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Exhibit 10.29
 
EIGHTH AMENDMENT TO SECOND AMENDED
AND RESTATED LOAN AND SECURITY AGREEMENT
 
This EIGHTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this “Amendment”), dated as of December 17, 2013, is entered into among Jazz
Semiconductor, Inc., a Delaware corporation (“Jazz”), Newport Fab, LLC (d/b/a
Jazz Semiconductor Operating Company), a Delaware limited liability company
(“Operating Company” and together with Jazz, the “Borrowers” and each
individually, a “Borrower”), Jazz Technologies, Inc., formerly known as Acquicor
Technology Inc., a Delaware corporation (“Guarantor”), the lenders party to the
“Loan Agreement” as defined below (each individually, a “Lender” and
collectively, “Lenders”), and Wells Fargo Capital Finance, LLC, a Delaware
limited liability company, as successor by merger to Wachovia Capital Finance
Corporation (Western), in its capacity as agent for the Lenders (in such
capacity, “Agent”).
 
RECITALS
 
A.            Borrowers, Guarantor, Agent, Lenders, and Wachovia Capital
Markets, LCC, in its capacity as lead arranger, bookrunner and syndication
agent, have previously entered into that certain Second Amended and Restated
Loan and Security Agreement, dated as of September 19, 2008, as amended by the
First Amendment to Second Amended and Restated Loan and Security Agreement,
dated as of March 17, 2009, as further amended by the Second Amendment to Second
Amended and Restated Loan and Security Agreement, dated as of July 16, 2009, as
further amended by the Third Amendment to Second Amended and Restated Loan and
Security Agreement, dated as of April 21, 2010, as further amended by the Fourth
Amendment to Second Amended and Restated Loan and Security Agreement, dated as
of June 29, 2010, as further amended by the Fifth Amendment to Second Amended
and Restated Loan and Security Agreement, dated as of July 19, 2010, as further
amended by the Sixth Amendment to Second Amended and Restated Loan and Security
Agreement, dated as of June 14, 2011, and as further amended by the Seventh
Amendment to Second Amended and Restated Loan and Security Agreement, dated as
of August 23, 2011 (as amended, the “Loan Agreement”), pursuant to which Agent
and Lenders have made certain loans and financial accommodations available to
Borrowers.  Terms used herein without definition shall have the meanings
ascribed to them in the Loan Agreement.
 
B.            Borrowers and Guarantor have requested that Agent and Lenders
amend the Loan Agreement, which Agent and Lenders are willing to do pursuant to
the terms and conditions set forth herein.
 
C.            Borrowers and Guarantor are entering into this Amendment with the
understanding and agreement that, except as specifically provided herein, none
of Agent’s or any Lender’s rights or remedies as set forth in the Loan Agreement
is being waived or modified by the terms of this Amendment.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree
as follows:
 
1.             Amendment to Loan Agreement.
 
a.           Section 1.2 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“1.2       Intentionally Omitted.”
 
 
 

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b.           The grid set forth in Section 1.10 of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:

“Level
Consolidated Fixed Charge Coverage Ratio (“CFCCR”)
Prime Spread
Eurodollar Spread
Tier I
CFCCR<1.10 to 1.0
1.0%
2.25%
Tier II
CFCCR>1.10 to 1.0 and <1.35 to1.0
0.75%
2.00%
Tier III
CFCCR>1.35 to 1.0
0.50%
1.75%”

 
c.           The following is hereby added to the Loan Agreement as Section
1.10A:
 
“1.10A  “Approved Increase” shall have the meaning set forth in Section 2.5(a)
hereof.”
 
d.           The following is hereby added to the Loan Agreement as Section
1.11A:
 
“1.11A  “Availability Block” shall mean $0; provided, however, that the
Availability Block shall be $5,000,000 during each Availability Block Trigger
Period.”
 
e.           The following is hereby added to the Loan Agreement as Section
1.11B:
 
“1.11B   “Availability Block Trigger Period” shall mean the period (a)
commencing on any day that: (i) the Senior Leverage Ratio is greater than 2.5 to
1.0, or (ii) the Consolidated Fixed Charge Coverage Ratio is less than 1.10 to
1.0 when measured on a trailing four fiscal quarter basis as of the end of any
fiscal quarter of Parent Guarantor; and (b) continuing until the day that the
Senior Leverage Ratio has been less than or equal to 2.5 to 1.0 at all times for
a full fiscal quarter of Parent Guarantor and the Consolidated Fixed Charge
Coverage Ratio is at least 1.10 to 1.0 when measured on a trailing four fiscal
quarter basis as of the end of such fiscal quarter.”
 
f.            The following is hereby added to the Loan Agreement as Section
1.11C:
 
“1.11C   “Available Increase Amount” shall mean, as of any date of
determination, an amount equal to the result of (a) $20,000,000 minus (b) the
aggregate principal amount of increases to the Maximum Credit previously made
pursuant to Section 2.5 hereof.”
 
 
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g.           Section 1.12 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.12     “Bank Products” shall mean any one or more of the following types of
services or facilities provided to Borrowers, Guarantors, or any of their
respective Subsidiaries upon Borrowers request by a Bank Product Provider,
including but not limited to: (a) credit cards (including commercial cards
(including so-called “purchase cards”, “procurement cards” or “p-cards”)), (b)
Cash Management Services, (c) credit card processing services, (d) debit cards,
(e) stored value cards, and (f) transactions under Hedge Agreements.”
 
h.           Section 1.17 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.17     “Borrowing Base” shall mean, at any time, the sum of:
 
(a)          the amount equal to eighty-five percent (85%) of the Eligible
Accounts of Borrowers; plus
 
(b)         the amount equal to the lesser of:  (i) the product of (I)
seventy-five percent (75%) times (II) the “net forced liquidation value” of the
Eligible Equipment of Borrowers as defined in the most recent appraisal of
Equipment then received by Agent in accordance with Section 7.4 hereof, and (ii)
the Equipment Sublimit; plus
 
(c)          the amount equal to the lesser of:  (i) seventy-five percent (75%)
of the Eligible Foreign Accounts of Borrowers, and (ii) the Foreign Accounts
Sublimit;
 
(d)         the amount equal to the lesser of: (i) the sum of (A) the amount
equal to the lesser of (1) the product of sixty-five percent (65%) multiplied by
the value (calculated at the lower of cost or market on a basis consistent with
Borrowers’ historical accounting practices) of Eligible Inventory consisting of
finished goods (provided that sort and 100% completed wafers included in work in
process shall constitute finished goods for purposes of this calculation), and
(2) the product of 85% multiplied by the Net Recovery Percentage identified in
the most recent inventory appraisal ordered and obtained by Agent multiplied by
the value (calculated at the lower of cost or market on a basis consistent with
Borrowers’ historical accounting practices) of Eligible Inventory consisting of
finished goods (provided that sort and 100% completed wafers included in work in
process shall constitute finished goods for purposes of this calculation) (such
determination may be made as to different categories of Eligible Inventory based
upon the Net Recovery Percentage applicable to such categories) at such time;
plus (B) the amount equal to the lesser of (1) the product of sixty-five percent
(65%) multiplied by the value (calculated at the lower of cost or market on a
basis consistent with Borrowers’ historical accounting practices) of Eligible
Inventory consisting of raw materials, and (2) the product of 85% multiplied by
the Net Recovery Percentage identified in the most recent inventory appraisal
ordered and obtained by Agent multiplied by the value (calculated at the lower
of cost or market on a basis consistent with Borrowers’ historical accounting
practices) of Eligible Inventory consisting of raw materials (such determination
may be made as to different categories of Eligible Inventory based upon the Net
Recovery Percentage applicable to such categories) at such time; plus (C) the
amount equal to the lesser of (1) the product of sixty-five percent (65%)
multiplied by the value (calculated at the lower of cost or market on a basis
consistent with Borrowers’ historical accounting practices) of Eligible
Inventory consisting of work in process, and (2) the product of 85% multiplied
by the Net Recovery Percentage identified in the most recent inventory appraisal
ordered and obtained by Agent multiplied by the value (calculated at the lower
of cost or market on a basis consistent with Borrowers’ historical accounting
practices) of Eligible Inventory consisting of work in process (such
determination may be made as to different categories of Eligible Inventory based
upon the Net Recovery Percentage applicable to such categories) at such time,
and (ii) the Inventory Sublimit; minus
 
 
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(e)          the Availability Block; minus
 
(f)          Reserves and the Equipment Reserve.”
 
i.            The following is hereby added to the Loan Agreement as Section
1.19A:
 
“1.19A  “Capex Loan Commitment” shall mean, at any time, as to each Lender, the
principal amount set forth below designated as the Capex Loan Commitment or on
Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of Section
13.7 hereof, as the same may be adjusted from time to time in accordance with
the terms hereof; sometimes being collectively referred to herein as “Capex Loan
Commitments”:
 
Lender
Capex Loan Commitments
Wells Fargo Capital Finance, LLC
$6,000,000”

 
j.            The following is hereby added to the Loan Agreement as Section
1.19B:
 
“1.19B   “Capex Loans” shall have the meaning set forth in Section 2.4 hereof.”
 
k.           The following is hereby added to the Loan Agreement as Section
1.19C:
 
“1.19C   “Capex Purchase Loan Request” shall have the meaning set forth in
Section 2.4 hereof.”
 
l.            The following is hereby added to the Loan Agreement as Section
1.19D:
 
“1.19D  “Capex Scheduled Repayment Date” means the first day of the calendar
quarter following the date of the initial Capex Loan, and the first day of each
calendar quarter thereafter.”
 
m.          The following is hereby added to the Loan Agreement as Section
1.22A:
 
“1.22A  “Cash Dominion Period” means each period (a) commencing on any day that
(i) the sum of Excess Availability plus Qualified Cash is less than the greater
of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount equal to the
Maximum Credit minus the Line Block, (ii) Excess Availability is less than
$6,500,000 for three consecutive Business Days, or (iii) an Event of Default
occurs; and (b) continuing until at all times for 60 consecutive calendar days:
(i) the sum of Excess Availability plus Qualified Cash has been greater than the
greater of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount equal
to the Maximum Credit minus the Line Block, (ii) Excess Availability has been
greater than $6,500,000, and (iii) no Event of Default then exists.”
 
 
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n.           The following is hereby added to the Loan Agreement as Section
1.23A:
 
“1.23A  “Cash Management Services” means any cash management or related services
including treasury, depository, return items, overdraft, controlled
disbursement,  merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) and other cash management
arrangements.”
 
o.           Section 1.28 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.28     “Commitment” shall mean, as to any Lender, the Revolving Loan
Commitment of such Lender, the Capex Loan Commitment of such Lender, or the
combined Revolving Loan Commitment and Capex Loan Commitment of such Lender, as
the context requires.”
 
p.           Section 1.30 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.30     “Consolidated EBITDA” shall mean, with respect to any Person for any
period, Consolidated Net Income of such Person and its Subsidiaries for such
period plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) Consolidated Net Interest Expense of such Person and its
Subsidiaries, amortization or write-off of debt discount and debt issuance costs
and commissions, discounts and other fees and charges associated with
Indebtedness (including unused line fees and administrative fees and charges
with respect to the  Credit Facility), (c) depreciation and amortization expense
(excluding such expense to the extent that the properties or assets being
depreciated primarily benefit Foreign Parent Nonguarantor), (d) amortization or
impairment of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary or non-cash non-recurring losses
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, losses on sales of
assets outside of the ordinary course of business), (f) any other non-cash
charges, expenses or losses, including in relation to earn-outs and similar
obligations (except to the extent such charges, expenses or losses represent an
accrual of or reserve for cash expenses in any future period or an amortization
of a prepaid cash expense paid in a prior period), (g) stock-option based
compensation expenses, (h) to the extent such costs, fees and expenses are
incurred after the Effective Date, transaction costs, fees and expenses related
to a completed acquisition transaction or a Joint Venture transaction permitted
hereby (except to the extent such fees, costs or expenses relate to the
acquisition of Parent Guarantor by Foreign Parent Nonguarantor), (i) the
non-cash portion of straight-line rent expense, (j) proceeds from any business
interruption insurance (in the case of this clause (j) to the extent not
reflected as revenue or income in such statement of such Consolidated Net
Income), (k) losses recognized and expenses incurred in connection with the
effect of currency and exchange rate fluctuations on intercompany balances and
other balance sheet items, and (l) cash expenses relating to earn-outs and
similar obligations, and minus, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (i) interest income (except
to the extent deducted in determining Consolidated Net Interest Expense), (ii)
any extraordinary or non-cash non-recurring income or gains (including, without
limitation, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, (1) gains on the
sales of assets outside of the ordinary course of business, (2) one-time
settlement gains, and (3) gains on the sale of retired capital assets), (iii)
any other non-cash income or gains (other than the accrual of revenue in the
ordinary course), all as determined on a consolidated basis, (iv) cash payments
in connection with “straight-line” rent expense which exceed the amount expensed
in respect of such rent expense, (v) gains realized and income accrued in
connection with the effect of currency and exchange rate fluctuations on
intercompany balances and other balance sheet items and (vi) gains realized and
income accrued in connection with the redemption of the Senior Notes (for the
avoidance of doubt, any gains realized and income accrued in connection with the
redemption of the Senior Notes incurred prior to the Effective Date shall be
excluded from this calculation).”
 
 
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q.           Clause (b) of the definition of “Consolidated Fixed Charges” set
forth in Section 1.32 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(b)       all regularly scheduled (as determined at the beginning of such
period) principal payments of Indebtedness, other than the repayment of any
Senior Notes at their final maturity date (for the avoidance of doubt,
repayments of Loans and unscheduled permitted Senior Notes principal payments
shall be excluded from the Consolidated Fixed Charges calculation).”
 
r.            Clause (d) of the definition of “Consolidated Fixed Charges” set
forth in Section 1.32 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(d)       all unfinanced Capital Expenditures (provided, that, if Borrowers
provide Agent with a schedule of projected Capital Expenditures for the 2014
fiscal year by December 31, 2013, in form and substance satisfactory to Agent
(the “2014 Schedule”), the first $10,000,000 of unfinanced Capital Expenditures
which are made in the 2014 fiscal year in accordance with the 2014 Schedule
shall not be included in the calculation of Consolidated Fixed Charges), plus”
 
s.           Clause (e) of the definition of “Consolidated Fixed Charges” set
forth in Section 1.32 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(e)        All taxes paid, plus”
 
t.            Clause (h) of the definition of “Consolidated Fixed Charges” set
forth in Section 1.32 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(h)       Senior Note repurchases made for cash (other than any repurchases
made in connection with a refinancing of such Senior Notes permitted
hereunder).”
 
u.           The following is hereby added to the Loan Agreement as Section
1.34A:
 
“1.34A  “Covenant Testing Trigger Period” means each period (a) commencing on
any day that (i) the sum of Excess Availability plus Qualified Cash is less than
the greater of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount
equal to the Maximum Credit minus the Line Block, or (ii) Excess Availability is
less than $6,500,000 for three consecutive Business Days, and (b) continuing
until at all times for 60 consecutive calendar days: (i) the sum of Excess
Availability plus Qualified Cash has been greater than the greater of (A)
$12,500,000, and (B) an amount equal to 12.5% of an amount equal to the Maximum
Credit minus the Line Block, and (ii) Excess Availability has been greater than
$6,500,000.”
 
 
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v.           Section 1.35 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.35     “Credit Facility” shall mean the loans and letters of credit provided
to or for the benefit of any Borrower pursuant to Sections 2.1, 2.2, and 2.4
hereof.”
 
w.           The following is hereby added to the Loan Agreement as Section
1.43A:
 
“1.43A  “Eighth Amendment Effective Date” shall mean December [___], 2013.”
 
x.            Clause (m) of the definition of “Eligible Accounts” set forth in
Section 1.44 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
 
“(m)       the aggregate amount of such Eligible Accounts owing by: (A) a single
account debtor (other than Skyworks and RF Micro Devices) does not constitute
more than twenty percent (20%) of the aggregate amount of all otherwise Eligible
Accounts; (B) Skyworks does not constitute more than forty-five percent (45%) of
the aggregate amount of all otherwise Eligible Accounts; (C) RF Micro Devices
does not constitute more than forty-five percent (45%) of the aggregate amount
of all otherwise Eligible Accounts; and (D) RF Micro Devices and Skyworks, in
the aggregate, does not constitute more than sixty percent (60%) of the
aggregate amount of all otherwise Eligible Accounts (but the portion of the
Accounts not in excess of the applicable percentages shall be deemed Eligible
Accounts to the extent that such portion would otherwise be eligible as
"Eligible Accounts" pursuant to this Section);”
 
y.           Section 1.45 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.45     “Eligible Equipment” shall mean, as to each Borrower, Equipment owned
by such Borrower as of the Eighth Amendment Effective Date and used in the
ordinary course of such Borrower’s business, that in each case satisfy the
criteria set forth below as reasonably determined by Agent.  Eligible Equipment
shall not include:  (a) Equipment located outside the United States; (b) items
of Equipment that are or have become fixtures other than trade fixtures which
are readily removable from the premises on which they are located; (c) leased
Equipment; (d) Equipment subject to a lien or security interest of any Person
other than Agent except for non-consensual liens or security interests that are
permitted under Sections 9.8(b) or (c) hereof; (e) worn-out, obsolete or
out-of-service Equipment; (f) Equipment acquired by any Borrower after the date
hereof located on or affixed to the Premises (as defined in that certain
Landlord Agreement dated on or about the Original Closing Date, by and among
Jazz, Conexant and Agent (the "Conexant Landlord Agreement") with respect to
which Equipnment the parties to such Conexant Landlord Agreement shall not have
agreed upon and delivered a revised Exhibit B to such Conexant Landlord
Agreement pursuant to the terms thereof, which revised Exhibit B shall designate
such Equipment as added to or included within the definition of "Personal
Property" as set forth in the Conexant Landlord Agreement; and (g) any
individual items of Equipment with an original cost or purchase price of less
than $10,000.  Any new criteria for Eligible Equipment may only be established
by Agent in good faith based on either:  (i) an event, condition or other
circumstance arising after the date hereof, or (ii) an event, condition or other
circumstance existing on the date hereof to the extent Agent has no notice
thereof prior to the date hereof, in either case under clause (i) or (ii) which
materially adversely affects or could reasonably be expected to materially
adversely affect the Eligible Equipment in the good faith determination of
Agent.  Any Equipment that is not Eligible Equipment shall nevertheless be part
of the Collateral.”
 
 
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z.            The following is hereby added to the Loan Agreement as Section
1.45A:
 
“1.45A  “Eligible Foreign Accounts” shall mean Accounts owing from account
debtors that have their chief executive office located outside the United States
of America or Canada, and which: (a) the account debtor with respect to such
Accounts is acceptable to Agent in its sole discretion, (b) the chief executive
office of the account debtor with respect to such Accounts is located in a
jurisdiction satisfactory to Agent in its sole discretion, and (c) otherwise
satisfy the criteria for Eligible Accounts (other than due to the operation of
clause (e) of the definition of Eligible Accounts).”
 
aa.         The following is hereby added to the Loan Agreement as Section
1.45B:
 
“1.45B   “Eligible Inventory” means Inventory of a Borrower that is not excluded
as ineligible by virtue of one or more of the excluding criteria set forth
below; provided, that such criteria may be revised from time to time by Agent to
address the results of any field examination or appraisal performed by Agent
from time to time after the Eighth Amendment Effective Date.  In determining the
amount to be so included, Inventory shall be valued at the lower of cost or
market on a basis consistent with Borrowers’ historical accounting
practices.  An item of Inventory shall not be included in Eligible Inventory if:
(a) a Borrower does not have good, valid, and marketable title thereto, (b) a
Borrower does not have actual and exclusive possession thereof (either directly
or through a bailee or agent of a Borrower), (c) it is not located at one of the
locations in the continental United States set forth on Schedule E-1 hereto (or
in-transit from one such location to another such location), (d) it is
in-transit to or from a location of a Borrower (other than in-transit from one
location set forth on Schedule E-1 hereto to another location set forth on
Schedule E-1 hereto), (e) it is located on real property leased by a Borrower or
in a contract warehouse, in each case, unless it is segregated or otherwise
separately identifiable from goods of others, if any, stored on the premises and
either (i) it is subject to a collateral access agreement, in form and substance
satisfactory to Agent, executed by the lessor or warehouseman, as the case may
be, or (ii) Agent has established a Reserve in an amount equal to three (3)
months' rent with respect to such premises or three (3) months warehouse charges
with respect to such premises, as applicable, (f) it is the subject of a bill of
lading or other document of title, (g) it is not subject to a valid and
perfected first priority security interest of Agent, (h) it consists of goods
returned or rejected by a Borrower’s customers, (i) it consists of goods that
are obsolete or slow moving, restrictive or custom items, or goods that
constitute spare parts, packaging and shipping materials, supplies used or
consumed in Borrowers’ business, bill and hold goods, defective goods, returned
inventory, or Inventory acquired or sold on consignment, (j) it is subject to
third party trademark, licensing or other proprietary rights, unless Agent is
satisfied that such Inventory can be freely sold by Agent on and after the
occurrence of an Event of a Default despite such third party rights, or (k)
Borrowers’ perpetual costing and tracking systems don’t provide Agent with
sufficient information with respect to such Inventory as determined by Agent it
is sole discretion.”
 
 
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bb.         The following is hereby added to the Loan Agreement as Section
1.45C:
 
“1.45C   “Eligible Additional Equipment” shall mean any additional Equipment
acquired by Borrowers after the Eighth Amendment Effective Date and which: (a)
meets all of the criteria for Eligible Equipment other than the fact that it was
acquired by Borrowers after the Eighth Amendment Effective Date; (b) is not part
of, affixed to, or otherwise a supplement to any Eligible Equipment; and (c) is
not located on or affixed to the Premises (as defined in the Conexant Landlord
Agreement) unless the parties to the Conexant Landlord Agreement have agreed
upon and delivered a revised Exhibit B to such Conexant Landlord Agreement
pursuant to the terms thereof, which revised Exhibit B shall designate such
Equipment as added to or included within the definition of "Personal Property"
as set forth in the Conexant Landlord Agreement.”
 
cc.         The following is hereby added to the Loan Agreement as Section
1.48A:
 
“1.48A  “Equipment Reserve” shall mean an amount (as determined by Agent from
time to time) equal to the amount by which (a) the sum of: (i) the amount
derived under clause (b) of the definition of “Borrowing Base” at such time,
plus (ii) the principal amount of Capex Loans outstanding at such time; exceeds
(b) the sum of: (i) the product of (A) seventy-five percent (75%) times (B) the
“net forced liquidation value” of Eligible Equipment and Eligible Additional
Equipment of Borrowers as determined by the most recent appraisal of Equipment
received by Agent, plus (ii) to the extent any Eligible Additional Equipment
which is the subject of a Capex Loan is not reflected on such appraisal
referenced in clause (b)(i)(B), eighty percent (80%) of the Hard Costs of such
Eligible Additional Equipment.”
 
dd.        Section 1.49 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“1.49     “Equipment Sublimit” shall mean $27,937,500 provided, however, that
beginning on the first day of the first calendar quarter following the Eighth
Amendment Effective Date and on the first day of each calendar quarter
thereafter, the Equipment Sublimit shall be reduced by $698,438.”
 
ee.         Section 1.55 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“1.55     “Excess Availability” shall mean the amount calculated at any date,
equal to: (a) the lesser of: (i) the Maximum Credit, minus the Line Block, minus
the principal amount of Capex Loans outstanding at such time, or (ii) the
Borrowing Base; minus (b) the sum of:  (i) the amount of all then outstanding
and unpaid Obligations of Borrowers (but not including for this purpose the then
outstanding principal amount of the Capex Loans) plus (ii) the aggregate amount
of all then outstanding and unpaid trade payables and other obligations of each
Borrower which are outstanding more than sixty (60) days past due as of the end
of the immediately preceding month (other than trade payables or other
obligations being contested or disputed by such Borrower in good faith), plus
(iii) without duplication, the amount of checks issued by each Borrower to pay
trade payables and other obligations which are more than sixty (60) days past
due as of the end of the immediately preceding month (other than trade payables
or other obligations being contested or disputed by such Borrower in good
faith), but not yet sent.”
 
 
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ff.           The last sentence of the definition of “Excluded Subsidiaries” set
forth in Section 1.57 of the Loan Agreement is hereby deleted in its entirety.
 
gg.         Section 1.61 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“1.61     “Financing Agreements” shall mean, collectively, this Agreement, the
Fee Letter and all notes, guarantees, security agreements, deposit account
control agreements, investment property control agreements, intercreditor
agreements and all other agreements, documents and instruments now or at any
time hereafter executed and/or delivered by any Borrower or any Guarantor in
connection with this Agreement.”
 
hh.         The following is hereby added to the Loan Agreement as Section
1.61A:
 
“1.61A  “Foreign Accounts Sublimit” shall mean, at any time, the amount equal to
$6,000,000.”
 
ii.           The following is hereby added to the Loan Agreement as Section
1.69A:
 
“1.69A  “Hard Costs” shall mean, with respect to the purchase by any Borrower of
an item of Eligible Additional Equipment, the net cash amount actually paid to
acquire title to such item, net of all incentives, discounts and rebates, and
exclusive of freight, delivery charges, installation costs and charges, software
costs, charges and fees, warranty costs, taxes, insurance and other incidental
costs or expenses and all indirect costs or expenses of any kind.”
 
jj.           Section 1.71 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.71     “Hedge Agreement” shall mean a “swap agreement” as that term is
defined in Section 101(53B)(A) of the Bankruptcy Code.”
 
kk.         The following is hereby added to the Loan Agreement as Section
1.71A:
 
“1.71A  “Increase Effective Date” shall have the meaning set forth in Section
2.5(a) hereof.”
 
ll.           The following is hereby added to the Loan Agreement as Section
1.71B:
 
“1.71B   “Increase Joinder” shall have the meaning set forth in Section 2.5(c)
hereof.”
 
mm.       Clause (c)(ii) of the definition of “Interest Rate” set forth in
Section 1.77 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
 
“(ii)        on Revolving Loans and Letters of Credit outstanding in excess of
the Borrowing Base (whether or not such excess(es) arise or are made with or
without Agent’s or any Lender’s knowledge or consent and whether made before or
after an Event of Default).”
 
 
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nn.         The following is hereby added to the Loan Agreement as Section
1.78A:
 
“1.78A  “Inventory Sublimit” shall mean an amount equal to $10,000,000.”
 
oo.        Section 1.85 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“1.85     “Letter of Credit Limit” shall mean $5,000,000.”
 
pp.         Clause (c) of the definition of “Letter of Credit Obligations” set
forth in Section 1.86 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(c)        without duplication, the aggregate amount of all payments made by
each Lender to the issuer with respect to such Lender’s participation in Letters
of Credit as provided in Section 2.2 for which Borrowers have not at such time
reimbursed the Lenders, whether by way of a Revolving Loan or otherwise.”
 
qq.         The last sentence of the definition of “Letters of Credit” set forth
in Section 1.87 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
 
“The issuer of the Letters of Credit shall be, and all references to such issuer
herein shall mean, Wells Fargo Bank, N.A. and its successors and assigns or such
other bank as Agent may from time to time designate.”
 
rr.           The following is hereby added to the Loan Agreement as Section
1.88A:
 
“1.88A  “Line Block” shall mean an amount equal to $5,000,000.”
 
ss.         Section 1.89 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“1.89     “Loans” shall mean the Revolving Loans and Capex Loans.”
 
tt.           Section 1.94 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.94     “Maximum Credit” shall mean the amount equal to $70,000,000, as
reduced by any reduction thereof pursuant to Section 2.1(c) hereof, and as
increased by any increase thereof pursuant to Section 2.5 hereof.”
 
uu.         The following is hereby added to the Loan Agreement as Section
1.95A:
 
“1.95A  “Net Recovery Percentage” means, as of any date of determination, the
percentage of the book value of Borrowers’ Inventory that is estimated to be
recoverable in an orderly liquidation (on a “non-conversion basis”) of such
Inventory net of all associated costs and expenses of such liquidation, such
percentage to be determined as to each category of Inventory and to be as
specified in the most recent appraisal received by Agent from an appraisal
company selected by Agent.”
 
 
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vv.        Section 1.112 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“1.112   “Pro Rata Share” shall mean:
 
(a)          with respect to a Lender’s obligation to make Revolving Loans and
receive payments relative thereto, participate in Letters of Credit, and with
respect to all other computations and other matters related to the Letters of
Credit, and the Revolving Loans, the fraction (expressed as a percentage) the
numerator of which is such Lender’s Revolving Loan Commitment and the
denominator of which is the aggregate amount of all of the Revolving Loan
Commitments of Lenders, as adjusted from time to time in accordance with the
provisions of Section 13.7 hereof; provided, that, if the Revolving Loan
Commitments have been terminated, the numerator shall be the unpaid amount of
such Lender’s Revolving Loans and its interest in the Letters of Credit and the
denominator shall be the aggregate amount of all unpaid Revolving Loans and
outstanding Letters of Credit;
 
(b)         with respect to a Lender’s obligation to make Capex Loans and
receive payments relative thereto, and with respect to all other computations
and other matters related to the Capex Loans, the fraction (expressed as a
percentage) the numerator of which is such Lender’s Capex Loan Commitment and
the denominator of which is the aggregate amount of all of the Capex Loan
Commitments of Lenders, as adjusted from time to time in accordance with Section
13.7 hereof, provided, that, if the Capex Loan Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender’s Capex Loans and the
denominator shall be the aggregate amount of all unpaid Capex Loans; and
 
(c)          with respect to all other matters (including the indemnification
obligations arising under Section 12.15 hereof), (i) prior to the Commitments
being terminated, the fraction (expressed as a percentage) the numerator of
which is such Lender’s Commitment, and the denominator of which is the aggregate
amount of Commitments of all Lenders, and (ii) from and after the time that the
Commitments have been terminated or reduced to zero, the fraction (expressed as
a percentage) the numerator of which is the sum of such Lender’s Revolving
Loans, Capex Loans and its interest in the Letters of Credit, and the
denominator of which is the aggregate amount of all unpaid Revolving Loans,
Capex Loans and outstanding Letters of Credit.”
 
ww.       The following is hereby added to the Loan Agreement as Section 1.118A:
 
“1.118A “Reporting Trigger Period” means each period (a) commencing on any day
that (i) the sum of Excess Availability plus Qualified Cash is less than the
greater of (A) $12,500,000, and (B) an amount equal to 12.5% of an amount equal
to the Maximum Credit minus the Line Block, (ii) Excess Availability is less
than $6,500,000 for three consecutive Business Days, or (iii) an Event of
Default occurs; and (b) continuing until at all times for 60 consecutive
calendar days: (i) the sum of Excess Availability plus Qualified Cash has been
greater than the greater of (A) $12,500,000, and (B) an amount equal to 12.5% of
an amount equal to the Maximum Credit minus the Line Block, (ii) Excess
Availability has been greater than $6,500,000, and (iii) no Event of Default
then exists.”
 
xx.          Section 1.119 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.119   “Required Lenders” shall mean, at any time, those Lenders whose Pro
Rata Shares (calculated under clause (c) of the definition of Pro Rata Share)
aggregate at least fifty and one tenth of one percent (50.1%).”
 
 
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yy.         Section 1.120 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.120   “Reserves” shall mean as of any date of determination, such amounts as
Agent may from time to time establish and revise in good faith reducing the
amount of Loans and Letters of Credit which would otherwise be available to
Borrowers under the lending formula(s) provided for herein:  (a) to reflect
events, conditions, contingencies or risks which, as determined by Agent in good
faith, materially adversely affect, or would have a reasonable likelihood of
materially adversely affecting, (i) the Collateral constituting Accounts,
Inventory or Equipment, its value or the amount that would reasonably be likely
to be received by Agent from the sale or other disposition or realization upon
such Collateral, or (ii) the security interests and other rights of Agent in the
Collateral constituting Accounts, Inventory or Equipment (including the
enforceability, perfection and priority thereof) or (b) to reflect Agent's good
faith belief that any collateral report relating to Accounts, Inventory or
Equipment furnished by or on behalf of any Borrower or any Guarantor to Agent is
or may have been incomplete, inaccurate or misleading in any material respect or
(c) to reflect outstanding Letters of Credit as provided in Section 2.2 hereof
or (d) in respect of any state of facts which Agent determines in good faith
constitutes a Default or an Event of Default.  Without limiting the generality
of the foregoing, Reserves may, at Agent’s option, be established to
reflect:  (A) dilution with respect to the Accounts (based on the ratio of the
aggregate amount of non-cash reductions in Accounts for any period to the
aggregate dollar amount of the sales of such Borrower for such period) as
calculated by Agent for any period is or is reasonably anticipated to be greater
than five percent (5%); (B) returns, discounts, claims, credits and allowances
of any nature that are not paid pursuant to the reduction of Accounts; (C)
amounts past due to owners and lessors of premises where any Collateral is
located, other than for those locations where Agent has received a Collateral
Access Agreement that Agent has accepted in writing; (D) amounts due or to
become due to owners and licensors of trademarks and other Intellectual Property
used by any Borrower; (E) the Bank Products Reserve; and (F) any other Reserve,
including without limitation any Reserve for deferred revenue to the extent
reserved by any Borrower on its books and records consistent with its historical
practices.  The amount of any Reserve established by Agent shall have a
reasonable relationship to the event, condition, Event of Default or other
matter which is the basis for such reserve as determined by Agent in good
faith.  To the extent Agent may revise the lending formulas used to determine
the Borrowing Base or establish new criteria (with respect to new information,
circumstances or facts) or revise existing criteria for Eligible Accounts,
Eligible Foreign Accounts, Eligible Inventory, Eligible Equipment or Eligible
Additional Equipment so as to address any circumstances, condition, event or
contingency in a manner satisfactory to Agent, Agent shall not establish a
Reserve for the same purpose or a Reserve that is otherwise duplicative of any
other Reserve or change in criteria.”
 
 
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zz.          Section 1.122 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“1.122   “Revolving Loan Commitment” shall mean, at any time, as to each Lender,
the principal amount set forth below designated as the Revolving Loan Commitment
or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which
such Lender became a Lender hereunder in accordance with the provisions of
Section 13.7 hereof, as the same may be adjusted from time to time in accordance
with the terms hereof; sometimes being collectively referred to herein as
“Revolving Loan Commitments”:
 
Lender
Revolving Loan Commitment
Wells Fargo Capital Finance, LLC
$70,000,000

 
Notwithstanding the foregoing, as of any date of determination, each Lender's
Revolving Loan Commitment shall be reduced by the then outstanding amount of
such Lender’s Capex Loans.”
 
aaa.       The following is hereby added to the Loan Agreement as Section
1.122A:
 
“1.122A “Revolving Loans” shall mean the loans now or hereafter made by or on
behalf of Agent and the Lenders on a revolving basis pursuant to the Credit
Facility (involving advances, repayments and readvances) as set forth in Section
2.1 hereof.”
 
bbb.      The following is hereby added to the Loan Agreement as Section 1.123A:
 
“1.123A “Senior Leverage Ratio” shall mean, as of any date of determination, the
ratio of (a) the outstanding principal balance of the Obligations as of such
date, to (b) Consolidated EBITDA of Parent Guarantor, calculated on a trailing 4
fiscal quarter basis as of the last fiscal quarter for which financial
statements have most recently been delivered pursuant to Section 9.6(a) as of
such date.”
 
ccc.       Section 1.124 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“1.124   “Senior Notes” shall mean the 8% Non-Convertible Senior Notes due 2015,
or “Securities” as defined in the Senior Note Indenture.”
 
ddd.      Section 1.125 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“1.125    “Senior Note Indenture” shall mean that certain Indenture, dated as of
July 9, 2010, by and among Parent Guarantor, certain Affiliates of Parent
Guarantor, and U.S. Bank National Association, as trustee.”
 
eee.       Section 2.1 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“2.1        Revolving Loans.
 
(a)         Subject to and upon the terms and conditions contained herein, each
Lender with a Revolving Loan Commitment severally (and not jointly) agrees to
make its Pro Rata Share of revolving loans to Borrowers from time to time on any
Business Day on or after the Effective Date in amounts requested by Borrowers up
to the aggregate amount outstanding for all Lenders at any time equal to the
lesser of: (i) the Borrowing Base at such time, and (ii) an amount equal to the
Maximum Credit, minus the Line Block, minus the principal amount of Capex Loans
outstanding at such time, minus the Letter of Credit Obligations outstanding at
such time.
 
 
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(b)         Except in Agent's discretion, at no time shall, the aggregate amount
of the outstanding Revolving Loans and the Letter of Credit Obligations exceed
an amount equal to the lesser of: (i) the Borrowing Base, and (ii) an amount
equal to the Maximum Credit minus the Line Block, minus the principal amount of
Capex Loans outstanding at such time.  If the event set forth in the preceding
sentence of this Section 2.1(b) shall have occurred, such event shall not limit,
waive or otherwise affect any rights of Agent or Lenders in such circumstances
or on any future occasions, and Borrowers shall, upon demand by Agent, which may
be made at any time or from time to time, promptly repay to Agent the entire
amount of any such excess that results from the occurrence of any such event for
which payment is demanded.
 
(c)          By providing ten (10) Business Days' written notice to Agent,
Borrowers may request that the amount set forth in the definition of “Maximum
Credit” hereof be reduced in an amount or amounts which shall not cause such
amount set forth in such definition to be less than $50,000,000, which reduction
shall be in increments of no less than $5,000,000; provided, that no Default or
Event of Default shall have occurred and be continuing prior to or after giving
effect to any such reduction; and further provided, that Borrowers may not make
any such request more than two (2) times per year.”
 
fff.         Section 2.2(a) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“(a)        Subject to and upon the terms and conditions contained herein and in
the Letter of Credit Documents, at the request of Borrowers, Agent agrees to
provide or arrange for the account of Borrowers one or more Letters of Credit,
for the ratable risk of each Lender with a Revolving Loan Commitment according
to its Pro Rata Share, containing terms and conditions acceptable to Agent and
the issuer thereof.”
 
ggg.      Section 2.2(e) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(e)        Borrowers shall reimburse immediately the issuer of a Letter of
Credit for any draw under any Letter of Credit issued for the account of
Borrowers by such issuer and pay such issuer the amount of all other charges and
fees payable to such issuer in connection with any Letter of Credit issued for
the account of Borrowers immediately when due, irrespective of any claim,
setoff, defense or other right which Borrowers, or any of them, may have at any
time against such issuer or any other Person.  Each drawing under any Letter of
Credit or other amount payable in connection therewith when due shall constitute
a request by Borrowers to Agent for a Prime Rate Loan in the amount of such
drawing or other amount then due and shall be made by Agent on behalf of Lenders
as a Revolving Loan.  The date of such Loan shall be the date of the drawing or
as to other amounts, the due date therefor.  Any payments made by or on behalf
of Agent or any Lender to an issuer and/or related parties in connection with
any Letter of Credit shall constitute additional Revolving Loans to Borrowers
pursuant to this Section 2.”
 
 
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hhh.      Section 2.2(i) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(i)        Immediately upon the issuance or amendment of any Letter of Credit,
each Lender with a Revolving Loan Commitment shall be deemed to have irrevocably
and unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender’s Pro Rata
Share of the liability with respect to such Letter of Credit and the obligations
of Borrowers with respect thereto (including all Letter of Credit Obligations
with respect thereto).  Each Lender with a Revolving Loan Commitment shall
absolutely, unconditionally and irrevocably assume, as primary obligor and not
as surety, and be obligated to pay to the issuer of any such Letter of Credit
therefor and discharge when due, its Pro Rata Share of all of such obligations
arising under such Letter of Credit.  Without limiting the scope and nature of
each Lender’s participation in any Letter of Credit, to the extent that the
issuer has not been reimbursed or otherwise paid as required hereunder or under
any such Letter of Credit, each such Lender with a Revolving Loan Commitment
shall pay to the issuer its Pro Rata Share of such unreimbursed drawing or other
amounts then due to issuer in connection therewith.”
 
iii.          The following is hereby added to the Loan Agreement as Section
2.4:
 
“2.4        Capex Loans.
 
(a)          Subject to and upon the terms and conditions contained herein, each
Lender with a Capex Loan Commitment severally (and not jointly) agrees to make
its Pro Rata Share of capex loans (“Capex Loans”) to Borrowers from time to time
on any Business Day on or after the Eighth Amendment Effective Date in amounts
requested by Borrowers up to an amount equal to such Lender’s Pro Rata Share of
eighty percent (80%) of the Hard Costs of Eligible Additional Equipment
purchased by a Borrower after the Eighth Amendment Effective Date; provided,
however, that no Lender shall be required to make aggregate Capex Loans in
excess of an amount equal to such Lender’s Capex Loan Commitment (without giving
effect to any repayments or prepayments thereof).
 
(b)         The proceeds of each Capex Loan shall be used solely for the payment
of the purchase price (or to reimburse Borrowers for the cash payments
previously paid by Borrowers for the purchase price) for the Eligible Additional
Equipment specified in the Capex Purchase Loan Request applicable to such Capex
Loan; provided, that, (i) to the extent that the proceeds of any Capex Loan are
used to reimburse Borrowers for the cash payments paid by Borrowers for the
purchase price of any Eligible Additional Equipment, Borrowers shall have taken
possession of such Eligible Additional Equipment within 90 days prior to the
date of Borrowers’ request for such Capex Loan, and (ii) no Capex Purchase Loan
Request shall include any Eligible Additional Equipment that supports any other
Capex Loan.  Each Capex Loan shall be in an amount of not less than $500,000.  A
single Capex Loan may be used for the purchase price of one or more items
constituting Eligible Additional Equipment specified in the Capex Loan Request
required to be delivered to Agent hereunder.
 
(c)          In addition to the other conditions precedent to any Loan set forth
in this Agreement, the provision of each Capex Loan shall be subject to the
satisfaction of each of the following additional conditions precedent, as
determined by Agent:
 
(i)           Agent shall have received from Borrowers not less than 3 Business
Days and not more than 20 Business Days prior written notice of the proposed
Capex Loan (each such notice being a “Capex Purchase Loan Request”), which
notice shall specify and include the following: (1) the proposed date and amount
of the Capex Loan, (2) a list and description of the Eligible Additional
Equipment (by model, make, manufacturer, serial number and/or such other
identifying information as may be reasonably requested by Agent), (3) whether
any of such Eligible Additional Equipment has been purchased prior to the date
of the proposed Capex Loan and if so, the date of such purchase and identifying
the specific Eligible Additional Equipment that has been so purchased, (4) the
Hard Costs and total purchase price for such Eligible Additional Equipment (and
the terms of payment of such purchase price), and (5) such other information and
documents as Agent may from time to time reasonably request with respect
thereto;
 
 
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(ii)           Agent shall have a valid and perfected first priority security
interest in and lien upon such Eligible Additional Equipment and such Eligible
Additional Equipment shall be free and clear of all other liens, security
interests, claims or other encumbrances (except for non-consensual liens or
security interests that are permitted under Sections 9.8(b) or (c) hereof); and
 
(iii)           Agent shall have received copies, or upon Agent's reasonable
request therefor, originals, of all material agreements, documents and
instruments relating to the sale of the Eligible Additional Equipment to
Borrowers, including, without limitation, any purchase orders, invoices, bills
of sale or similar documents.
 
(d)         On each Capex Scheduled Repayment Date, the principal of the Capex
Loans (regardless of the date such Capex Loans were made) shall be repaid in an
amount equal to 1/28th of the original principal amount of each Capex Loan
outstanding on such Capex Scheduled Repayment Date.  In addition to the
foregoing, the outstanding unpaid principal balance and all accrued and unpaid
interest on the Capex Loans shall be due and payable on the earlier of (i) the
Maturity Date, and (ii) the date of the acceleration of the Capex Loans in
accordance with the terms hereof.  Any principal amount of the Capex Loans that
is repaid or prepaid may not be reborrowed.”
 
jjj.          The following is hereby added to the Loan Agreement as Section
2.5:
 
“2.5        Increase in Maximum Credit.
 
(a)          From time to time the Maximum Credit may be increased (each
increase that satisfies the terms and conditions of this Section, an “Approved
Increase”) by an amount not in excess of the Available Increase Amount at the
option of Borrowers by delivery of a written notice from Borrowers of a proposed
increase to Agent if and only if (i) each of the conditions precedent set forth
in Section 4.2 are satisfied as of the Increase Effective Date (as if Borrowers
were requesting an extension of credit hereunder), (ii) Lenders or other Persons
commit to increase or provide Commitments in an aggregate amount equal to the
Approved Increase in accordance with Section 2.5(c), and (iii) Borrowers shall
have (A) reached agreement with the prospective new Lenders (the “Prospective
Lenders”) with respect to the amount of any supplemental closing fee to be paid
to such Prospective Lenders on the Increase Effective Date and shall have
communicated the amount of such supplemental closing fee to Agent, and (B) paid
any fees described in clause (A) above to Agent for the account of the
Prospective Lenders and Agent, as applicable.  Each such notice shall specify
the date on which the proposed increase is to be effective (the “Increase
Effective Date”), which date shall not be less than 10 Business Days after the
date of such notice.  Each proposed increase shall be in an amount of at least
$5,000,000 and integral multiples of $5,000,000 in excess thereof.
 
 
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(b)          So long as each of the requirements set forth in Section 2.5(a) are
satisfied, the increased Maximum Credit with respect to an Approved Increase
shall become effective, as of such Increase Effective Date.
 
(c)          Agent shall invite each Lender to increase its Commitment (it being
understood that no Lender shall be obligated to increase its Commitment) and, if
sufficient Lenders do not agree to increases in their Commitments in an
aggregate amount equal to the Approved Increase, may invite any other Person who
is reasonably satisfactory to Agent and Borrowers to become a Lender in
connection with an Approved Increase by executing a joinder agreement, in form
and substance reasonably satisfactory to Agent, to which such Person, Borrowers,
and Agent are party (the “Increase Joinder”).  Such Increase Joinder or any
other joinder agreement reasonably acceptable to the Borrowers and Agent in
connection with any Approved Increase may, with the consent of Borrowers and
Agent (but without the consent of the Required Lenders or any other Lender other
than Prospective Lenders and any existing Lender participating in the applicable
Approved Increase), effect such amendments to this Agreement and the other
Financing Agreements as may be necessary or appropriate, in the opinion of
Agent, to effectuate the provisions of this Section 2.5; provided, however, that
any amendment to cure any ambiguity, defect, or inconsistency as may be
necessary or appropriate, in the opinion of Agent shall require only the consent
of Borrowers and Agent.
 
(d)          To the extent any Revolving Loans, Capex Loans, or Letters of
Credit are outstanding on the Increase Effective Date, each of the Lenders
having a Commitment prior to the Increase Effective Date (the “Pre-Increase
Revolver Lenders”) shall assign to any Lender which is acquiring a new or
additional Commitment on the Increase Effective Date (the “Post-Increase
Revolver Lenders”), and such Post-Increase Revolver Lenders shall purchase from
each Pre-Increase Revolver Lender, at the principal amount thereof, such
interests in the Revolving Loans, Capex Loans and participation interests in
Letters of Credit on such Increase Effective Date as shall be necessary in order
that, after giving effect to all such assignments and purchases, such Revolving
Loans, Capex Loans, and participation interests in Letters of Credit will be
held by Pre-Increase Revolver Lenders and Post-Increase Revolver Lenders ratably
in accordance with their Pro Rata Share (calculated under clause (c) of the
definition of Pro Rata Share) after giving effect to such increased Commitments.
 
(e)          Borrowers shall take any actions reasonably required by Agent to
ensure and demonstrate that the liens granted by the Financing Agreements
continue to be perfected under the UCC or otherwise after giving effect to the
increase in the Maximum Credit and the establishment of any such new
Commitments.”
 
kkk.        Section 3.2(a) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“(a)        Borrowers shall pay to Agent, for the account of Lenders, monthly,
an unused line fee at a rate of .25% per annum, calculated upon the amount by
which the Maximum Credit minus the Line Block exceeds the average daily
principal balance of the outstanding Loans and Letters of Credit during the
immediately preceding month (or part thereof) while this Agreement is in effect
and for so long thereafter as any of the Obligations are outstanding, which fee
shall be payable on the first day of each month in arrears.”
 
 
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lll.           The following is hereby added to the end of Section 3.3(a) of the
Loan Agreement:
 
“Notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith or in implementation
thereof, and (y) all requests, rules, guidelines, requirements or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “change in law” as applicable for all purposes of
this Agreement, regardless of the date enacted, adopted, issued or implemented.”
 
mmm.    Section 4.2(b) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(b)       no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or Governmental Authority, which purports to enjoin, prohibit or restrain the
making of the Loans or providing the Letters of Credit;”
 
nnn.      Section 6.3(d) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(d)       Notwithstanding the foregoing in this Section 6.3, Agent shall
exercise control over the Blocked Accounts and shall be entitled to receive
payments on and/or proceeds of Accounts and other Collateral only during a Cash
Dominion Period.  Following any exercise of control by Agent over the Blocked
Accounts pursuant to this clause (d), Agent shall relinquish control over the
Blocked Accounts upon the termination of the applicable Cash Dominion Period.”
 
ooo.      Section 7.1 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“7.1        Collateral Reporting.
 
(a)          Borrowers shall provide Agent with the following documents in a
form reasonably satisfactory to Agent:
 
(i)           on a monthly basis as required by Agent (or weekly basis during a
Reporting Trigger Period), schedules of sales made, credits issued and cash
received;
 
(ii)           as soon as possible after the end of each calendar month (but in
any event within ten (10) Business Days after the end thereof), on a monthly
basis (or weekly basis (within 3 Business Days after the end of each week) for
any week ending during a Reporting Trigger Period), (A) a completed borrowing
base certificate pertaining to the fiscal month (or week, as applicable) then
ended substantially in the form of Exhibit D hereto (each such certificate, a
"Borrowing Base Certificate"), which Borrowing Base Certificate shall not
include, in the case of Eligible Equipment, any items subject to capital leases
or similar arrangements, (B) agings of accounts receivable (together with a
reconciliation to the previous month’s aging and general ledger), (C) agings of
accounts payable, and (D) perpetual inventory reports and such other inventory
reports requested by Agent from time to time; and
 
 
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(iii)          upon Agent's reasonable request, but no more frequently than once
a month (or once a week during any Reporting Trigger Period), (A) copies of
customer statements, purchase orders, sales invoices, credit memos, remittance
advices and reports, and copies of deposit slips and bank statements, (B) copies
of shipping and delivery documents, and (C) copies of purchase orders, invoices
and delivery documents for Inventory and Equipment acquired by any Borrower or
Guarantor.
 
(b)         If any of any Borrower's or Guarantor’s records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, such Borrower and Guarantor hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such records,
reports, and related documents to Agent and to follow Agent's instructions with
respect to further services at any time that an Event of Default exists or has
occurred and is continuing.
 
(c)         In addition to providing the foregoing documents within the time
frames set forth in this Section 7.1, Borrowers shall provide Agent with any of
the documents set forth in this Section 7.1 at any intervals requested by Agent
while an Event of Default exists.”
 
ppp.      Section 7.2(a) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(a)        Borrowers shall notify Agent promptly of: (i) with respect to
Eligible Accounts and Eligible Foreign Accounts, any material delay in any
Borrower's performance of any of its material obligations to any account debtor
or the assertion of any material claims, offsets, defenses or counterclaims by
any account debtor, or any material disputes with account debtors, or any
material settlement, adjustment or compromise thereof, (ii) with respect to
Eligible Accounts and Eligible Foreign Accounts, all material adverse
information known to any Borrower or Guarantor relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
the best of any Borrower's or Guarantor’s knowledge, would cause Agent to
consider any then existing Eligible Accounts and Eligible Foreign Accounts as no
longer constituting Eligible Accounts and Eligible Foreign Accounts,
respectively.  No credit, discount, allowance or extension or agreement for any
of the foregoing shall be granted to any account debtor without Agent's consent,
except in the ordinary course of a Borrower's or Guarantor’s business in
accordance with past practices and except as set forth in the schedules
delivered to Agent pursuant to Section 7.1(a) above.  So long as no Event of
Default exists or has occurred and is continuing, Borrowers and Guarantors shall
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor.  At any time that an Event of Default exists or has occurred and
is continuing, Agent shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.”
 
 
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qqq.      Section 7.2(b)(iv) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(iv)      none of the transactions giving rise thereto will violate any
applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms; and with respect to Eligible Accounts and Eligible Foreign
Accounts, there shall be no setoffs, deductions, contras, defenses,
counterclaims or disputes existing or asserted with respect thereto except as
reported to Agent in accordance with the terms of this Agreement.”
 
rrr.         Section 7.3 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“7.3       Inventory Covenants.  With respect to the Inventory:  (a) none of the
Borrowers or Guarantors shall remove any Inventory with a fair market value in
excess of $1,000,000 in the aggregate for all such Inventory of the Borrowers or
Guarantors from the locations set forth or permitted herein, without prior
notice to Agent, except for sales of Inventory in the ordinary course of its
business and except to move Inventory directly from one location set forth or
permitted herein to another such location and except for Inventory shipped from
the manufacturer thereof to a Borrower or Guarantor which is in transit to the
locations set forth or permitted herein; (b) each Borrower and Guarantor shall
produce, use, store and maintain the Inventory with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including the requirements of the Federal Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto); (c) none of the Inventory or other Collateral constitutes farm
products or the proceeds thereof; (d) each Borrower and Guarantor assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (e) each Borrower and Guarantor
shall at all times maintain inventory records reasonably satisfactory to Agent,
keeping correct and accurate records itemizing and describing the kind, type and
quantity of Inventory, such Borrower's or Guarantor’s cost therefor and daily
withdrawals therefrom and additions thereto; (f) Borrowers and Guarantors shall
conduct a physical count of the Inventory at least once each year but at any
time or times as Agent may request on or after an Event of Default, and promptly
following such physical inventory shall supply Agent, if requested by Agent,
with a report in the form and with such specificity as may be satisfactory to
Agent concerning such physical count; and (g) upon Agent's request, Borrowers
shall, at their expense, no more than one (1) time in any twelve (12) month
period (or two (2) times if the second such appraisal is commenced during a Cash
Dominion Period), but at any time or times as Agent may request while an Event
of Default is continuing, deliver or cause to be delivered to Agent written
appraisals as to the Inventory in form, scope and methodology acceptable to
Agent and by an appraiser acceptable to Agent, addressed to Agent and Lenders
and upon which Agent and Lenders are expressly permitted to rely; without
limiting in any way the foregoing in this clause (g), Agent, at its expense,
shall have the right to have such an appraiser, at any time, perform such
additional appraisals as to the Inventory.”
 
 
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sss.       Section 7.4 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“7.4       Equipment Covenants.  With respect to the Equipment:  (a) upon
Agent’s request, Borrowers and Guarantors shall, at their expense, no more than
two (2) times in any twelve (12) month period, but at any time or times as Agent
may request on or after an Event of Default has occurred and is continuing,
deliver or cause to be delivered to Agent written full appraisals as to the
Equipment, each such full appraisal to be in form, scope and methodology
reasonably acceptable to Agent and by an appraiser reasonably acceptable to
Agent, addressed to Agent and upon which Agent is expressly permitted to rely;
without limiting in any way the foregoing in this clause (a), Agent, at its
expense, shall have the right to have such an appraiser, at any time, perform
such additional appraisals as to the Equipment; (b) Borrowers and Guarantors
shall keep the Equipment necessary in the conduct of their business in good
order, repair, running and marketable condition (ordinary wear and tear
excepted); (c) Borrowers and Guarantors shall use the Equipment, with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity in all material respects with all applicable laws;
(d) the Equipment is and shall be used in the business of Borrowers and
Guarantors and not for personal, family, household or farming use; (e) without
prior notice to Agent, Borrowers and Guarantors shall not remove (i) any
Eligible Equipment or Eligible Additional Equipment, or (ii) any other Equipment
with a fair market value in excess of $1,000,000 in the aggregate for all such
Equipment of the Borrowers or Guarantors from the locations set forth or
permitted herein, except to the extent the Equipment is not in use anymore or to
the extent necessary to have any Equipment repaired or maintained in the
ordinary course of its business or to move Equipment directly from one location
set forth or permitted herein to another such location and except for the
movement of motor vehicles used by or for the benefit of Borrowers or Guarantors
in the ordinary course of business; (f) the Equipment is now and shall remain
personal property and Borrowers and Guarantors shall not permit any of the
Equipment to be or become a part of or affixed to real property; and (g) each
Borrower and Guarantor assumes all responsibility and liability arising from the
use of the Equipment.”
 
ttt.         The following is hereby added to the Loan Agreement as Section
8.19:
 
“8.19     Hedge Agreements.  On each date that any Hedge Agreement is executed
by any Bank Product Provider, each Borrower and Guarantor satisfies all
eligibility, suitability and other requirements under the Commodity Exchange Act
(7 U.S.C. § 1, et seq., as in effect from time to time) and the Commodity
Futures Trading Commission regulations.”
 
uuu.      Section 9.6 of the Loan Agreement is hereby amended by replacing the
period at the end of clause (a)(iii) thereof with “, and”, and adding the
following as clause (a)(iv) thereof:
 
“(iv)      within thirty (30) days after the end of each fiscal month of
Borrowers ending during a Reporting Trigger Period, a schedule in a form
reasonably satisfactory to Agent of the calculations used in determining, as of
the end of such month, whether Borrowers and Guarantors were in compliance with
the covenants set forth in Section 9.24 of this Agreement for such month, in
addition to operational and other metrics that will be reasonably satisfactory
to the Agent, including, without limitation, monthly starts, layers, shipments,
revenues and headcount.”
 
vvv.      Section 9.7(a)(i) is hereby amended and restated in its entirety to
read as follows:
 
“(i)        a Domestic Subsidiary of any Borrower (other than another Borrower,
a Guarantor, or an Excluded Subsidiary) may merge with and into such Borrower
with such Borrower being the surviving entity, provided, that following the
consummation of any such merger, the assets owned by such Domestic Subsidiary
prior to such merger shall not be deemed Eligible Accounts, Eligible Foreign
Accounts, Eligible Inventory, or Eligible Additional Equipment unless the
criteria set forth in Sections 9.10(i)(x), (xi) and (xii) hereof shall have been
fully satisfied with respect to such assets and such Credit Party (in place of
any subject Target or New Subsidiary as referred to in such Sections), as
applicable, and such assets shall meet the criteria set forth in the definition
of “Eligible Accounts”, “Eligible Foreign Accounts”, “Eligible Inventory” or
“Eligible Additional Equipment”, as applicable;”
 
 
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www.    Section 9.7(b)(ii) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“(ii)       the sale or other disposition of worn-out, surplus or obsolete
Equipment (other than Eligible Additional Equipment which is the subject of a
Capex Loan) or Equipment (other than Eligible Additional Equipment which is the
subject of a Capex Loan) no longer used or useful in the business of any
Borrower or any Guarantor so long as (A) before and after giving effect to any
such sale or disposition, no Default or Event of Default has occurred and is
continuing, (B) the proceeds of any such sale or disposition are paid to Agent
for application to the Obligations as set forth herein, and (C) such Equipment
is sold for at least the appraised value thereof as set forth on the most recent
appraisal of Equipment then received by Agent in accordance with Section 7.4
hereof,”
 
xxx.        Section 9.7(b)(iii) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(iii)      the sale or other disposition of Equipment (excluding worn-out,
surplus and obsolete Equipment and Equipment no longer used or useful in the
business of any Borrower or Guarantor) so long as (A) such sales or other
dispositions do not involve such Equipment having an aggregate fair market value
in excess of $5,000,000 for all such Equipment disposed of by all of the
Borrowers and Guarantors in any fiscal year of Borrowers or as Agent may
otherwise agree, (B) before and after giving effect to any such sale or
disposition, no Default or Event of Default has occurred and is continuing, (C)
the proceeds of any such sale or disposition are paid to Agent for application
to the Obligations as set forth herein (it being understood that to the extent
such Equipment is Eligible Additional Equipment, such proceeds shall be applied
first to any Capex Loan which was made on account of such Eligible Additional
Equipment (with the remaining proceeds being applied to the other Obligations)),
and (D) such Equipment is sold for at least: (x) the appraised value thereof as
set forth on the most recent appraisal of Equipment then received by Agent in
accordance with Section 7.4 hereof, and (y) in the case of Eligible Additional
Equipment which is the subject of a Capex Loan, the amount of such Capex Loan,
and”
 
yyy.      Section 9.7(b)(v) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“(v)       the transfer, sale, lease or licensing of all or part of such
Borrower's or Guarantor’s Intellectual Property or any items of Equipment (other
than Eligible Equipment and Eligible Additional Equipment) with a fair market
value not to exceed $10,000,000 in the aggregate for all such Equipment of the
Borrowers or Guarantors to a Domestic Subsidiary (other than an Excluded
Subsidiary) of such Borrower or Guarantor or to any other Borrower or Guarantor;
provided, that: (A) immediately prior to and as a result of such transfer, sale,
lease or licensing, no Default or Event of Default shall have occurred and be
continuing; and (B) to the extent such transfer, sale, lease or licensing is to
a Domestic Subsidiary which is not a Borrower or Guarantor, (1) prior to such
transfer, sale, lease or licensing to such Domestic Subsidiary, Agent shall have
had a reasonable opportunity to conduct customary and other business, legal, and
collateral due diligence with respect to such Domestic Subsidiary, including,
but not limited to, ordering, in form and substance reasonably satisfactory to
Agent, and reviewing to its satisfaction, UCC, tax lien, litigation, bankruptcy
and intellectual property searches from all offices that Agent deems reasonably
appropriate in its sole discretion, certificates of status with respect to such
Domestic Subsidiary, in form and substance satisfactory to Agent, which
certificates shall be issued by the appropriate officer of the jurisdiction of
organization of such Domestic Subsidiary and by the appropriate officers of each
other jurisdiction in which such Domestic Subsidiary is qualified to do
business, which certificates shall indicate that such Domestic Subsidiary is in
good standing in such jurisdictions; and (2) such Domestic Subsidiary shall have
executed and delivered a Guaranty, a joinder to this Agreement, and such other
documents (including but not limited to a non-restrictive license to use) as
Agent may reasonably request to protect and perfect its interest in such
Collateral each in form and substance reasonably satisfactory to Agent in its
sole discretion,”
 
 
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zzz.        Section 9.7(b)(viii) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(viii)    the transfer or sale of assets to any Joint Venture (other than any
Joint Venture involving Foreign Parent Nonguarantor or any of its Affiliates),
Foreign Subsidiary of any Borrower or Guarantor, Excluded Subsidiary or to Jazz
WOFE in connection with any investment or other transaction permitted by Section
9.10(h); provided, that (A) all transfers or sales of items of Equipment of any
Credit Party (other than an Excluded Subsidiary) to any Joint Venture (other
than any Joint Venture involving Foreign Parent Nonguarantor or any of its
Affiliates), Foreign Subsidiary of any Borrower or Guarantor, or Excluded
Subsidiary shall be limited to Equipment with a fair market value not to exceed
$2,500,000 in the aggregate for all such Equipment of the Credit Parties (other
than Excluded Subsidiaries) and for all such transfers and sales and shall be
only permitted to the extent that any such transfer or sale is in the ordinary
course of the applicable Credit Parties’ business; (B) no Eligible Additional
Equipment may be transferred or sold unless any Capex Loan which was made on
account of such Eligible Additional Equipment is repaid in full at the time of
such transfer or sale, and (C) immediately prior to and after giving effect to
such transfer or sale, no Default or Event of Default shall have occurred and be
continuing,”
 
aaaa.     Section 9.7(b)(xiv) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(xiv)    other dispositions (other than Eligible Additional Equipment which is
the subject of a Capex Loan) which do not in the aggregate exceed $1,000,000 per
fiscal year,”
 
bbbb.    Section 9.8(l) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(l)        any other security interest, lien or other encumbrance (other than
any security interest, lien or other encumbrance that would encumber any
Accounts, Inventory, Eligible Equipment, or Eligible Additional Equipment)
created or incurred in connection with any Indebtedness not to exceed $1,000,000
in the aggregate at any one time outstanding for all Credit Parties (other than
Excluded Subsidiaries);”
 
 
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cccc.     Section 9.8(n) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(n)       liens on any asset (other than any lien that encumbers any Accounts,
Inventory, Eligible Equipment, or Eligible Additional Equipment) existing at the
time of acquisition of such asset by any Credit Party so long as (i) the lien
shall apply only to the asset so acquired and the proceeds thereof, and (ii) the
Indebtedness secured by such lien is otherwise permitted hereunder;”
 
dddd.    Section 9.9(e) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(e)        the incurrence by a Credit Party of Indebtedness under Hedge
Agreements that are incurred for the bona fide purpose of hedging the interest
rate, commodity, or foreign currency risks associated with such Credit Party’s
operations and not for speculative purposes;”
 
eeee.     Section 9.9(g) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(g)       Indebtedness incurred or created in connection with Existing Letters
of Credit or any letter of credit (other than any Letter of Credit) issued to
any Credit Party in the ordinary course of its business by any issuer other than
WFCF and its Affiliates, or their respective  successors and assigns;”
 
ffff.        Section 9.10(i)(iii) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(iii)       as of the date of the Subsidiary Investment or acquisition of the
subject Target and any related Targets, as applicable, and after giving effect
thereto, Borrowers’ Excess Availability shall not be less than $13,750,000 and
Borrowers’ Excess Availability shall be projected, to the Agent’s reasonable
satisfaction, to be $13,750,000 or more for 90 consecutive days following the
consummation of such Subsidiary Investment or such acquisition, as applicable;”
 
gggg.    Section 9.10(i)(ix) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(ix)       Agent shall have received such further agreements, documents and
instruments, and such further acts shall have been completed, with respect to
the subject Target or New Subsidiary (as applicable), as required by Section
9.23 hereof;
 
at Borrowers’ request, the subject Target or the Person acquiring the subject
Target or the subject New Subsidiary (as applicable) may be added as a borrower
hereunder, but only at the election of Agent; regardless of whether the subject
Target or the Person acquiring the subject Target or the subject New Subsidiary
(as applicable) is or becomes a Borrower hereunder, and regardless of whether
the Accounts or Inventory (which term shall mean Accounts and Inventory as
applied to the subject Target or New Subsidiary for the purposes of this
Section) of the subject Target or New Subsidiary qualify under the definition of
“Eligible Accounts”, “Eligible Inventory” or “Eligible Foreign Accounts”, or
whether the Equipment (which term shall mean Equipment as applied to the subject
Target or New Subsidiary for the purposes of this Section) of the subject Target
or New Subsidiary qualify under the definition of “Eligible Equipment” or
“Eligible Additional Equipment”, the inclusion of such Accounts in Eligible
Accounts or Eligible Foreign Accounts, Inventory in Eligible Inventory, or
Equipment in Eligible Equipment or Eligible Additional Equipment shall be
subject to:”
 
 
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hhhh.    Section 9.10(i)(xii) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(xii)      the chief executive office of the subject Target or New Subsidiary
(as applicable) shall be in the United States, and in any event, only those
Accounts generated and invoiced from the United States may be deemed Eligible
Accounts.”
 
iiii.         Section 9.11(g) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(g)       Parent Guarantor may repurchase any of its Indebtedness arising under
any Senior Notes; provided that at the time of such repurchase and after giving
effect thereto, (A) no Default or Event of Default shall have occurred and be
continuing, (B) Borrowers’ Excess Availability shall not be less than
$13,750,000 after giving effect to the purchase of such Senior Notes; and (C)
Borrowers’ Excess Availability shall be projected, to Agent’s reasonable
satisfaction, to be $13,750,000 or more for 60 consecutive days following the
consummation of such repurchase.”
 
jjjj.         Section 9.18 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“9.18     Financial Covenants.  Upon the occurrence and during the continuance
of a Covenant Testing Trigger Period, Parent Guarantor and its Subsidiaries
(other than any Excluded Subsidiaries) shall have a Consolidated Fixed Charge
Coverage Ratio of at least 1.10 to 1.0 when measured on a trailing four fiscal
quarter basis as of the end of: (a) the last fiscal quarter immediately
preceding the occurrence of such Covenant Testing Trigger Period for which
financial statements have most recently been delivered pursuant to Section
9.6(a) hereof, and (b) each fiscal quarter for which financial statements are
delivered pursuant to Section 9.6(a) hereof during such Covenant Testing Trigger
Period.”
 
kkkk.     Section 9.22(f) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
 
“(f)        (i) all out-of-pocket expenses and costs heretofore and from time to
time hereafter incurred by Agent during the course of periodic field
examinations of the Collateral and each Borrower's or Guarantor’s operations;
provided that Borrowers shall not have to reimburse Agent for more than two (2)
such field examinations in any twelve (12) month period, except that, on or
after the occurrence and continuation of an Event of Default or at any time
during a Cash Dominion Period, all such field examinations shall be at
Borrowers’ expense without regard to such limitation, plus (ii) a per diem
charge at Agent’s then standard rate for Agent’s examiners in the field and
office (which rate as of the date hereof is $1,000.00 per person per day); and”
 
 
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llll.         Section 10.1(h) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(h)        a case or proceeding under the bankruptcy laws of the United States
of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed (i) by any Borrower or any Guarantor seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to its debts,
or (ii) against all or any part of the Collateral constituting Accounts,
Inventory, Equipment, deposit accounts and proceeds thereof; provided that,
notwithstanding anything to the contrary in this clause (h), any such case or
proceeding filed by any Borrower or Guarantor as set forth in subclause (i)
above shall constitute an Event of Default;”
 
mmmm. The first sentence of Section 11.2(d) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
 
“The consent of Agent shall be required for any amendment, waiver or consent
affecting the rights or duties of Agent hereunder or under any of the other
Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts, Eligible Foreign
Accounts, Eligible Inventory, Eligible Equipment or Eligible Additional
Equipment shall not be deemed an amendment to the advance rates provided for in
this Section 11.2.”
 
nnnn.    Section 12.18 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“12.18   Additional Loans.  Agent shall not make any Revolving Loans or provide
any Letter of Credit to any Borrower on behalf of Lenders intentionally and with
actual knowledge that such Revolving Loans or Letter of Credit would cause the
aggregate amount of the total outstanding Revolving Loans and Letters of Credit
to Borrowers to exceed the Borrowing Base, without the prior consent of all
Lenders, except, that, Agent may make such additional Revolving Loans or provide
such additional Letter of Credit on behalf of Lenders, intentionally and with
actual knowledge that such Revolving Loans or Letter of Credit will cause the
total outstanding Revolving Loans and Letters of Credit to Borrowers to exceed
the Borrowing Base, as Agent may deem necessary or advisable in its discretion,
provided, that: (a) the total principal amount of the additional Revolving Loans
or additional Letters of Credit to any Borrower which Agent may make or provide
after obtaining such actual knowledge that the aggregate principal amount of the
Revolving Loans equal or exceed the Borrowing Bases of Borrowers, plus the
amount of Special Agent Advances made pursuant to Section 12.21(a)(ii) hereof
then outstanding, shall not exceed the aggregate amount equal to ten percent
(10%) of the Maximum Credit and shall not cause the total principal amount of
the Loans and Letters of Credit to exceed the Maximum Credit and (b) no such
additional Revolving Loan or Letter of Credit shall be outstanding more than
ninety (90) days after the date such additional Revolving Loan or Letter of
Credit is made or issued (as the case may be), except as the Required Lenders
may otherwise agree.  Each Lender shall be obligated to pay Agent the amount of
its Pro Rata Share of any such additional Revolving Loans or Letters of Credit.”
 
 
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oooo.    Section 12.21(a)(ii)(A) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(A)      the aggregate principal amount of the Special Agent Advances pursuant
to this clause (ii) outstanding at any time, plus the then outstanding principal
amount of the additional Revolving Loans and Letters of Credit which Agent may
make or provide as set forth in Section 12.18 hereof, shall not exceed the
amount equal to ten percent (10%) percent of the Maximum Credit and”
 
pppp.    Section 13.1(a) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
 
“(a)        This Agreement and the other Financing Agreements shall continue in
full force and effect for a term ending on December 31, 2018 (the “Maturity
Date”), unless sooner terminated pursuant to the terms hereof.  Borrowers may
terminate this Agreement at any time upon ten (10) Business Days’ prior written
notice to Agent (which notice shall be irrevocable); provided, that this
Agreement and all other Financing Agreements must be terminated
simultaneously.  In addition, Agent may terminate this Agreement at any time
that an Event of Default has occurred and is continuing.  In addition, upon
written notice to Borrowers, Agent may terminate this Agreement effective 120
days prior (or anytime thereafter) to the final maturity date of any of the
Senior Notes unless prior to such date: (i) such Senior Notes are refinanced on
terms and conditions satisfactory to Agent (including having a final maturity
date at least 120 days after the Maturity Date); (ii) such Senior Notes have
been paid in accordance with the terms of this Agreement; (iii) Borrowers
deposit into a deposit account under the sole control of Agent pursuant to a
Deposit Account Control Agreement, an amount at least equal to the then current
outstanding balance of such Senior Notes as of the date of such deposit, or (iv)
a combination of the above (i), (ii) and (iii) with respect to such Senior
Notes.  Upon the Maturity Date or any other effective date of termination of the
Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid
Obligations and shall furnish cash collateral to Agent (or at Agent’s option, a
letter of credit issued for the account of Borrowers and at Borrowers’ expense,
in form and substance satisfactory to Agent, by an issuer acceptable to Agent
and payable to Agent as beneficiary) in such amounts as Agent determines are
reasonably necessary to secure Agent and Lenders from loss, cost, damage or
expense, including reasonable attorneys’ fees and expenses, in connection with
any contingent Obligations that are known or ascertainable or that are likely to
ripen, including issued and outstanding Letter of Credit Obligations and checks
or other payments provisionally credited to the Obligations and/or as to which
Agent or any Lender has not yet received final and indefeasible payment and any
continuing obligations of Agent or any Lender pursuant to any Deposit Account
Control Agreement.  The amount of such cash collateral (or letter of credit, as
Agent may determine) as to any Letter of Credit Obligations shall be in the
amount equal to one hundred two percent (102%) of the amount of the Letter of
Credit Obligations plus the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of the
Letters of Credit giving rise to such Letter of Credit Obligations.  Such
payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to the Agent Payment Account or such other bank
account of Agent, as Agent may, in its discretion, designate in writing to
Borrowers for such purpose.  Interest shall be due until and including the next
Business Day, if the amounts so paid by Borrowers to the Agent Payment Account
or other bank account designated by Agent are received in such bank account
later than 12:00 noon, Pasadena, California time.”
 
 
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qqqq.    Section 13.1(c) of the Loan Agreement is hereby deleted.
 
rrrr.        Section 13.3(a) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
 
“(a)        All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made:  if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing.  Notices delivered through electronic
communications shall be effective to the extent set forth in Section 13.3(b)
below.  All notices, requests and demands upon the parties are to be given to
the following addresses (or to such other address as any party may designate by
notice in accordance with this Section):
 
If to any Borrower:
Jazz Semiconductor, Inc.
4321 Jamboree Road
Newport Beach, California  92660
Attention: Chief Financial Officer
Telephone No.:  (949) 435-8000
Telecopy No.:    (949) 435-8111
 
If to Parent Guarantor:
Jazz Technologies, Inc.
4321 Jamboree Road
Newport Beach, California  92660
Attention: Chief Financial Officer
Telephone No.:  (949) 435-8000
Telecopy No.:   (949) 435-8111
 
If to Foreign Parent Nonguarantor:
Tower Semiconductor Ltd.
Ramat Gavriel Industrial Area
P.O. Box 619
Migdal Haemek Israel 23105
Attention: Chief Financial Officer
Telephone No.: +972-(4)-650-6418
Telecopy No.: +972-(4)-604-7242
 
with a copy to:
Yigal Arnon & Co.
1 Azrieli Center
Tel-Aviv 67021
Israel
Attention: David Schapiro
Telephone No.:  972-(3)-607-7726
Telecopy No.:    +972-(3)-608-7714
 
If to Agent:
Wells Fargo Capital Finance, LLC
2450 Colorado Avenue, Suite 3000 West
Santa Monica, California 90404
Attention:  Business Finance Division Manager
Telephone No.:  (310) 453-7300
Telecopy No.:    (310) 453-7413

 
 
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with a copy to:
Morgan, Lewis & Bockius LLP
300 S. Grand Avenue, Twenty-Second Floor
Los Angeles, CA 90071-3132
Attention:  Marshall Stoddard
Telephone No.:  (213) 612-7428
Telecopy No.:    (213) 612-2501”

 
ssss.     Schedule E-1 attached hereto is hereby added to the Loan Agreement as
Schedule E-1 thereto.
 
2.             Effectiveness of this Amendment. The effectiveness of this
Amendment is subject to the satisfaction of each of the following conditions
precedent:
 
a.           Amendment. Agent shall have received this Amendment, fully executed
by Borrowers, Guarantor, Agent and Lenders in a sufficient number of
counterparts for distribution to all parties.
 
b.           Amended and Restated Fee Letter. Agent shall have received an
Amended and Restated Fee Letter, in form and substance satisfactory to Agent,
fully executed by Borrowers and Agent in a sufficient number of counterparts for
distribution to all parties.
 
c.           Representations and Warranties. The representations and warranties
set forth herein and in the Loan Agreement must be true and correct.
 
d.           Other Required Documentation. All other documents and legal matters
in connection with the transactions contemplated by this Amendment shall have
been delivered or executed or recorded and shall be in form and substance
satisfactory to Agent.
 
3.             Representations and Warranties. Each Borrower and Guarantor
represents and warrants as follows:
 
a.           Authority. Each Borrower and Guarantor has the requisite company
power and authority to execute and deliver this Amendment, and to perform its
obligations hereunder and under the Financing Agreements (as amended or modified
hereby) to which it is a party. The execution, delivery and performance by each
Borrower and Guarantor of this Amendment have been duly approved by all
necessary company action and no other company proceedings are necessary to
consummate such transactions.
 
b.           Enforceability. This Amendment has been duly executed and delivered
by each Borrower and Guarantor. This Amendment and each Financing Agreement (as
amended or modified hereby) are the legal, valid and binding obligation of each
Borrower and Guarantor, enforceable against each Borrower and Guarantor in
accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or similar laws limiting creditors’ rights
generally or by general equitable principles, and are in full force and effect.
 
c.           Representations and Warranties.  The representations and warranties
contained in each Financing Agreement (other than any such representations or
warranties that, by their terms, are specifically made as of a date other than
the date hereof) are correct on and as of the date hereof as though made on and
as of the date hereof.
 
 
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d.           Due Execution. The execution, delivery and performance of this
Amendment are within the power of each Borrower and Guarantor, have been duly
authorized by all necessary company action, have received all necessary
governmental approval, if any, and do not contravene any law or any contractual
restrictions binding on any Borrower or Guarantor.
 
e.           No Default. No event has occurred and is continuing that
constitutes an Event of Default.
 
4.             Choice of Law. The validity of this Amendment, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be
determined in accordance with the internal laws of the State of California
governing contracts only to be performed in that State.
 
5.             Counterparts. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Amendment by telefacsimile
shall be effective as delivery of a manually executed counterpart of this
Amendment.
 
6.             Capitalized Terms. Capitalized terms not express defined
elsewhere in this Amendment have the meanings set forth in the Loan Agreement.
 
7.             Reference to and Effect on the Financing Agreements.
 
a.           Upon and after the effectiveness of this Amendment, each reference
in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of
like import referring to the Loan Agreement, and each reference in the other
Financing Agreements to “the Loan Agreement”, “thereof”, or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as modified and amended hereby.
 
b.           Except as specifically amended above, the Loan Agreement and all
other Financing Agreements, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
 
c.           The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of Agent or any Lender under any of the Financing Agreements,
nor constitute a waiver of any provision of any of the Financing Agreements.
 
d.           To the extent that any terms and conditions in any of the Financing
Agreements shall contradict or be in conflict with any terms or conditions of
the Loan Agreement, after giving effect to this Amendment, such terms and
conditions are hereby deemed modified or amended accordingly to reflect the
terms and conditions of the Loan Agreement as modified or amended hereby.
 
8.             Estoppel. To induce Agent and Lenders to enter into this
Amendment and to induce Agent and Lenders to continue to make advances to
Borrowers under the Loan Agreement, each Borrower and Guarantor hereby
acknowledges and agrees that, after giving effect to this Amendment, as of the
date hereof, there exists no Default or Event of Default and no right of offset,
defense, counterclaim or objection in favor of any Borrower or Guarantor as
against Agent or any Lender with respect to the Obligations.
 
 
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9.             Integration. This Amendment incorporates all negotiations of the
parties hereto with respect to the subject matter hereof and is the final
expression and agreement of the parties hereto with respect to the subject
matter hereof.
 
10.           Severability. In case any provision of this Amendment shall be
invalid, illegal or unenforceable, such provision shall be severable from the
remainder of this Amendment and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
 
[Remainder of Page Intentionally Left Blank]

 
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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date
first above written.
 

 
JAZZ SEMICONDUCTOR, INC.,
   
as a Borrower
 
   
By:
     
Name:
Nabil Alali
   
Title:
General Manager and Site  Manager
 
   
By:
     
Name:
Ronit Vardi
   
Title:
CFO            
NEWPORT FAB, LLC,
   
as a Borrower
 
   
By:
     
Name:
Nabil Alali
   
Title:
General Manager and Site  Manager
 
   
By:
     
Name:
Ronit Vardi
   
Title:
CFO            
JAZZ TECHNOLOGIES, INC.,
   
as a Guarantor
 
   
By:
     
Name:
Nabil Alali
   
Title:
General Manager and Site  Manager
 
   
By:
     
Name:
Ronit Vardi
   
Title:
CFO            
WELLS FARGO CAPITAL FINANCE, LLC,
   
as Agent and a Lender
           
By:
     
Name:
     
Title:
   

 
 
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Schedule E-1
 
Eligible Inventory Locations
 
(see attached)
 
 

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