Exhibit 10.1
 
BUSINESS LOAN AGREEMENT
by and between
PEOPLESUPPORT, INC.,
a Delaware corporation
and
CITIBANK (WEST), FSB
Dated as of July 28, 2006
 

 

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Citibank (West), FSB
Business Loan Agreement

     
Borrower:
  PeopleSupport, Inc.,
 
  a Delaware corporation
 
   
Address:
  1100 Glendon Avenue
 
  Los Angeles, CA 90024
 
   
Date:
  July 28, 2006

     THIS BUSINESS LOAN AGREEMENT (“Agreement”) is entered into as of the above
date between Citibank (West), FSB (“Lender”), with offices at 210 West Lexington
Drive, Glendale, California, 91203, and the borrower named above (“Borrower”),
whose chief executive office is located at the above address (“Borrower’s
Address”).
1. DEFINITIONS AND INTERPRETATIONS.
     1.1 Definitions. As used in this Agreement, the following terms have the
following meanings:
          “Account” has the meaning set forth in Section 9102(a)(2) of the Code.
          “Account Debtor” means a Person obligated on an Account, chattel paper
or General Intangible.
          “Additional Costs” has the meaning set forth in Section 3.2(vii).
          “Adjusted Quick Ratio” means, as of the date of determination, Quick
Assets divided by the amount of Revolving Loans outstanding.
          “Affiliate” means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
          “Audit” means to inspect, audit and copy Borrower’s books and records.
           “Borrower” has the meaning set forth in the introduction to this
Agreement.
           “Borrower’s Address” has the meaning set forth in the introduction to
this Agreement.
          “Business Day” means (i) a day on which Lender is open for business in
the State of California, and (ii) a day on which banks are open for dealings in
dollar deposits in the London interbank market.
          “Capital Expenditures” means, for any period, the aggregate of all
cash expenditures by Borrower during that period that, in conformity of GAAP,
are or are required to be included in the property, plant or equipment reflected
in the balance sheet of Borrower.
          “Change of Control” shall be deemed to have occurred at such time as a
“person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) (other than the current holders of the
ownership interests in Borrower) becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
as a result of any

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single transaction or a series of transactions, of more than fifty percent (50%)
of the total voting power of all classes of stock or other ownership interests
then outstanding of Borrower normally entitled to vote in the election of
directors or analogous governing body.
          “Closing Date” means the date of the initial funding under this
Agreement.
          “Code” means the Uniform Commercial Code as adopted and in effect in
the State of California, from time to time, including revised Division 9 of the
Uniform Commercial Code-Secured Transactions, effective July 1, 2001.
          “Credit Limit” has the meaning set forth in Section 2.1 of this
Agreement.
          “Debt” means, as of the date of determination, the sum, but without
duplication, of any and all of Borrower’s (i) indebtedness heretofore or
hereafter created, issued, incurred or assumed by Borrower (directly or
indirectly) for or in respect of money borrowed, (ii) all obligations arising
out of capital leases, (iii) all obligations for the deferred purchase price of
property or services, (iv) all indebtedness and liabilities guaranteed by
Borrower, and (v) all liabilities under Title IV of ERISA, less permitted
subordinated debt.
          “Debt Collection Assets” means any assets relating to Borrower’s debt
collection business and which are subject to liens of Persons who have an
interest in such Debt Collection Assets.
          “Debt Collection Indebtedness” means debt of Borrower incurred in
connection with the purchase of Debt Collection Assets so long as such debt:
(i) specifically states that the recourse of the lender or any other creditor
thereunder is limited to the collateral securing the same and (ii) is secured
solely by the Debt Collection Assets which were purchased with the proceeds of
such Debt Collection Indebtedness.
          “Default” means any event which, with notice or passage of time or
both, would constitute an Event of Default.
          “Default Rate” has the meaning set forth in Section 3.3 if this
Agreement.
          “Deposit Account” means any demand, time, savings, passbook or similar
account now or hereafter maintained by or for the benefit of Borrower with a
bank (as defined in the Code), and all amounts therein, whether or not
restricted or designated for a particular purpose.
          “Dollars or $” means United States dollars.
          “Domestic Receivables” means Receivables where the Account Debtor is
located in the United States.
          “EBITDA” means, for any period, the sum of the following items:
(a) net income after tax for such period, (b) interest expense for such period,
(c) depreciation and amortization for such period, (d) all other non-cash
expenses (less non-cash gains), including without limitation charges resulting
from FASB 123R, for such period, (e) income tax expense for such period, (f) all
extraordinary items and (g) non-recurring charges or restructuring charges
relating to an acquisition as agreed to by the Bank (in each instance to the
extent deducted in the determination of net income and, in each case, as
determined in accordance with GAAP).
          “Equipment” means all of Borrower’s present and hereafter acquired
goods (other than Inventory, farm products, or consumer goods) including, but
not limited to, software embedded in such goods and all machinery, molds,
machine tools, motors, furniture, equipment, furnishings, fixtures, trade
fixtures, motor vehicles, tools, parts, dies, jigs, of every kind and
description used in Borrower’s operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.

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          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor statute, and any and all regulations
thereunder.
          “Event of Default” means any of the events set forth in Section 8.1.
          “F/X Obligations” means Borrower’s obligations under any foreign
exchange facility with Lender.
          “GAAP” means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
          “General Intangibles” means all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower, including,
without limitation, payment intangibles, all choses in action, causes of action,
corporate or other business records, inventions, designs, drawings, blueprints,
patents, patent applications, trademarks and the goodwill of the business
symbolized thereby, names, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, security and other
deposits, rights in all litigation presently or hereafter pending for any cause
or claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Borrower against Lender, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, proprietary information, purchase
orders, and all insurance policies and claims (including without limitation,
life insurance, key man insurance, credit insurance, liability insurance,
property insurance and other insurance), tax refunds and claims, software,
discs, tapes and tape files, claims under guaranties, security interests or
other security held by or granted to Borrower, all rights to indemnification and
all other intangible property of every kind and nature (other than Receivables).
          “Guaranty” means the Guaranty executed by PeopleSupport (Philippines),
Inc. a Philippines corporation, STC Solutions, Inc., a Delaware corporation,
ProArm Management, Inc., a Delaware corporation, PeopleSupport Rapidtext, Inc.,
a Delaware corporation, The Transcription Company, a California corporation, and
PeopleSupport (Costa Rica), S.R.L., a Costa Rican entity, and any other Material
Subsidiary after the date hereof in favor of Lender.
          “Interest Period” means, with respect to each LIBOR Rate Loan, the
period commencing on the Business Day specified by Borrower in a LIBOR Rate Loan
Pricing Worksheet and agreed to by Lender and ending on the numerically
corresponding day thirty (30), sixty (60), ninety (90), or one hundred twenty
(120) days thereafter as Borrower may elect pursuant to the applicable LIBOR
Loan Pricing Worksheet. If any Interest Period would otherwise expire on a day
that is not a Business Day, the Interest Period shall expire on the next
succeeding Business Day; provided that no Interest Period shall extend beyond
the RLOC Maturity Date.
          “Inventory” means all of Borrower’s now owned and hereafter acquired
goods, including software embedded in such goods, merchandise or other personal
property, wherever located, to be furnished under any contract of service or
held for sale or lease (including without limitation all raw materials, work in
process, finished goods and goods in transit, and, including without limitation,
all farm products), and all materials and supplies of every kind, nature and
description which are or might be used or consumed in Borrower’s business or
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of such goods, merchandise or other personal property, and all
warehouse receipts, documents of title and other documents representing any of
the foregoing.
          “Lender” has the meaning set forth in the introduction to this
Agreement.
          “Lender Parent” has the meaning set forth in Section 3.2(ix).
          “LIBOR Base Rate” means the rate per annum for United States dollar
deposits quoted by Lender in accordance with its customary procedures and
utilizing such electronic or other quotation sources as it considers appropriate
in its sole discretion as the London interbank offered rate for a period of time
approximately equal to the number of months in the relevant Interest Period,
with the

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understanding that such rate is quoted by Lender for the purpose of calculating
effective rates of interest for loans making reference thereto.
          “LIBOR Breakage Costs” mean loss, costs or expense incurred by Lender
as a result of any failure by Borrower to borrow a Revolving Loan on the date
for such borrowing specified in the relevant notice of borrowing hereunder.
          “LIBOR Option” has the meaning set forth in Section 3.2(i).
          “LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan,
the rate per annum (rounded upwards, if necessary, to the next 1/16%) determined
by Lender as the sum of (a) the quotient of (i)the LIBOR Base Rate for such
Interest Period, divided by (ii) 100% minus the Reserve Percentage. The LIBOR
Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.
          “LIBOR Rate Loan” means each Revolving Loan that bears interest at a
rate determined by reference to the LIBOR Rate.
          “LIBOR Loan Pricing Worksheet” means an irrevocable request from
Borrower to Lender, in the form set forth on Exhibit B attached hereto, duly
executed by Borrower, stating that Borrower elects to pay interest at the LIBOR
Option, and specifying the date such LIBOR Rate Loan is to be made (which shall
be a Business Day), the amount of the LIBOR Rate Loan and the Interest Period
for such LIBOR Rate Loan.
          “Loan Account” has the meaning set forth in Section 2.2.
          “Loan Documents” means this Agreement, the Guaranty and any other
agreement, instrument or document executed in connection herewith or therewith.
          “Marketable Securities” means (i) marketable direct obligations issued
by any state of the United States or any political subdivision of any such state
or any public instrumentality thereof maturing within 3 years from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor’s Rating Group or Moody’s
Investors Services, Inc. and (ii) securities traded in a nationally-recognized
market.
          “Material Adverse Effect” means a material adverse effect on (i) the
business, assets, condition (financial or otherwise) or results of operations of
Borrower or the subsidiaries of Borrower (taken as a whole with Borrower), or
any guarantor (taken as a whole with Borrower) of any of the Obligations,
(ii) the ability of Borrower or any guarantor (taken as a whole with Borrower)
of any of the Obligations to perform its obligations under this Agreement
(including, without limitation, repayment of the Obligations as they come due),
or (iii) the validity or enforceability of this Agreement or any other agreement
or document entered into by any party in connection herewith, or the rights or
remedies of Lender hereunder or thereunder.
          “Maximum Funded Debt” means, as of the date of determination, all
outstanding interest-bearing Debt of Borrower, including without limitation
outstanding Revolving Loans.
          “Material Subsidiary” means a Subsidiary of Borrower which (i) has
annual revenues of $100,000 or greater or (ii) has assets valued at $100,000 or
more.
          “Obligations” means all present and future Revolving Loans, advances,
debts, liabilities, obligations, guaranties, covenants, duties and indebtedness
at any time owing by Borrower to Lender, whether evidenced by this Agreement or
any note or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, banker’s acceptance, loan, guaranty,
indemnification or otherwise made in connection with this Agreement, whether
direct or indirect (including, without limitation, those acquired by assignment
and any participation by Lender in Borrower’s debts owing to

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others), absolute or contingent, due or to become due, including, without
limitation, all interest, charges, expenses, fees, reasonable attorneys’ fees
(including reasonable attorneys’ fees and expenses incurred in bankruptcy),
expert witness fees and expenses, fees and expenses of consultants, audit fees,
letter of credit fees, collateral monitoring fees, closing fees, facility fees,
termination fees, and any other sums chargeable to Borrower under this Agreement
or under any other present or future instrument or agreement between Borrower
and Lender delivered or executed in connection with this Agreement.
          “Overadvance” has the meaning set forth in Section 4.1.
           “Permitted Liens” means the following:
          (a) purchase money security interests in specific items of Equipment
and liens for non-recourse loans secured by real property;
          (b) leases of specific items of Equipment;
          (c) liens for taxes and assessment not yet delinquent or that are
being contested in good faith by proper proceedings so long as adequate reserves
have been established on Borrower’s books in accordance with GAAP;
          (d) security interests being terminated substantially concurrently
with this Agreement;
          (e) liens of materialmen, mechanics, warehousemen, carriers, or other
similar liens arising in the ordinary course of business and securing
obligations which are not delinquent or that are being contested in good faith
by proper proceedings so long as adequate reserves have been established on
Borrower’s books in accordance with GAAP;
          (f) liens imposed by law arising in the ordinary course of business
such as materialmen’s, mechanics’, warehousemen’s, workers compensation and
other like Liens; or
          (g) liens in favor of customs and revenue authorities which secure
payment of customs duties in connection with the importation of goods.
“Permitted F/X Indebtedness” means foreign exchange contracts with other
financial institutions with an aggregate maximum unsecured exposure of up to
Five Million Dollars ($5,000,000).
          “Person” means any individual, sole proprietorship, general
partnership, limited partnership, limited liability partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, government, or any agency or political division
thereof, or any other entity.
          “Prime Rate” means the variable rate of interest, per annum, published
in the “Money Rates” column or section of The Wall Street Journal (Western
Edition) (“WSJ”) as the “prime rate”. In the event two prime rates are
published, the higher rate shall be used. The Prime Rate is an index for
determining one of the interest rates payable under the terms of this Agreement.
The Prime Rate is not necessarily the lowest rate offered by the banks that
establish the rate or by Lender. In the event the WSJ ceases to publish the
Prime Rate, Lender, in its reasonable judgment, may substitute any similar index
for the Prime Rate. Any change in the Prime Rate shall take effect on the date
of publication in the WSJ.
          “Prime Rate Loan” means each Revolving Loan that bears interest at a
rate determined by reference to the Prime Rate.
          “Quick Assets” means, as at any date of determination, the sum of
Borrower’s cash, cash equivalents, Marketable Securities and Domestic
Receivables minus any Debt Collection Assets.

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          “Receivables” means all of Borrower’s now owned and hereafter acquired
Accounts (whether or not earned by performance), letters of credit, letter of
credit rights, license fees, contract rights, chattel paper (including tangible
chattel paper, electronic chattel paper, and intangible chattel paper),
instruments (including promissory notes), drafts, securities, documents,
securities accounts, security entitlements, commodity contracts, commodity
accounts, investment property, supporting obligations and all other forms of
obligations at any time owing to Borrower, all guaranties and other security
therefor, all merchandise returned to or repossessed by Borrower, and all rights
of stoppage in transit and all other rights or remedies of an unpaid vendor,
lienor or secured party.
          “Regulatory Change” means, with respect to Lender, any change on or
after the date of this Agreement in United States federal, state or foreign laws
or regulations, including Regulation D, or the adoption or making on or after
such date of any interpretations, directives or requests applying to a class of
lenders including Lender of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
          “Reserve Percentage” means, on any day, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor governmental authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or emergency reserves) that are in
effect on such date with respect to eurocurrency funding (currently referred to
as “eurocurrency liabilities”) of Lender, but so long as Lender is not required
or directed under applicable regulations to maintain such reserves, the Reserve
Percentage shall be zero.
          “Responsible Officer” means Chief Executive Officer, President and
Chief Financial Officer.
          “Revolving Loans” has the meaning set forth in Section 2.1 of this
Agreement.
           “RLOC Maturity Date” means July 28, 2008.
          “Solvent” means, with respect to any Person on a particular date, that
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person’s ability to pay as such debts mature, and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person’s properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual or matured liability.
          “Subsidiary” means a corporation, partnership, limited liability
company, or other entity in which Borrower directly or indirectly owns or
controls the shares of stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.
     1.2 Accounting Terms and Determinations. Unless otherwise specified herein,
all accounting terms used in this Agreement, unless otherwise indicated, shall
have the meanings given to such terms in accordance with GAAP. In addition,
unless otherwise specified herein all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meanings provided by the Code, to the extent
such terms are defined therein.

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     1.3 Construction. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular and references to the
singular include the plural; references to any gender include any other gender;
the part includes the whole; the term “including” is not limiting, and the term
“or” has, except where otherwise indicated, the inclusive meaning represented by
the phrase “and/or”. The words, “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Article, section, subsection,
clause, exhibit and schedule references are to this Agreement, unless otherwise
specified. Any reference in this Agreement or any of the Loan Documents to this
Agreement or any of the Loan Documents includes any and all permitted
alterations, amendments, changes, extensions, modifications, renewals, or
supplements thereto or thereof, as applicable.
     1.4 Exhibits and Schedules. All of the exhibits and schedules attached
hereto shall be deemed incorporated herein by reference.
     1.5 No Presumption Against Any Party. Neither this Agreement, any of the
Loan Documents, any other documents, agreement, or instrument entered into in
connection herewith, nor any uncertainty or ambiguity herein or therein shall be
construed or resolved using any presumption against any party hereto, whether
under any rule of construction or otherwise. On the contrary, this Agreement,
the Loan Documents, and the other documents, instruments, and agreements entered
into in connection herewith have been reviewed by each of the parties and their
counsel and shall be construed and interpreted according to the ordinary
meanings of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
     1.6 Independence of Provisions. All agreements and covenants hereunder,
under the Loan Documents and the other documents, instruments, and agreements
entered into in connection herewith shall be given independent effect such that
if a particular action or condition is prohibited by the terms of any such
agreement or covenant, the fact that such action or condition would be permitted
within the limitations of another agreement or covenant shall not be construed
as allowing such action to be taken or condition to exist.
2. CREDIT FACILITIES.
     2.1 Revolving Line of Credit. Provided no Default or Event of Default has
occurred and is continuing, Lender will make loans to Borrower (the “Revolving
Loans”) from time to time from the Closing Date to the RLOC Maturity Date in a
total amount (the “Credit Limit”) at any time outstanding not to exceed Twenty
Five Million Dollars ($25,000,000.00). Within the foregoing limits, Borrower may
borrow, partially or wholly prepay and reborrow under this Agreement as set
forth herein.
     2.2 Loan Account/Deposit Account. Lender shall maintain on its books a
record of account (“Loan Account”) in which it shall make entries for each
Revolving Loan and such other debits and credits as shall be appropriate in
connection with the credit facility set forth in this Agreement. Each Revolving
Loan made by Lender shall be deposited in Borrower’s account number 201844586 at
Lender, or such other account with Lender as designated in writing by Borrower.
3. INTEREST.
     3.1 Prime Rate.
          (i) All Revolving Loans (except for LIBOR Rate Loans) and all other
monetary Obligations shall bear interest at a rate equal to the Prime Rate minus
.25 percentage points (twenty-five basis points), calculated on the basis of a
360-day year for the actual number of days elapsed.
          (ii) Except as otherwise provided in this Agreement, interest on each
Prime Rate Loan shall be due and payable (i) monthly, in arrears, on the last
day of each and every month, commencing August 31, 2006, and (ii) on the RLOC
Maturity Date.

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          (iii) Each Prime Rate Loan shall be made upon the irrevocable written
request of Borrower in the form of Exhibit A received by Lender no later than
11:00 a.m. (California time) on the Business Day such Prime Rate Loan is to be
made. Each such notice shall specify the date such Prime Rate Loan is to be
made, which day shall be a Business Day, and the amount of such Prime Rate Loan,
and shall comply with such other requirements as Lender determines are
reasonable or desirable in connection therewith. Any written request for a Prime
Rate Loan received by Lender after 11:00 a.m. (California time) shall not be
considered by Lender until the next Business Day.
     3.2 LIBOR Option.
          (i) In lieu of having interest charged at a rate based upon the Prime
Rate, Borrower shall have the option (the “LIBOR Option”) to have interest on
all or a portion of the Revolving Loans accrue interest at the LIBOR Rate plus
0.65 percentage points (sixty-five basis points). Borrower shall request such
LIBOR Rate by delivering to Lender a LIBOR Loan Pricing Worksheet with respect
thereto. The LIBOR Loan Pricing Worksheet shall be received by Lender no later
than 11:00 a.m. (California time) on the same Business Day such LIBOR Rate Loan
shall occur. Any LIBOR Loan Pricing Worksheet received by Lender after
11:00 a.m. (California time) shall not be considered by Lender until the next
Business Day.
          (ii) Interest on each LIBOR Rate Loan shall be payable on the earlier
to occur of (i) the last day of the Interest Period applicable thereto, and
(ii) if the Interest Period has a duration of more than one month, on the last
day of each one (1) month interval that occurs during such Interest Period from
the first day of such Interest Period. Interest on each LIBOR Rate Loan shall be
calculated on the basis of a 360-day year for the actual number of days elapsed.
          (iii) Borrower may from time to time submit in writing a request that
Prime Rate Loans be converted to LIBOR Rate Loans or that any existing LIBOR
Rate Loans be continued for an additional Interest Period. Such request shall
specify the amount of the Prime Rate Loans which will constitute LIBOR Rate
Loans (subject to the limits set forth below) and the Interest Period to be
applicable to such LIBOR Rate Loans. Each written request for a conversion to a
LIBOR Rate Loan or a continuation of a LIBOR Rate Loan shall be substantially in
the form of a LIBOR Loan Pricing Worksheet and received by Lender no later than
11:00 a.m. (California time) at least one (1) Business Day prior to the Business
Day such conversion or continuation shall occur provided that:
               (A) no Default or Event of Default exists;
               (B) Borrower shall have complied with such customary procedures
as Lender has established from time to time for Borrower’s requests for LIBOR
Rate Loans;
               (C) the amount of a LIBOR Rate Loan shall be $100,000.00 or such
greater amount which is an integral multiple of $10,000.00;
               (D) no more than seven (7) LIBOR Rate Loans are outstanding; and
               (E) Lender shall have determined that the Interest Period or
LIBOR Rate is available to Lender and can be readily determined as of the date
of the request for such LIBOR Rate Loan.
          (iv) Any request by Borrower to convert Prime Rate Loans to LIBOR Rate
Loans or continue any existing LIBOR Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Lender shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable LIBOR Rate market to fund any LIBOR Rate Loans, but
the provisions hereof shall be deemed to apply as if Lender had purchased such
deposits to fund the LIBOR Rate Loans.
          (v) Each LIBOR Rate Loan shall automatically convert to a Prime Rate
Loan on the last day of the applicable Interest Period, unless Lender has
received and approved a duly

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completed LIBOR Loan Pricing Worksheet no later than 11:00 a.m. (California
time) at least one (1) Business Day prior to such last day of the existing
Interest Period in accordance with the terms hereof. After the occurrence of an
Event of Default (i) Lender may determine not to permit Borrower to incur any
LIBOR Rate Loans or convert any Prime Rate Loans into LIBOR Rate Loans and
(ii) any LIBOR Rate Loans outstanding at such time shall, at Lender’s option,
(x) convert to Prime Rate Loans; provided that Borrower shall not be responsible
for any LIBOR Breakage Costs resulting from such conversion or (y) expire at the
then current Interest Period applicable to such LIBOR Rate Loans and then be
continued as Prime Rate Loans. Unless as provided above, Borrower agrees to pay
to Lender, upon demand by Lender (or Lender may, at its option, charge
Borrower’s Loan Account) any amounts required to compensate Lender for any loss
(including loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of LIBOR Rate Loans to Prime Rate Loans
pursuant to any of the foregoing.
          (vi) If for any reason (including voluntary or mandatory prepayment or
acceleration), Lender receives all or part of the principal amount of a LIBOR
Rate Loan prior to the last day of the Interest Period for such Revolving Loan,
Borrower shall immediately notify Borrower’s account officer at Lender and, on
demand by Lender, pay Lender the amount (if any) by which (i) the additional
interest which would have been payable on the amount so received had it not been
received until the last day of such Interest Period exceeds (ii) the interest
which would have been recoverable by Lender by placing the amount so received on
deposit in the certificate of deposit markets or the offshore currency interbank
markets or United States Treasury investment products, as the case may be, for a
period starting on the date on which it was so received and ending on the last
day of such Interest Period at the interest rate determined by Lender in its
reasonable discretion. Lender’s determination as to such amount shall be
conclusive absent manifest error.
          (vii) Borrower shall pay to Lender, upon demand by Lender, from time
to time such amounts as Lender may determine to be necessary to compensate it
for any costs incurred by Lender that Lender determines are attributable to its
making or maintaining of any amount receivable by Lender hereunder in respect of
any Revolving Loans relating thereto (such increases in costs and reductions in
amounts receivable being herein called “Additional Costs”), in each case
resulting from any Regulatory Change which:
               (A) changes the basis of taxation of any amounts payable to
Lender under this Agreement with respect of any Revolving Loans (other than
changes which affect franchise, capital, branch profit taxes or taxes measured
by or imposed on the overall net income of Lender); or
               (B) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of Lender (including any Revolving Loans or
any deposits referred to in the definition of “LIBOR Base Rate”); or
               (C) imposes any other condition affecting this Section 3.2(vii)
(or any of such extensions of credit or liabilities).
Lender will notify Borrower of any event occurring after the date of this
Agreement which will entitle Lender to compensation pursuant to this
Section 3.2(vii) as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation. Lender will furnish Borrower with a
statement setting forth the basis and amount of each request by Lender for
compensation under this Section 3.2(vii). Determinations and allocations by
Lender for purposes of this Section 3.2(vii) of the effect of any Regulatory
Change on its costs of maintaining its obligations to make Revolving Loans or of
making or maintaining Revolving Loans or on amounts receivable by it in respect
of Revolving Loans, and of the additional amounts required to compensate Lender
in respect of any Additional Costs, shall be conclusive absent manifest error.
          (viii) Borrower shall pay to Lender, upon the request of Lender, such
amount or amounts as shall be sufficient (in the sole good faith opinion of such
Lender) to compensate it for any

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LIBOR Breakage Costs, unless such LIBOR Breakage Costs are due solely from
Lender’s failure to make a Revolving Loan specified in a notice of borrowing
pursuant to the terms of this Agreement.
          (ix) If Lender shall determine that the adoption or implementation of
any applicable law, rule, regulation or treaty regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by Lender in
any respect, with any directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of Lender or any person or entity controlling Lender (a “Lender Parent”) as a
consequence of its obligations hereunder to a level below that which Lender (or
its Lender Parent) could have achieved but for such adoption, change or
compliance (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by Lender to be material, then from time to time,
within 15 days after demand by Lender, Borrower shall pay to Lender such
additional amount or amounts as will compensate Lender for such reduction. A
statement of Lender claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder shall be conclusive,
absent manifest error.
          (x) If at any time Lender, in its sole and absolute discretion,
determines that: (i) the amount of the LIBOR Rate Loans for periods equal to the
corresponding Interest Periods are not available to Lender in the offshore
currency interbank markets, or (ii) the LIBOR Rate does not accurately reflect
the cost to Lender of lending the LIBOR Rate Loan, then Lender shall promptly
give notice thereof to Borrower, and upon the giving of such notice Lender’s
obligation to make the LIBOR Rate Loans shall terminate, unless Lender and
Borrower agree in writing to a different interest rate applicable to LIBOR Rate
Loans. If it shall become unlawful for Lender to continue to fund or maintain
any Revolving Loans, or to perform its obligations hereunder, upon demand by
Lender, Borrower shall prepay the Revolving Loans in full with accrued interest
thereon and all other amounts payable by Borrower hereunder.
     3.3 Default Interest. Upon the occurrence and during the continuance of an
Event of Default, Borrower shall pay interest on the unpaid principal amount of
each Revolving Loan owing to Lender and on the unpaid amount of all interest,
fees and other amounts payable hereunder that is not paid when due, payable on
demand by Lender, at a rate per annum (the “Default Rate”) equal at all times to
five percent (5%) per annum above the rate per annum required to be paid on such
Revolving Loan pursuant to Sections 3.1 or 3.2, as the case may be, or, in the
case of such other amounts, above the rate per annum required to be paid on
Prime Rate Loans pursuant to Section 3.1 above.
4. PAYMENT OF OBLIGATIONS.
     4.1 Overadvance. If, at any time and for any reason, the amount of the
outstanding Obligations exceeds the Credit Limit (an “Overadvance”), Borrower
shall immediately pay Lender, in cash, the amount of such Overadvance. Lender
shall apply such payments (i) first to the outstanding Revolving Loans that are
Prime Rate Loans and (ii) second to the outstanding Revolving Loans that are
LIBOR Rate Loans in an order to minimize LIBOR Breakage Costs.
     4.2 RLOC Maturity Date. On the RLOC Maturity Date, Borrower shall pay and
perform in full all outstanding Revolving Loans and all other Obligations,
whether for principal, interest, costs, fees or otherwise.
     4.3 Manner of Payment. Payment of the Revolving Loans and all other
Obligations shall be withdrawn from Borrower’s account number 201844586 with
Lender, or such other account with Lender as designated in writing by Borrower.
5. CONDITIONS PRECEDENT.
     5.1 Conditions to Initial Revolving Loans. The obligation of Lender to make
the Revolving Loans is subject to the satisfaction, in the sole discretion of
Lender, at or prior to the first advance of funds hereunder, of each, every and
all of the following conditions:

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      Business Loan Agreement  

          (a) Borrower shall deliver to Lender this Agreement and the Guaranty,
in form and substance satisfactory to Lender in its sole and absolute
discretion;
          (b) Lender shall have received copies of the insurance binders or
certificates evidencing Borrower’s compliance with Section 7.2 of this
Agreement.
          (c) Lender shall have received copies of Borrower’s articles and all
amendments thereto, and a certificate of good standing, each certified by the
Secretary of State of the state of Borrower’s organization, and dated a recent
date prior to the Closing Date, and Lender shall have received certificates of
foreign qualification for Borrower from the Secretary of State of California.
          (d) Lender shall have received copies of Borrower’s bylaws and all
amendments thereto, and Lender shall have received copies of the resolutions of
the board of directors of Borrower, authorizing the execution and delivery of
this Agreement and the other documents contemplated hereby, and authorizing the
transactions contemplated hereunder and thereunder, and authorizing specific
officers of Borrower to execute the same on behalf of Borrower, in each case
certified by the Secretary or other acceptable officer of Borrower as of the
Closing Date.
          (e) Lender shall have received evidence from Borrower that Borrower
has complied with all tax withholding and Internal Revenue Service regulations,
in form and substance satisfactory to Lender in its sole and absolute
discretion.
          (f) Lender shall have completed its due diligence with respect to
Borrower.
          (g) Lender shall have received such other agreements, instruments and
documents as Lender may require in connection with the transactions contemplated
hereby, all in form and substance satisfactory to Lender in Lender’s sole and
absolute discretion, and, as applicable, in form for filing in the appropriate
filing office.
          (h) Lender shall have received all out-of-pocket costs incurred by
Lender in connection with the loan documents.
          (i) The Closing Date shall occur no later than July 31, 2006.
     5.2 Conditions to all Revolving Loans. The obligation of Lender to make any
Revolving Loans to Borrower (including the initial Revolving Loans) is further
subject to and contingent upon the fulfillment of each of the following
conditions to the satisfaction of Lender:
          (a) The fact that, immediately before and after the making of any
Revolving Loan, no Event of Default or Default shall have occurred or be
continuing; and
          (b) The fact that the representations and warranties of Borrower
contained in this Agreement shall be materially true and correct on and as of
the date of such borrowing.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. In order to induce
Lender to enter into this Agreement and to make Revolving Loans, Borrower
represents and warrants to Lender as follows, and Borrower covenants that the
following representations will continue to be true, and that Borrower will at
all times comply with all of the following covenants:
     6.1 State of Organization, Existence and Authority. Borrower and each
Subsidiary is and will continue to be, duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization which, as
to Borrower, is accurately set forth in the heading to this Agreement. Borrower
and each Subsidiary is and will continue to be qualified and licensed to do
business in all jurisdictions in which such qualification or license is required
under applicable law. The execution, delivery and performance by Borrower of
this Agreement, and all other documents contemplated hereby, and any documents
executed by a Subsidiary, (a) have been duly and validly authorized, (b) are
enforceable against Borrower and such Subsidiary in accordance with their terms
(except as enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or

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      Business Loan Agreement  

similar laws relating to creditors’ rights generally), and (c) do not violate
Borrower’s or such Subsidiary’s articles, or any law or any material agreement
or instrument which is binding upon Borrower or such Subsidiary or Borrower’s or
such Subsidiary’s property, and (d) do not constitute grounds for acceleration
of any material indebtedness or obligation under any material agreement or
instrument that is binding upon Borrower or such Subsidiary or Borrower’s or
such Subsidiary’s property. Borrower will give Lender ten (10) days’ prior
written notice before changing its state of organization.
     6.2 Name; Trade Names and Styles. The name of Borrower set forth in the
heading to this Agreement is its correct name. All prior names of Borrower and
all of Borrower’s present and prior trade names are listed on the Schedule
attached hereto. Borrower shall give Lender thirty (30) days’ prior written
notice before changing its name or doing business under any trade name. Borrower
has complied, and will in the future comply, with all laws relating to the
conduct of business under a fictitious business name.
     6.3 Place of Business. Borrower’s Address set forth in the heading to this
Agreement is the address and location of Borrower’s chief executive office.
     6.4 Books and Records. Borrower has maintained and will maintain at
Borrower’s Address complete and accurate books and records, comprising an
accounting system in accordance with GAAP.
     6.5 Financial Condition, Statements and Reports. All financial statements
now or in the future delivered to Lender have been, and will be, prepared in
conformity with GAAP (except, in the case of unaudited financial statements, for
the absence of footnotes and subject to normal year-end adjustments) and now and
in the future will fairly reflect the financial condition of Borrower, at the
times and for the periods therein stated. Between the last date covered by any
such statement provided to Lender and the date hereof, there has been no
Material Adverse Effect. Borrower is now and will continue to be Solvent.
     6.6 Tax Returns and Payments; Pension Contributions. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and Borrower has timely paid, and will timely pay,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (a) in good faith
contests Borrower’s obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (b) notifies Lender in writing
of the commencement of, and any material development in, the proceedings, and
(c) posts bonds or takes any other steps required to keep the contested taxes
from becoming a lien upon any of Borrower’s assets. As of the date hereof,
Borrower is unaware of any claims or adjustments proposed for any of Borrower’s
prior tax years which could result in additional taxes becoming due and payable
by Borrower. Borrower has paid, and shall continue to pay all amounts necessary
to fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
     6.7 Compliance with Law. Borrower and each Subsidiary has complied, and
will comply, in all material respects, with all provisions of all material
foreign, federal, state and local laws and regulations relating to Borrower or
such Subsidiary, including, but not limited to, the Fair Labor Standards Act,
and those relating to Borrower’s or such Subsidiary’s ownership of real or
personal property, the conduct and licensing of Borrower’s or such Subsidiary’s
business, and environmental matters.
     6.8 Material Subsidiaries. All of Borrower’s Material Subsidiaries on the
Closing Date are set forth in the definition of “Guaranty” in Section 1.1.
Borrower shall cause all other Subsidiaries that become Material Subsidiaries
after the Closing Date to execute a counterpart to the Guaranty.
     6.9 Litigation. Except as disclosed in the Schedule attached hereto, there
is no claim, suit, litigation, proceeding or investigation pending, or to the
best of Borrower’s knowledge, threatened by or

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      Business Loan Agreement  

against or affecting Borrower or any Subsidiary in any court or before any
governmental agency (or any basis therefore known to Borrower) which may result,
either separately or in the aggregate, in a Material Adverse Effect. Borrower
will promptly inform Lender in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted by or against Borrower or
any Subsidiary involving any single claim of $1,000,000.00 or more, or involving
$2,000,000.00 or more in the aggregate.
     6.10 Use of Proceeds. All proceeds of all Revolving Loans shall be used
solely for lawful business purposes. Borrower is not purchasing or carrying any
“margin stock” (as defined in Regulation U of the Board of Governors of the
Federal Reserve System) and no part of the proceeds of any Revolving Loan will
be used to purchase or carry any “margin stock” or to extend credit to others
for the purpose of purchasing or carrying any “margin stock.”
7. ADDITIONAL DUTIES OF THE BORROWER.
     7.1 Financial and Other Covenants. Borrower shall at all times comply with
the following covenants:
          (a) Borrower shall maintain an Adjusted Quick Ratio of at least
1.25:1.00 as of the last day of each fiscal quarter-end.
          (b) Borrower shall maintain a Maximum Funded Debt to EBITDA Ratio,
measured on a rolling four-quarter basis, of no greater than 1.50:1.00, measured
the last day of each fiscal quarter-end
     7.2 Insurance. Borrower shall at all times carry such business insurance
with financially sound and reputable insurance companies in amounts, covering
such risks, and having such deductibles as is customary for reputable companies
engaged primarily in the same business as Borrower.
     7.3 Reports. Borrower, at its expense, shall provide Lender with the
written reports set forth below, and, after the occurrence and continuance of an
Event of Default, such other written reports with respect to Borrower (including
budgets, sales projections, operating plans and other financial documentation),
as Lender shall from time to time reasonably request:
          (a) SEC Form 10-Q, together with company prepared consolidating
schedules no later than forty-five (45) days after the end of each quarter,
commencing with the quarter ending September 30, 2006.
          (b) SEC Form 10-K, together with company prepared consolidating
schedules no later than ninety (90) days after the end of Borrower’s fiscal
year, commencing with the fiscal year ending December 31, 2006.
          (c) a quarterly loan covenant compliance certificate in the form of
Exhibit C attached hereto no later than forty-five (45) days after the end of
each fiscal quarter, commencing with the fiscal quarter ending September 30,
2006.
     7.4 Access to Books and Records. At reasonable times but not less
frequently than annually and on one (1) Business Day’s notice, Lender, by and
through its employees or agents, shall have the right to perform Audits. Lender
shall take reasonable steps to keep confidential all confidential information
obtained in any Auditor appraisal, but Lender shall have the right to disclose
any such information to its auditors, regulatory agencies, and attorneys, and
pursuant to any subpoena or other legal process. Borrower will not enter into
any agreement with any accounting firm, service bureau or third party to store
Borrower’s books or records at any location other than Borrower’s Address,
without first notifying Lender of the same and obtaining the written agreement
from such accounting firm, service bureau or other third party to give Lender
the same rights with respect to access to books and records and related rights
as Lender has under this Agreement. Borrower shall reimburse Lender immediately
upon demand of the fees and expenses incurred in connection with said Audit;
provided that Borrower shall only have to pay for one Audit per year (which cost
shall be limited to $3,500) unless an Event of Default has occurred and is
continuing.

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      Business Loan Agreement  

     7.5 Negative Covenants. Borrower shall not, and shall not permit any of its
Subsidiaries to, without Lender’s prior written consent, do any of the
following:
          (a) merge or consolidate with another entity, except in a transaction
in which (1) as to Borrower, (i) the owners of Borrower hold at least fifty
percent (50%) of the ownership interest in the surviving entity immediately
after such merger or consolidation, and (ii) (x) Borrower is the surviving
entity or (y) Borrower is not the surviving entity and Lender has conducted a
credit analysis of the surviving entity which is satisfactory to Lender in its
sole discretion and has received the requisite credit approval and (2) as to any
Subsidiary, Borrower holds at least fifty percent (50%) of the ownership
interest in the surviving entity immediately after such merger or consolidation;
          (b) enter into any other transaction outside the ordinary course of
business. For purposes of this Section 7.5, Lender acknowledges that Borrower’s
ordinary course of business includes, but is not limited to, any activity by it
or its subsidiaries related to business process outsourcing, including, without
limitation, acquiring other companies or property which Borrower believes will
enhance its position in such industry;
          (c) sell, lease or license (except for software licensed by Borrower
in the ordinary course of business) any of Borrower’s or any Subsidiary’s
assets, or grant any other security interest (other than a Permitted Lien) in
such assets, except for the sale, lease or license of finished Inventory in the
ordinary course of Borrower’s or any Subsidiary’s business, and except for the
sale of obsolete or unneeded Equipment in the ordinary course of business;
          (d) make any loans of any money or other assets, except (i) advances
to customers or suppliers in the ordinary course of business, (ii) travel
advances, employee relocation loans and other employee loans and advances in the
ordinary course of business, and (iii) loans to employees, officers and
directors for the purpose of purchasing equity securities of Borrower or any
Subsidiary or for any other purpose satisfactory to Lender; provided, however,
that nothing in this Section 7.5 or elsewhere in this Agreement shall restrict
Borrower’s or any Subsidiary’s right to make investments in Marketable
Securities;
          (e) incur any debts outside the ordinary course of business, other
than Permitted F/X Indebtedness and Debt Collection Indebtedness;
          (f) guarantee or otherwise become liable with respect to the
obligations of another party or entity (other than for surety bonds incurred in
the ordinary course of business);
          (g) make any change in Borrower’s or any Subsidiary’s capital
structure which would have a Material Adverse Effect; or
          (h) dissolve or elect to dissolve;
     Transactions permitted by the foregoing provisions of this Section are only
permitted if no Default or Event of Default is continuing or would occur as a
result of such transaction.
     7.6 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Lender with respect to or relating to Borrower or any
Subsidiary, Borrower shall, without expense to Lender, make available Borrower
and any Subsidiary and any of their officers, employees and agents and
Borrower’s and any Subsidiary’s books and records, to the extent that Lender may
deem them reasonably necessary in order to prosecute or defend any such suit or
proceeding.
     7.7 Further Assurances. Borrower agrees, at its expense, on request by
Lender, to execute all documents and take all actions, as Lender, may deem
reasonably necessary or useful in order to fully consummate the transactions
contemplated by this Agreement.
     7.8 Primary Operating Account. Within twelve months of the Closing Date,
Borrower’s primary operating banking relationship shall be with Lender. For
purposes of this Section 7.8, “Borrower’s

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      Business Loan Agreement  

primary operating banking relationship” shall be deemed to mean Borrower’s
accounts containing funds which Borrower reasonably expects to be used in the
ordinary course of business within a ninety (90) day period.
     7.9 Dividends and Distributions. Borrower shall not pay or declare any
dividends or distributions on the ownership interests in Borrower, including
dividends or distributions payable solely in stock form of ownership interests
in Borrower, unless immediately before and after such payment or declaration no
Event of Default or Default shall have occurred or be continuing.
8. EVENTS OF DEFAULT AND REMEDIES.
     8.1 Events of Default. The occurrence of any of the following events shall
constitute an “Event of Default” under this Agreement, and Borrower shall give
Lender immediate written notice thereof:
          (a) Any warranty, representation, statement, report or certificate
made or delivered to Lender by Borrower or any of Borrower’s officers, employees
or agents, now or in the future, shall be untrue or misleading and results in a
Material Adverse Effect; or
          (b) Borrower shall fail to pay when due any Revolving Loan or any
interest thereon or any other monetary Obligation (other than any F/X
Obligation) within three (3) Business Days of when due for regularly scheduled
payments or ten (10) Business Days after Borrower’s receipt of notice from
Lender of non-regularly scheduled amounts due; or
          (c) Borrower shall fail to give Lender access to its books and records
as provided in Section 7.4 above, or shall breach any negative covenant set
forth in Section 7.5 above; or
          (d) Borrower shall fail to comply with the financial covenants (if
any) set forth in Section 7.1 or shall fail to perform any other non-monetary
Obligation which by its nature cannot be cured; or
          (e) Borrower shall fail to perform any other non-monetary Obligation,
which failure is not cured within the later of (i) ten (10) days after Borrower
receives notice from Lender of the occurrence of such failure to perform with
respect to such non-monetary obligation (but this subsection (i) is only
applicable if no Responsible Officer has prior knowledge of such failure) or
(ii) thirty (30) days after the date due; or
          (f) any default or event of default occurs under any obligation
secured by a Permitted Lien, which is not cured within any applicable cure
period or waived in writing by the holder of the Permitted Lien; or
          (g) Dissolution, termination of existence, insolvency or business
failure of Borrower or any guarantor of any of the Obligations; or voluntary
appointment of a receiver, trustee or custodian, for all or any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceeding by Borrower or any guarantor of any of the Obligations under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, or involuntary appointment of a receiver, trustee or
custodian, for all or any part of the property of Borrower which is not
dismissed within sixty (60) days; or
          (h) the commencement of any proceeding against Borrower or any
guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is (i) not
timely controverted, or (ii) not cured by the dismissal thereof within ninety
(90) days after the date commenced; or
          (i) revocation or termination of, or limitation or denial of liability
upon, any guaranty of the Obligations or any attempt to do any of the foregoing,
or commencement of proceedings by any guarantor of any of the Obligations under
any bankruptcy or insolvency law; or

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      Business Loan Agreement  

          (j) revocation or termination of, or limitation or denial of liability
upon, any pledge of any certificate of deposit, securities or other property or
asset of any kind pledged by any third party to secure any or all of the
Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or
          (k) Borrower or any guarantor of any of the Obligations makes any
payment on account of any indebtedness or obligation which has been subordinated
to the Obligations, other than as permitted in the applicable subordination
agreement, or if any Person who has subordinated such indebtedness or
obligations terminates or in any way limits his subordination agreement; or
          (l) Except as permitted under Section 7.5(a), Borrower shall suffer or
experience any Change of Control without Lender’s prior written consent, which
consent shall be in the discretion of Lender in the exercise of its reasonable
business judgment; or
          (m) Borrower shall generally not pay its debts as they become due, or
Borrower shall conceal, remove or transfer any part of its property, with intent
to hinder, delay or defraud its creditors, or make or suffer any transfer of any
of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or
          (n) Borrower defaults on any of its F/X Obligations, which default is
not cured within five (5) Business Days of such default; or
          (o) there shall be any Material Adverse Effect.
     8.2 Remedies. Upon the occurrence and during the continuance of any Event
of Default, Lender, at its option, and without notice or demand of any kind (all
of which are hereby expressly waived by Borrower), may do any one or more of the
following:
          (a) Cease making Revolving Loans or otherwise extending credit to
Borrower under this Agreement or any other document or agreement;
          (b) Accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation;
          (c) Demand and receive possession of copies of any of Borrower’s
federal and state income tax returns and copies of the books and records
utilized in the preparation thereof or referring thereto.
All reasonable attorneys’ fees, expenses, costs, liabilities and obligations
incurred by Lender (including reasonable attorneys’ fees and expenses incurred
in connection with bankruptcy) with respect to the foregoing shall be due from
Borrower to Lender on demand. Lender may charge the same to Borrower’s Loan
Account, and the same shall thereafter bear interest at the same rate as is
applicable to the Prime Rate Loans. Without limiting any of Lender’s rights and
remedies, from and after the occurrence of any Event of Default, the interest
rate applicable to the Obligations shall be increased by an additional five
percent (5%) per annum.
     8.3 Power of Attorney. After the occurrence and continuance of an Event of
Default, Borrower grants to Lender an irrevocable power of attorney coupled with
an interest, authorizing and permitting Lender (acting through any of its
employees, attorneys or agents) at any time, at its option, but without
obligation, with or without notice to Borrower, and at Borrower’s expense, to do
any or all of the following, in Borrower’s name or otherwise, but Lender agrees
to exercise the following powers in a commercially reasonable manner:
          (a) Execute on behalf of Borrower any documents that Lender may, in
its sole discretion, deem advisable in order to exercise a right of Borrower or
Lender, or in order to fully

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Citibank (West), FSB
      Business Loan Agreement  

consummate all the transactions contemplated under this Agreement, and all other
present and future agreements;
          (b) Pay any sums required on account of Borrower’s taxes or to secure
the release of any liens therefor, or both;
          (c) Take any action or pay any sum required of Borrower pursuant to
this Agreement and any other present or future agreements.
Any and all sums paid and any and all costs, expenses, liabilities, obligations
and reasonable attorneys’ fees incurred by Lender (including reasonable
attorneys’ fees and expenses incurred pursuant to bankruptcy) with respect to
the foregoing shall be added to and become part of the Obligations, and shall be
payable on demand. Lender may charge the foregoing to Borrower’s Loan Account
and the foregoing shall thereafter bear interest at the same rate applicable to
the Prime Rate Loans. In no event shall Lender’s rights under the foregoing
power of attorney or any of Lender’s other rights under this Agreement be deemed
to indicate that Lender is in control of the business, management or properties
of Borrower. Borrower shall pay, indemnify, defend, and hold Lender and each of
its officers, directors, employees, counsel, agents, and attorneys-in-fact
(each, an “Indemnified Person”) harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable attorneys fees and
disbursements and other costs and expenses actually incurred in connection
therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of them
in connection with or as a result of or related to the execution, delivery,
enforcement, performance, and administration of this Agreement and any other
Loan Documents or the transactions contemplated herein, and with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event or circumstance in any manner related thereto (all the
foregoing, collectively, the “Indemnified Liabilities”). Borrower shall have no
obligation to any Indemnified Person hereunder with respect to any Indemnified
Liability to have resulted from the gross negligence or willful misconduct of
such Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations.
     8.4 Remedies Cumulative. In addition to the rights and remedies set forth
in this Agreement, Lender shall have all the other rights and remedies accorded
a secured party in equity, under the Code, and under all other applicable laws,
and under any other instrument or agreement now or in the future entered into
between Lender and Borrower, and all of such rights and remedies are cumulative
and none is exclusive. Exercise or partial exercise by Lender of one or more of
its rights or remedies shall not be deemed an election, nor bar Lender from
subsequent exercise or partial exercise of any other rights or remedies. The
failure or delay of Lender to exercise any rights or remedies shall not operate
as a waiver thereof, but all rights and remedies shall continue in full force
and effect until all of the Obligations have been indefeasibly paid and
performed.
9. GENERAL PROVISIONS.
     9.1 Application of Payments. All payments with respect to the Obligations
may be applied, and in Lender’s sole discretion reversed and re-applied, to the
Obligations, in such order and manner as Lender shall determine in its sole
discretion; provided that before the occurrence of an Event of Default, Lender
shall apply payments (i) first to the outstanding Revolving Loans that are Prime
Rate Loans and (ii) second to the outstanding Revolving Loans that are LIBOR
Rate Loans in an order to minimize LIBOR Breakage Costs.
     9.2 Charges to Accounts. Lender may, in its discretion, require that
Borrower pay monetary Obligations in cash to Lender, or charge them to
Borrower’s Loan Account, in which event they will bear interest from the date
due to the date paid at the same rate applicable to Prime Rate Loans.
     9.3 Monthly Accountings. Lender shall provide Borrower monthly with a copy
of the Loan Account that reflects all advances, charges, expenses and payments
made pursuant to this Agreement.

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Citibank (West), FSB
      Business Loan Agreement  

Such Loan Account shall be deemed correct, accurate and binding on Borrower and
an account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by Lender), unless Borrower notifies Lender in
writing to the contrary within thirty (30) days after each Loan Account is
rendered, describing the nature of any alleged errors or omissions.
     9.4 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, facsimile or certified mail return
receipt requested. All notices to Borrower shall be addressed to Borrower at the
address shown in the heading to this Agreement, or at any other address
designated in writing by Borrower to Lender. All notices to Lender shall be
addressed to Lender at the address set forth in the introductory paragraph of
this Agreement, to the attention of the Commercial Banking Division, Manager,
Note Department, or at any other address designated in writing by Lender to
Borrower. All notices shall be deemed to have been given upon delivery in the
case of notices personally delivered, faxed (at time of confirmation of
transmission), or at the expiration of one (1) Business Day following delivery
to a private delivery service, or two (2) Business Days following the deposit
thereof in the United States mail, with postage prepaid.
     9.5 Severability. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
     9.6 Integration. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Lender and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. There are
no oral understandings, representations or agreements between the parties which
are not set forth in this Agreement or in other written agreements signed by the
parties in connection herewith.
     9.7 Waivers. The failure of Lender at any time or times to require Borrower
to strictly comply with any of the provisions of this Agreement or any other
present or future agreement between Borrower and Lender shall not waive or
diminish any right of Lender later to demand and receive strict compliance
therewith. Any waiver of any Default shall not waive or affect any other
Default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Lender shall be deemed to have been waived
by any act or knowledge of Lender or its agents or employees, but only by a
specific written waiver signed by an authorized officer of Lender and delivered
to Borrower. Borrower waives demand, protest, notice of protest and notice of
default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper, instrument, account,
General Intangible, document or guaranty at any time held by Lender on which
Borrower is or may in any way be liable, and notice of any action taken by
Lender, unless expressly required by this Agreement.
     9.8 No Liability for Ordinary Negligence. Neither Lender, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Lender shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the ordinary negligence of Lender, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Lender, but nothing herein shall relieve Lender from
liability for its own gross negligence or willful misconduct.
     9.9 Amendment. The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by Borrower and a duly authorized
officer of Lender.
     9.10 Time of Essence. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement.
     9.11 Attorneys’ Fees, Costs and Charges. Borrower shall reimburse Lender
for all reasonable attorneys’ fees (including reasonable attorneys’ fees and
expenses incurred pursuant to bankruptcy) and all filing, recording, search,
title insurance, appraisal, audit (subject to Section 7.4), and

18

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Citibank (West), FSB
      Business Loan Agreement  

other costs incurred by Lender, pursuant to, or in connection with, or relating
to this Agreement (whether or not a lawsuit is filed), including, but not
limited to, any reasonable attorneys’ fees and costs (including reasonable
attorneys’ fees and expenses incurred pursuant to bankruptcy) Lender incurs in
order to do the following: prepare and negotiate this Agreement and the
documents relating to this Agreement; obtain legal advice in connection with
this Agreement or Borrower; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, Account Debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of Borrower’s books and records; and otherwise represent
Lender in any litigation relating to Borrower. If either Lender or Borrower
files any lawsuit against the other predicated on a breach of this Agreement,
the prevailing party in such action shall be entitled to recover its costs and
reasonable attorneys’ fees (including reasonable attorneys’ fees and expenses
incurred pursuant to bankruptcy), including (but not limited to) reasonable
attorneys’ fees and costs incurred in the enforcement of, execution upon or
defense of any order, decree, award or judgment. Borrower shall also pay
Lender’s standard charges for returned checks and for wire transfers, in effect
from time to time. If Borrower does not pay the amounts required under this
Section 9.11 within ten (10) days of written demand, all reasonable attorneys’
fees, costs and charges (including reasonable attorneys’ fees and expenses
incurred pursuant to bankruptcy) and other fees, costs and charges to which
Lender may be entitled pursuant to this Agreement may be charged by Lender to
Borrower’s Loan Account and shall thereafter bear interest at the same rate as
the Revolving Loan. Notwithstanding anything to the contrary herein, Borrower
shall only be responsible to reimburse Lender for reasonable attorneys’ fees
that Lender incurs on and before the Closing Date in an amount not to exceed
$10,000.
     9.12 Benefit of Agreement. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Lender; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Lender, and any prohibited
assignment shall be void. No consent by Lender to any assignment shall release
Borrower from its liability for the Obligations. Lender may assign its rights
and delegate its duties hereunder without the consent of Borrower. Lender
reserves the right to syndicate (at Lender’s sole cost and expense) all or a
portion of the transaction created herein or sell, assign, transfer, negotiate,
or grant participations in all or any part of, or any interest in Lender’s
rights and benefits hereunder. In connection with any such syndication,
assignment or participation, Lender may disclose all documents and information
which Lender now or hereafter may have relating to Borrower or Borrower’s
business. To the extent that Lender assigns its rights and obligations hereunder
to a third Person, Lender thereafter shall be released from such assigned
obligations to Borrower.
     9.13 Publicity. Lender is hereby authorized, at its expense and in its sole
discretion, to issue appropriate press releases and to cause a tombstone to be
published announcing the consummation of this transaction and the aggregate
amount thereof.
     9.14 Confidentiality. Lender agrees that material, non-public information
(“Confidential Information”) regarding Borrower, its operations, assets, and
existing and contemplated business plans shall be treated by Lender in a
confidential manner, and shall not be disclosed by Lender to Persons who are not
parties to this Agreement, except: (a) to attorneys for and other advisors,
accountants, auditors, and consultants of Lender, (b) to subsidiaries and
Affiliates of Lender, provided that any such subsidiary or Affiliate shall have
agreed to receive such information hereunder subject to the terms of this
Section 9.14, (c) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation, (d) as may be agreed to in advance by
Borrower or its subsidiaries or as requested or required by any governmental
authority pursuant to any subpoena or other legal process, (e) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Lender), (f) in connection with any
assignment, prospective assignment, sale, prospective sale, participation or
prospective participations, or pledge or prospective pledge of Lender’s interest
under this Agreement, provided that any such assignee, prospective assignee,
purchaser, prospective purchaser, participant, prospective participant, pledgee,
or prospective pledgee shall have agreed in writing to receive such information
hereunder subject to the terms of this Section, and (g) in connection with any

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Citibank (West), FSB
      Business Loan Agreement  

litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents. For
purposes of hereof, “Confidential Information” includes all documents, materials
and information concerning Borrower, including without limitation its
PeopleSupport Center in Makati City, Philippines (the “Service Center”), which
(a) are furnished, made available or otherwise disclosed by Borrower or on
Borrower’s behalf and (b) are designated by Borrower in writing as being
confidential, excluding however from this requirement, any information obtained
or disclosed in connection with the visit of any of Lender’s representative to
the Service Center. Confidential Information excludes any documents, materials
and information which (i) was or becomes generally available to the public other
than as a result of a disclosure by Lender, (ii) was available to Lender on a
non-confidential basis prior to its disclosure by Borrower or (iii) becomes
available to Lender on a non-confidential basis from an independent source,
provide that such source was not itself bound by an obligation of
confidentiality owed by Borrower and known to Lender. The provisions of this
Section 9.14 shall survive the termination of this Agreement.
     9.15 Governing Law; Jurisdiction; Venue. This Agreement and all acts and
transactions hereunder and all rights and obligations of Lender and Borrower
shall be governed by the internal laws of the State of California, without
regard to its conflicts of law principles. As a material part of the
consideration to Lender to enter into this Agreement, Borrower (a) agrees that
all actions and proceedings relating directly or indirectly to this Agreement
shall, at Lender’s option, be litigated in courts located within California, and
that the exclusive venue therefor shall be Los Angeles County; (b) consents to
the jurisdiction and venue of any such court and consents to service of process
in any such action or proceeding by personal delivery or any other method
permitted by law; and (c) waives any and all rights Borrower may have to object
to the jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
     9.16 Mutual Waiver of Jury Trial. TO THE EXTENT ALLOWED BY APPLICABLE LAW,
BORROWER AND LENDER EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS
AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN LENDER
AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF LENDER OR BORROWER OR ANY OF
THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH LENDER OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
[Execution Page Follows]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth in the heading to this Agreement.

                    BORROWER:       LENDER:
 
                PEOPLESUPPORT, INC.       CITIBANK (WEST), FSB
 
               
By:
  /s/ Lance Rosenzweig        By:  /s/ John Curry   
 
             
 
  Lance Rosenzweig, President and Chief         John Curry
 
  Executive Officer         Vice President

S-1
Business Loan Agreement

 

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SCHEDULE TO
BUSINESS LOAN AGREEMENT

     
Borrower:
  PEOPLESUPPORT, INC.,
 
  a Delaware corporation
 
   
Address:
  1100 Glendon Avenue
 
  Los Angeles, CA 90024
 
   
Date:
  July 28, 2006

This Schedule forms an integral part of the Business Loan Agreement between
Citibank (West), FSB and the above Borrower dated of even date herewith.
REPRESENTATIONS, WARRANTIES AND COVENANTS

             
Section 7.2 -
  Prior Names of        
 
  Borrower:        
 
           
 
           
Section 7.2 -
  Prior Trade Names        
 
  of Borrower:        
 
           
 
           
Section 7.2 -
  Existing Trade Names        
 
  of Borrower:        
 
           
 
           
 
           
 
           
 
           
 
           
Section 7.3 -
  Other Locations and        
 
  Addresses:        
 
           
 
           
 
           
 
           
 
           
 
           
 
           
 
           
Section 7.10 -
  Material Adverse        
 
  Litigation:        
 
           

Schedule to
Business Loan Agreement

 

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      Citibank (West), FSB   Business Loan Agreement  

Exhibit A
Line of Credit Advance Authorization
See attached.

 

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      Citibank (West), FSB   Business Loan Agreement  

EXHIBIT B
LIBOR Loan Pricing Worksheet

         
Borrower(s) Name:
       
 
       
 
       
Note Amount:
       
 
       

                 
 
  Obligor #:   Classification   Risk   Request
 
          Rating   Date:
 
               
Term
               
 
                Effective Date:                                           Index
Rate:                                    Spread:                          Fixed
Rate:                   
 
                Maturity Date:        

         
Obligation Note #:
  Term:   o thirty (30) days o sixty (60) days
 
      o ninety (90) days o one hundred twenty
 
                                                  (120) days

Notified Customer of Rate:                                                Rate
Verified By:                                         
The undersigned authorizes Lender to disburse the proceeds of this new libor
note with terms indicated above.
The undersigned hereby represents and warrants to lender as follows:
All representatives and warranties contained in the Loan and Security Agreement
(a) are materially true, correct, complete and accurate as the date of this
request as if made this date and (b) will be materially true, correct, complete
and accurate as of the requested date of disbursement above, as if made on that
date. No event of Default under the Loan and Security Agreement has occurred
that remains uncured, and no event has occurred which with the passage of time
would result in the Event of Default under the Loan and Security Agreement.
Borrowers Signature:
                                                                    
                                 Date:                                         
 
Bank Use
Repayment Terms:            Interest:                                         
                                     Principal:
                                        

                     
Auto Debit IFR Tranche:
   No ________   Yes:  X   Checking        
 
          Account #: ____________________________        
 
                   

         
Prepared By:
       
 
         
Approved By:
       
 
       

NOTE DEPARTMENT PURPOSES ONLY

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      Citibank (West), FSB   Business Loan Agreement  

         
APPROVED BY:
       
 
       

EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
     This certificate is given by PeopleSupport, Inc. (“Borrower”) pursuant to
Section 7.3(c) of that certain Business Loan Agreement dated as of July 28, 2006
among Borrower and Citibank (west), FSB (“Lender”) (as such agreement may have
been amended, restated, supplemented or otherwise modified from time to time,
the “Loan Agreement”). Capitalized terms used herein without definition shall
have the meanings set forth in the Loan Agreement.
     The officer executing this certificate is the Chief Financial Officer of
Borrower and as such is duly authorized to execute and deliver this certificate
on behalf of Borrower. By executing this certificate such officer hereby
certifies to Lender that:
     1. The calculations set forth on the Attachment hereto are true and
accurate computations of the financial covenants.
     2. As of the date hereof no Default or Event of Default exists.
     Dated this ___day of                     , 200_

                       
 
  Name:        
 
                Title: Chief Financial Officer

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Citibank (West), FSB
  Business Loan Agreement  

ATTACHMENT TO COMPLIANCE CERTIFICATE
ALL TERMS USED HEREIN SHALL HAVE THE MEANING
ASCRIBED TO SUCH TERMS IN THE LOAN AGREEMENT

                 
1. Adjusted Quick Ratio
               
 
               
A. Cash:
                                                      
 
               
B. Cash Equivalents:
                                                      
 
               
C. Total Receivables:                                         
               
 
               
D. Receivables which the Account Debtor
is located outside of the United States:
               
                                        
               
 
               
E. Domestic Receivables (C minus D)
                                                      
 
               
F. Quick Assets (A + B + E)
                                                      
 
               
G. Total Amount of Revolving Loans Outstanding
                                                      
 
               
H. Adjusted Quick Ratio (F divided by G)
                                                      
 
               
Greater than 1.25:1.00? Yes ____ No ____
               
 
               
2. Maximum Funded Debt to EBITDA
               
 
               
A. All Debt of Borrower
                                                      
 
               
B. Net Income (after tax)
                                                      
 
               
C. Interest Expense
                                                      
 
               
D. Depreciation and Amortization
                                                      
 
               
E. Non-Cash Expenses and Charges
                                                      
 
               
F. Income Tax
                                                      
 
               
G. Extraordinary Items
                                                      
 
               
H. EBITDA (B + C + D + E + F + G)
                                                      
 
               
I. Maximum Funded Debt to EBITDA (A divided by H)
                                                      
 
               
Less than 1.50:1.00? Yes ____ No ____