthetic Lease Obligation” means the monetary obligation of a Person under a
Synthetic Lease.

“Taxes” is defined in Section 22.3(a).

“Technology” means, collectively, products and services, all designs, formulas,
algorithms, procedures, techniques, ideas, know-how, Software (whether in source
code, object code or human readable form), databases and data collections,
Internet, websites and web content, tools, inventions, creations, improvements,
works of authorship, other similar materials and all recordings, graphs,
drawings, reports, analyses, other writings and any other embodiment of the
above, in any form or media, whether or not specifically listed herein, and all
related technology, documentation and other materials used in, incorporated in,
embodied in or displayed by any of the foregoing, or used or useful in the
design, development, reproduction, maintenance or modification of any of the
foregoing.

“Terrorism Order” is defined in Section 5.20(a).

 

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Third Amended and Restated Credit Agreement

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“Trade Secrets” means confidential and proprietary information, or non-public
processes, designs, specifications, technology, know-how, techniques, formulas,
inventions, concepts, trade secrets, discoveries, ideas and technical data and
information.

“Transferee” means any direct or indirect transferee of all or any part of a
Loan in accordance with Section 13.2 or Section 22 as registered in the register
maintained by the Company pursuant to Section 13.1.

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the
State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the issue of perfection of
security interests.

“U.S. Security Agreement” means the Amended and Restated Security Agreement,
dated as of October 1, 2010, among the Principal Companies, the other Grantors
party thereto from time to time and the Collateral Agent.

“U.S. Subsidiary” means any Subsidiary of any Principal Company that is
incorporated or organized under the laws of the United States of America, any
state thereof or in the District of Columbia.

“Voting Stock” means, with respect to any Person, Capital Stock issued by such
Person the holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or persons performing similar
functions) of such Persons, even though the right so to vote has been suspended
by the happening of such contingency.

“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent
(100%) of all of the equity interests (except directors’ qualifying shares) and
voting interests of which are owned by any one or more of any Principal Company
and such Principal Company’s other Wholly-Owned Subsidiaries at such time.

“Working Capital Facility” means that certain Credit Agreement dated as of
March 5, 2008 among the Company, the lenders party thereto and Wells Fargo
Foothill Canada ULC as Arranger and Administrative Agent, and all documents,
instruments and agreements executed in connection therewith, each as amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms of the Intercreditor Agreement.”

“Yield Enhancement Premium” is defined in Section 3.3.

 

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Third Amended and Restated Credit Agreement