Exhibit 10.1

 

 

 

[Execution Version]

CREDIT AGREEMENT

Dated as of October 5, 2009

between

MICROSEMI CORPORATION

and

BANK OF AMERICA, N.A.

 

 

 

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TABLE OF CONTENTS

 

Article I.    DEFINITIONS AND ACCOUNTING TERMS    1

  1.01

   Defined Terms    1

  1.02

   Other Interpretive Provisions    21

  1.03

   Accounting Terms    22

  1.04

   Rounding    23

  1.05

   References to Agreements and Laws    23

  1.06

   Times of Day    23

  1.07

   Letter of Credit Amounts    23 Article II.    THE COMMITMENT AND CREDIT
EXTENSIONS    23

  2.01

   Loans    23

  2.02

   Borrowings, Conversions and Continuations of Loans    23

  2.03

   Letters of Credit.    25

  2.04

   Prepayments    30

  2.05

   Reduction or Termination of Commitment    30

  2.06

   Repayment of Loans    31

  2.07

   Interest    31

  2.08

   Fees    31

  2.09

   Computation of Interest and Fees    32

  2.10

   Evidence of Debt    32

  2.11

   Payments Generally    32 Article III.    TAXES, YIELD PROTECTION AND
ILLEGALITY    32

  3.01

   Taxes    32

  3.02

   Illegality    33

  3.03

   Inability to Determine Eurodollar Rate    34

  3.04

   Increased Cost and Reduced Return; Capital Adequacy    34

  3.05

   Funding Losses    35

  3.06

   Requests for Compensation    35

  3.07

   Survival    35 Article IV.    CONDITIONS PRECEDENT TO CREDIT EXTENSIONS    36

  4.01

   Conditions of Initial Credit Extension    36

  4.02

   Conditions to all Credit Extensions    37

 

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Article V.    REPRESENTATIONS AND WARRANTIES    38

  5.01

   Existence, Qualification and Power; Compliance with Laws    38

  5.02

   Authorization; No Contravention    39

  5.03

   Governmental Authorization; Other Consents    39

  5.04

   Binding Effect    39

  5.05

   Financial Statements; No Material Adverse Effect    39

  5.06

   Litigation    40

  5.07

   No Default    40

  5.08

   Ownership of Property; Liens    40

  5.09

   Environmental Compliance    40

  5.10

   Insurance    41

  5.11

   Taxes    41

  5.12

   ERISA Compliance    41

  5.13

   Subsidiaries    42

  5.14

   Proceeds; Margin Regulations; Investment Company Act; Anti-Terrorism Laws   
42

  5.15

   Disclosure    42

  5.16

   Compliance with Laws    43

  5.17

   Intellectual Property; Licenses, Etc    43

  5.18

   Solvency    43 Article VI.    AFFIRMATIVE COVENANTS    44

  6.01

   Financial Statements    44

  6.02

   Certificates; Other Information    44

  6.03

   Notices    45

  6.04

   Payment of Obligations    46

  6.05

   Preservation of Existence, Etc    46

  6.06

   Maintenance of Properties    46

  6.07

   Maintenance of Insurance    46

  6.08

   Compliance with Laws    47

  6.09

   Books and Records    47

  6.10

   Inspection Rights    47

  6.11

   Use of Proceeds    47

  6.12

   Material Subsidiaries; Pledge Agreement; Additional Guarantors    47

 

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  6.13

   Further Assurances    50

  6.14

   Post-Closing; Additional Matters    50 Article VII.    NEGATIVE COVENANTS   
50

  7.01

   Liens    50

  7.02

   Investments    52

  7.03

   Indebtedness    53

  7.04

   Fundamental Changes    55

  7.05

   Dispositions    56

  7.06

   Restricted Payments    57

  7.07

   Change in Nature of Business    57

  7.08

   Transactions with Affiliates    57

  7.09

   Burdensome Agreements; Negative Pledge    58

  7.10

   Use of Proceeds    58

  7.11

   Financial Covenants    59 Article VIII.    EVENTS OF DEFAULT AND REMEDIES   
59

  8.01

   Events of Default    59

  8.02

   Remedies Upon Event of Default    61

  8.03

   Application of Funds    62 Article IX.    MISCELLANEOUS    62

  9.01

   Amendments; Etc    62

  9.02

   Notices and Other Communications; Facsimile Copies    62

  9.03

   No Waiver; Cumulative Remedies    63

  9.04

   Attorney Costs, Expenses and Taxes    63

  9.05

   Indemnification by the Borrower    64

  9.06

   Payments Set Aside    64

  9.07

   Successors and Assigns    65

  9.08

   Confidentiality    67

  9.09

   Set-off    67

  9.10

   Interest Rate Limitation    68

  9.11

   Counterparts    68

  9.12

   Integration    68

  9.13

   Survival of Representations and Warranties    68

  9.14

   Severability    69

 

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  9.15

   Governing Law    69

  9.16

   Waiver of Jury Trial; Judicial Reference    69

  9.17

   USA Patriot Act Notice    70

  9.18

   Reinstatement    71

SCHEDULES

 

  5.05

   Supplement to Interim Financial Statements   

  5.13

   Subsidiaries and Other Equity Investments   

  5.17

   Intellectual Property Matters   

  7.01

   Existing Liens   

  7.02

   Existing Investments   

  7.03

   Existing Indebtedness   

  9.02

   Lending Office, Addresses for Notices   

 

EXHIBITS

 

      Form of   

  A

   Loan Notice   

  B

   Note   

  C

   Compliance Certificate   

  D

   Guaranty   

  E

   Pledge Agreement   

 

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CREDIT AGREEMENT

This CREDIT AGREEMENT (“Agreement”) is entered into as of October 5, 2009 by and
between MICROSEMI CORPORATION, a Delaware corporation (the “Borrower”), and BANK
OF AMERICA, N.A. (the “Lender”).

The Borrower has requested that the Lender provide a revolving credit facility,
and the Lender is willing to do so on the terms and conditions set forth herein.

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

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms.

As used in this Agreement, the following terms shall have the meanings set forth
below:

“Account” means any right to payment of a monetary obligation arising in the
ordinary course of business and which otherwise is an account within the meaning
of Section 9-102(a)(2) of the Uniform Commercial Code.

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto. Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 10% or more
of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent. Notwithstanding the foregoing, in
no event shall the Lender or any of its Affiliates be deemed to be an Affiliate
of the Borrower.

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

“Anti-Terrorism Laws” shall mean any applicable Laws relating to terrorism or
money laundering, including Executive Order No. 13224, the PATRIOT Act, the
applicable Laws comprising or implementing the Bank Secrecy Act, and the
applicable Laws administered by the United States Treasury Department’s Office
of Foreign Asset Control (as any of the foregoing applicable Laws may from time
to time be amended, renewed, extended, or replaced).

“Applicable Rate” means (a) from the Closing Date to, but excluding, the earlier
to occur of (i) the first Business Day following delivery by the Borrower to the
Lender of its Compliance Certificate pursuant to Section 6.02(a) and
accompanying consolidated financial statements for the Borrower’s Fiscal Period
ending on or about September 30, 2010, in accordance with GAAP, or (ii) the date
which is 45 days after the last day of such Fiscal Period (the “Initial
Applicable Rate Calculation Date”), the following percentages per annum:
(A) 0.50% for Commitment Fees,

 

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(B) 1.50% for Base Rate Loans, and (C) 2.50% for each of Eurodollar Rate Loans
and Letter of Credit Fees; and (b) from and after the Initial Applicable Rate
Calculation Date, and at all times thereafter, the following percentages per
annum, based upon the Consolidated Leverage Ratio as set forth in the most
recent Compliance Certificate received by the Lender
pursuant to Section 6.02(a):

Applicable Rate

 

Pricing
Level

  

Consolidated Leverage Ratio

   Commitment
Fee     Base Rate
Loans     Eurodollar
Rate Loans
Letter of
Credit Fee   1    <1.00:1.00    0.40 %    1.25 %    2.25 %  2    >1.00:1.00 but
<1.5:1.00    0.40 %    1.50 %    2.50 %  3    >1.50.100    0.50 %    1.75 %   
2.75 % 

Any increase or decrease in the Applicable Rate resulting from a change in the
Consolidated Leverage Ratio shall become effective as of the first Business Day
immediately following the date a Compliance Certificate is delivered
pursuant to Section 6.02(a); provided, however, that if a Compliance Certificate
is not delivered when due in accordance with such Section, then Pricing Level 3
shall apply as of the first Business Day after the date on which such Compliance
Certificate was required to have been delivered until the first Business Day
immediately following the date a Compliance Certificate is subsequently
delivered.

Notwithstanding anything in the foregoing to the contrary, in the event the
Borrower or the Lender determines, in good faith, that the calculation of the
Consolidated Leverage Ratio on which the Applicable Rate for any particular
period was determined is inaccurate and as a consequence thereof the Applicable
Rate as determined based thereon was lower than it would have been had the
Consolidated Leveraged Ratio been calculated accurately, (a) the Borrower shall
promptly deliver to the Lender a corrected Compliance Certificate for such
period (it being understood that Borrower will exercise all commercially
reasonable efforts to deliver such corrected Compliance Certificate within five
(5) Business Days after the Borrower discovers such inaccuracy or is otherwise
notified by the Lender of such inaccuracy), deliver to the Lender a corrected
Compliance Certificate for such period (and if such Compliance Certificate is
not accurately restated and delivered within 20 days after the first discovery
of such inaccuracy by the Borrower or such notice, as the case may be, then
Pricing Level 3 shall apply retroactively for such period until such time as the
corrected Compliance Certificate is delivered and, from and after the delivery
of such corrected Compliance Certificate to the Lender the corrected Pricing
Level shall apply for such period), (b) the Lender shall determine and notify
the Borrower of the amount of interest, Commitment Fees and Letter of Credit
Fees that would have been due in respect of any outstanding Obligations during
such period had the Applicable Rate been determined based on an accurate
Consolidated Leverage Ratio (or, to the extent applicable, Pricing Level 3 if
such corrected Compliance Certificate was not timely delivered as provided
herein) and (c) the Borrower shall promptly pay to the Lender the difference, if
any, between that

 

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amount and the amount actually paid in respect of such period. The foregoing
shall in no way limit the rights of the Lender to impose the Default Rate of
interest during an Event of Default as provided herein or to exercise any other
remedy available at law or as provided hereunder or under any of the other Loan
Documents.

“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all reasonable
expenses and disbursements of internal counsel.

“Attributable Indebtedness” means, on any date, (a) in respect of any capital
lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

“Audited Financial Statements” means the audited consolidated balance sheet of
the Borrower and its Subsidiaries for the Fiscal Year ended September 28, 2008,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such Fiscal Year of the Borrower and its Subsidiaries,
including the notes thereto.

“Availability Period” means the period from and including the Closing Date to
the earlier of (a) the Maturity Date and (b) the date of termination of the
Commitment.

“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect
for such day as publicly announced from time to time by the Lender as its “prime
rate”, and (c) the One Month LIBOR Rate for such day (determined on a daily
basis as set forth in the definition of “One Month LIBOR Rate” below) plus
1.50%. The “prime rate” is a rate set by the Lender based upon various factors
including the Lender’s costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in such rate
announced by the Lender shall take effect at the opening of business on the day
specified in the public announcement of such change.

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

“Borrower” has the meaning specified in the introductory paragraph hereto.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Lending Office is located and, if such day
relates to any Eurodollar Rate Loan, means any such day on which dealings in
Dollar deposits are conducted by and between banks in the London interbank
eurodollar market.

“Cash” means any funds held in any demand, time, savings, checking or other
deposit account, or held in any securities account, and any cash on hand.

 

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“Cash Collateralize” has the meaning specified in Section 2.03(f).

“Cash Equivalents” means: (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six months from the date of acquisition;
(b) certificates of deposit, time deposits, eurodollar time deposits or
overnight bank deposits having maturities of three months or less from the date
of acquisition issued by (i) any commercial bank organized under the laws of the
United States of America or any state thereof, or any branch or agency of a
foreign bank licensed to conduct business in the United States of America, in
each case having combined capital and surplus of not less than $1,000,000,000 or
(ii) the Lender; and (c) shares of money market mutual or similar funds whose
assets are invested in investments satisfying the requirements of clause (a) or
(b) of this definition, as applicable.

“Cash Management Agreement” means any agreement to provide Cash Management
Services.

“Cash Management Services” means cash management services, including, treasury,
depository, overdraft, credit or debit card, electronic funds transfer and other
similar or customary cash management arrangements; provided that the investment
of funds in excess of operating requirements shall not constitute Cash
Management Services.

“Cash Management Bank” means any Person that, at the time it enters into a Cash
Management Agreement, is the Lender or an Affiliate of the Lender, in its
capacity as a party to such Cash Management Agreement.

“Change of Control” means, with respect to any Person, an event or series of
events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire (such right, an “option right”), whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 35% or more of the equity securities of such Person entitled to
vote for members of the board of directors or equivalent governing body of such
Person on a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right); or

(b) during any period of 12 consecutive months, a majority of the members of the
board of directors or other equivalent governing body of such Person cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election

 

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or nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent
governing body (excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member of
that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of directors).

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived by the Lender.

“Code” means the Internal Revenue Code of 1986.

“Collateral” means a collective reference to all personal property with respect
to which Liens in favor of the Lender are purported to be granted pursuant to
and in accordance with the terms of the Collateral Documents.

“Collateral Documents” means, collectively, the Pledge Agreement, each of the
consents to pledge agreements, stock powers, assignments separate from
certificates, and other similar agreements and instruments delivered to the
Lender in connection with this Agreement, and each of the other agreements,
instruments or documents that creates or purports to create a Lien in favor of
the Lender.

“Commitment” means the obligation of the Lender to make Loans and L/C Credit
Extensions hereunder from and including the Closing Date in an aggregate
principal amount at any one time not to exceed $50,000,000, as such Commitment
may be further reduced from time to time or terminated in accordance with this
Agreement.

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

“Consolidated Capital Expenditures” means, for any period, for the Borrower and
its Subsidiaries on a consolidated basis, without duplication, (a) all cash
expenditures made, directly or indirectly, during such period for equipment,
fixed assets, real property or improvements, or for replacements or
substitutions therefor or additions thereto, that have been or should be, in
accordance with GAAP, reflected as additions to property, plant or equipment on
a consolidated balance sheet of the Borrower, plus (b) the aggregate principal
amount of all Indebtedness (including all Indebtedness under capital leases)
assumed or incurred (other than, specifically, any borrowing of Loans under this
Agreement) in connection with any such expenditures

“Consolidated EBITDA” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, without duplication, an amount equal to
Consolidated Net Income for such period plus (a) the following to the extent
deducted in calculating such Consolidated Net Income: (i) Consolidated Interest
Charges for such period, (ii) the provision for federal, state, local and
foreign income taxes payable by the Borrower and its Subsidiaries for such
period, (iii) the amount of depreciation and amortization expense deducted in
determining such Consolidated Net Income (iv) non-cash stock-based compensation
expense for such period, (v) all nonrecurring cash expenses and charges,
including any restructuring charges and any losses on

 

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related sales of personal and real property, not to exceed $5,000,000 in the
aggregate incurred in connection with the closure of the Borrower’s Broomfield,
Colorado facility for such period, (vi) all nonrecurring cash expenses and
charges, including any restructuring charges and any losses on related sales of
personal and real property, incurred in connection with the closure of any other
operational facilities of the Borrower and its Subsidiaries for such period,
which charges and expenses added back by the Borrower pursuant to this clause
(vi) do not exceed $25,000,000 in the aggregate for all such closures over the
term of the Loan, (vii) non-cash acquired research and development efforts that
are expensed at the time of, or immediately following, acquisition for such
period, (viii) all nonrecurring expenses created by contingent consideration in
connection with any business combination or acquisition to the extent required
to be expensed under SFAS 141R for such period, provided that the contingent
consideration from any such business combination or acquisition does not exceed
25% of the “all-in” consideration (inclusive of such contingent consideration)
of such acquisition, (ix) all nonrecurring transaction costs incurred or paid in
connection with an acquisition of any entity or business division or line
charges to the extent required to be expensed under SFAS 141R for such period,
and (x) other expenses of the Borrower and its Subsidiaries reducing such
Consolidated Net Income which do not represent a cash item in such period or any
future period, and less (b) the sum of (A) all interest income for such period,
(B) all income tax benefits included in Consolidated Net Income for such period,
(C) all income created by or relating to contingent consideration in connection
with any business combination or acquisition to the extent required under SFAS
141R for such period, (D) all nonrecurring income created by or relating to
transaction items included in Consolidated Net Income in connection with an
acquisition of any entity or business division or line charges, and (E) all
non-cash items increasing Consolidated Net Income for such period.

“Consolidated Fixed Charge Coverage Ratio” means, as of any date of
determination, the ratio of (a)(i) Consolidated EBITDA for the period of the
four prior Fiscal Periods ending on such date less (ii) Consolidated Capital
Expenditures for such period to (b) the sum of (A) Consolidated Interest Charges
for such period, (B) the current portion of Consolidated Long Term Indebtedness
(excluding the Existing UBS Indebtedness), (C) the provision for federal, state,
local and foreign income taxes payable by the Borrower and its Subsidiaries for
such period, and (D) cash dividends paid by the Borrower and its Subsidiaries to
holders of equity interests in the Borrower during such period.

“Consolidated Funded Indebtedness” means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, without duplication,
the sum of (a) the outstanding principal amount of all obligations, whether
current or long-term, for borrowed money (including Obligations hereunder) and
all obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, (b) all purchase money Indebtedness, (c) all direct
obligations arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments,
(d) all obligations in respect of the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business),
(e) Attributable Indebtedness in respect of capital leases and Synthetic Lease
Obligations, (f) without duplication, all Guarantees with respect to outstanding
Indebtedness of the types specified in clauses (a) through (e) above of Persons
other than the Borrower or any Subsidiary, and (g) all Indebtedness of the types
referred to in clauses (a) through (f) above of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company) in which the Borrower or a Subsidiary is a general

 

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partner or joint venturer, unless such Indebtedness is expressly made
non-recourse to the Borrower or such Subsidiary; provided that Consolidated
Funded Indebtedness shall not include the Existing UBS Indebtedness.

“Consolidated Interest Charges” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, without duplication, the sum of (a) all
interest, premium payments, debt discount, fees, charges and related expenses of
the Borrower and its Subsidiaries in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
and (b) the portion of rent expense of the Borrower and its Subsidiaries with
respect to such period under capital leases that is treated as interest in
accordance with GAAP; provided that Consolidated Interest Charges with respect
to the Existing UBS Indebtedness shall be excluded.

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio
of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated
EBITDA for the period of the four Fiscal Periods most recently ended for which
the Borrower has delivered financial statements pursuant to Section 6.01(a) or
(b).

“Consolidated Liquidity Ratio” means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis and without duplication,
the ratio of (a) Total Unrestricted Cash and Cash Equivalents plus Total
Accounts Receivable, to (b) Total Current Liabilities plus Consolidated Senior
Funded Indebtedness.

“Consolidated Long Term Indebtedness” means, as of any date of determination,
for the Borrower and its Subsidiaries on a consolidated basis, without
duplication, Indebtedness obligations that are due and payable more than one
year after issuance and which are not shown on the balance sheet as current
liabilities, determined in accordance with GAAP on a consolidated basis;
provided that Consolidated Long Term Indebtedness shall not include the Existing
UBS Indebtedness.

“Consolidated Net Income” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, without duplication, the net income of the
Borrower and its Subsidiaries (excluding extraordinary gains but including
extraordinary losses) for that period.

“Consolidated Senior Funded Indebtedness” means, as of any date of
determination, Consolidated Funded Indebtedness other than Subordinated
Indebtedness.

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

“Control” has the meaning specified in the definition of “Affiliate.”

“Credit Extension” means each of the following: (a) a borrowing of a Loan and
(b) an L/C Credit Extension.

 

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

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

“Default Rate” means (a) in the case of Loans, an interest rate equal to the
interest rate then applicable to such Loan plus two percent (2.0%) per annum and
(b) in the case of other Obligations, an interest rate equal to the sum of
(i) the Base Rate plus (ii) the Applicable Rate then applicable to Base Rate
Loans plus (iii) two percent (2.0%) per annum, in each case to the fullest
extent permitted by applicable Laws.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

“Dollar” and “$” mean lawful money of the United States.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

“Eligible Assignee” has the meaning specified in Section 9.07(g).

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

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.

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

“ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

 

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“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

“Eurodollar Base Rate” has the meaning specified in the definition of Eurodollar
Rate.

“Eurodollar Rate” means for any Interest Period with respect to any Eurodollar
Rate Loan, a rate per annum determined by the Lender pursuant to the following
formula:

 

Eurodollar Rate =       Eurodollar Base Rate          1.00 – Eurodollar Reserve
Percentage   

Where,

“Eurodollar Base Rate” means, for such Interest Period:

(a) the rate per annum (rounded upwards, as necessary, to the nearest 1/16th of
one percent (0.0625%)) equal to the rate determined by the Lender to be the
offered rate that appears on the page of the screen (of any service (including
Bloomberg, Reuters or Thomson Financial) selected by the Lender that has been
nominated by the British Bankers Association as an authorized information vendor
for the purpose of displaying such rates) that displays an average British
Bankers Association “Interest Settlement Rate” for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, or

(b) if the rate referenced in the preceding clause (a) is not available, the
rate per annum determined by the Lender as the rate of interest at which
deposits in Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Rate Loan being made,
continued or converted and with a term equivalent to such Interest Period would
be offered by the Lender’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 4:00 p.m. (London time) two
Business Days prior to the first day of such Interest Period.

 

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“Eurodollar Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, carried out to five decimal
places and rounded upwards, as necessary, to the nearest 1/16 of one percent
(0.0625%)) in effect on such day applicable to the Lender under regulations
issued from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to as
“Eurocurrency liabilities”). The Eurodollar Rate for each outstanding Eurodollar
Rate Loan shall be adjusted automatically as of the effective date of any change
in the Eurodollar Reserve Percentage.

“Eurodollar Rate Loan” means a Loan that bears interest based on the Eurodollar
Rate.

“Event of Default” has the meaning specified in Section 8.01.

“Existing UBS Credit Agreement” means that certain Credit Line Agreement and
related agreements dated as of January 26, 2009 among Borrower and UBS, pursuant
to which UBS made a loan of money to the Borrower in the approximate amount of
$46,500,000 in respect of UBS’s agreement to provide liquidity support for
auction rate securities purchased by the Borrower, and granted to the Borrower a
“put” right entitling the Borrower to “put” all of such auction rate securities
to UBS in satisfaction of such loan obligations (such “put” right to commence on
June 30, 2010).

“Existing UBS Indebtedness” means the Indebtedness of the Borrower to UBS under
the Existing UBS Credit Agreement.

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Lender
on such day on such transactions as determined by the Lender.

“Fee Letter” means the letter agreement dated September 29, 2009 between the
Borrower and the Lender relating to the payment of fees.

“Fiscal Period” means a fiscal quarter of the Borrower in accordance with GAAP.

“Fiscal Year” means the twelve month fiscal period of the Borrower ending on a
Sunday on or about September 30th of each year.

“Foreign Subsidiary” means any Subsidiary of Borrower that is not a Domestic
Subsidiary.

 

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“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Guarantor” means any Subsidiary of the Borrower that executes and delivers a
counterpart to the Guaranty on the Closing Date or from time to time thereafter
pursuant to Section 6.12.

“Guaranty” means the Guaranty made by the Guarantors in favor of the Lender,
substantially in the form of Exhibit D.

“Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith. The term “Guarantee” as a verb has a corresponding meaning.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

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“Honor Date” has the meaning specified in Section 2.03(c)(i).

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments (other than trade or other accounts payable in the ordinary
course of business);

(b) all direct or contingent obligations of such Person arising under letters of
credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;

(c) net obligations of such Person under any Swap Contract;

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

(f) capital leases and Synthetic Lease Obligations; and

(g) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any capital lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.

“Indemnified Liabilities” has the meaning specified in Section 9.05.

“Indemnitees” has the meaning specified in Section 9.05.

“Interest Payment Date” means, (a) as to any Eurodollar Rate Loan, the last day
of each Interest Period applicable to such Loan, commencing with the first such
Interest Period to occur after the Closing Date, and the Maturity Date;
provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan, the last Business Day of each March, June,
September and December, commencing with the first such Business Day to occur
after the Closing Date, and the Maturity Date.

 

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“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one, three or six months
thereafter, as selected by the Borrower in its Loan Notice; provided that:

(a) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;

(b) any Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period; and

(c) no Interest Period shall extend beyond the Maturity Date.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

“IP Rights” has the meaning specified in Section 5.17.

“IRS” means the United States Internal Revenue Service.

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the renewal or increase of
the amount thereof.

“L/C Obligations” means, as at any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit plus the aggregate of all
unreimbursed drawings under all Letters of Credit.

 

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“Lender” has the meaning specified in the introductory paragraph hereto.

“Lending Office” means the office or offices of the Lender described as such on
Schedule 9.02, or such other office or offices as the Lender may from time to
time notify the Borrower.

“Letter of Credit” means any letter of credit issued hereunder.

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the Lender.

“Letter of Credit Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).

“Letter of Credit Fee” has the meaning specified in Section 2.03(h).

“Letter of Credit Sublimit” means an amount equal to $20,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Commitment.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing).

“Loan” has the meaning specified in Section 2.01.

“Loan Documents” means this Agreement, any Note, the Fee Letter, the Guaranty,
the Collateral Documents and each other document or instrument now or hereafter
executed and delivered by a Loan Party to the Lender in connection with,
pursuant or relating to, this Agreement, including, without limitation, any
Letter of Credit and Letter of Credit Application.

“Loan Notice” means a notice of (a) a borrowing of a Loan, (b) a conversion of a
Loan from one Type to the other, or (c) a continuation of a Eurodollar Rate Loan
as the same Type, pursuant to Section 2.02(a), which, if in writing, shall be
substantially in the form of Exhibit A.

“Loan Parties” means, collectively, the Borrower and each Guarantor.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, assets, liabilities
(actual or contingent) or condition (financial or otherwise) of the Borrower or
the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of
the ability of any Loan Party to perform its obligations under any Loan Document
to which it is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party.

“Material Domestic Subsidiary” means, as at any date of determination, (a) any
Domestic Subsidiary listed on Part (c) of Schedule 5.13, and (b) each other
Domestic Subsidiary (other

 

14

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than PowerDsine) (i) whose total assets equals or exceeds 5.0% of the
consolidated total assets (after intercompany eliminations) of the Borrower and
its Subsidiaries or (ii) whose revenue for the period of four Fiscal Periods
most recently ended exceeds 5.0% of the revenue (after intercompany
eliminations) for the period of four Fiscal Periods most recently ended of such
Fiscal Period of Borrower and its Subsidiaries, in each case calculated on a
consolidated basis in accordance with GAAP, as determined by the Lender in its
reasonable discretion. Each determination under clause (b) of the preceding
sentence shall be made (A) for each new Domestic Subsidiary acquired after the
Closing Date in connection with an acquisition permitted under Section 7.02,
(1) as of the date of acquisition thereof by the Borrower or any Subsidiary on a
pro forma basis taking to account the consummation of such new Domestic
Subsidiary, and (2) thereafter annually as of the date of delivery to the Lender
pursuant to Section 6.01(a) of the audited consolidated financial statements of
the Borrower and its Subsidiaries for the most recently completed Fiscal Year,
and (B) for each other Domestic Subsidiary not listed on Part (c) of Schedule
5.13 and either existing as of the Closing Date or formed by the Borrower as a
Domestic Subsidiary after the Closing Date, annually as of the date of delivery
to the Lender pursuant to Section 6.01(a) of the audited consolidated financial
statements of the Borrower and its Subsidiaries for the most recently completed
Fiscal Year.

“Material Foreign Subsidiary” means, as at any date of determination, (a) any
Foreign Subsidiary listed on Part (d) of Schedule 5.13, and (b) each other
Foreign Subsidiary of the Borrower or a Guarantor (i) which satisfies either of
the following tests: (1) such Foreign Subsidiary’s total assets (after
intercompany eliminations) exceeds 5.0% of consolidated total assets of the
Borrower and its Subsidiaries or (2) such Foreign Subsidiary’s revenue for the
period of four Fiscal Periods most recently ended exceeds 5.0% of the revenue
(after intercompany eliminations) for the period of four Fiscal Periods most
recently ended of such Fiscal Period of Borrower and its Subsidiaries, in each
case calculated on a consolidated basis in accordance with GAAP, and (ii) as to
which a deemed dividend of profits pursuant to IRC 956 would not result in a
material adverse tax consequence; in each case, as determined by the Borrower
and confirmed by the Lender in its reasonable discretion. Each determination
under clause (b) of the preceding sentence shall be made (A) for each new
Foreign Subsidiary acquired after the Closing Date in connection with an
acquisition permitted under Section 7.02, (1) as of the date of acquisition
thereof by the Borrower or any Subsidiary on a pro forma basis taking to account
the consummation of such new Foreign Subsidiary, and (2) thereafter annually as
of the date of delivery to the Lender pursuant to Section 6.01(a) of the audited
consolidated financial statements of the Borrower and its Subsidiaries for the
most recently completed Fiscal Year, and (B) for each other Foreign Subsidiary
not listed on Part (c) of Schedule 5.13 and either existing as of the Closing
Date or formed by the Borrower as a Foreign Subsidiary after the Closing Date,
annually as of the date of delivery to the Lender pursuant to Section 6.01(a) of
the audited consolidated financial statements of the Borrower and its
Subsidiaries for the most recently completed Fiscal Year.

“Maturity Date” means October 5, 2012.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

 

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“Note” means a promissory note made by the Borrower in favor of the Lender
evidencing Loans made by the Lender, substantially in the form of Exhibit B.

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, Letter of Credit or under or in respect of
any Swap Contracts and/or Secured Cash Management Agreements entered into with
the Lender and/or one or more Affiliates of the Lender as counterparty, in each
case whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest and fees that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.

“One Month LIBOR Rate” means, as used in the definition of “Base Rate”, with
respect to any interest rate calculation for a Loan or other Obligation bearing
interest at the Base Rate, a rate per annum equal to the quotient (rounded
upward if necessary to the nearest 1/16th of one percent (0.0625%)) of (i) the
rate per annum referred to as the BBA (British Bankers Association) LIBOR RATE
as reported on Reuters LIBOR page 1, or if not reported by Reuters, as reported
by any service selected by the Lender two business days prior to the applicable
day (provided that if such day is not a Business Day for which a LIBOR Rate is
quoted, the next preceding Business Day for which a LIBOR Rate is quoted) at or
about 11:00 a.m., London time (or as soon thereafter as practicable), for Dollar
deposits being delivered in the London interbank eurodollar currency market for
a term of one month commencing on such date of determination, divided by
(ii) one minus the Eurodollar Reserve Percentage in effect on such day. If for
any reason rates are not available as provided in clause (i) of the preceding
sentence, the rate to be used in clause (i) shall be, at the Lender’s discretion
(in each case, rounded upward if necessary to the nearest one-sixteenth
(1/16) of one percent (0.0625%)), (1) the rate per annum at which Dollar
deposits are offered to the Lender in the London interbank eurodollar currency
market or (2) the rate at which Dollar deposits are offered to or by the
Lender’s London Branch to major banks in any offshore interbank eurodollar
market selected by the Lender, in each case on the applicable day (provided that
if such day is not a Business Day for which Dollar deposits are offered to the
Lender in the London interbank eurodollar currency market, the next preceding
Business Day for which Dollar deposits are offered to the Lender in the London
interbank eurodollar currency market) at or about 11:00 a.m., London time (or as
soon thereafter as practicable) (for delivery on such date of determination) for
a one month term. Each determination by the Lender pursuant to this definition
shall be conclusive absent manifest error.

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

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“Outstanding Amount” means (i) with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Loans occurring on such date; and (ii) with respect
to any L/C Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any L/C Credit Extension occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements of outstanding unpaid drawings
under any Letters of Credit or any reductions in the maximum amount available
for drawing under Letters of Credit taking effect on such date.

“Participant” has the meaning specified in Section 9.07(d).

“PATRIOT Act” means the USA PATRIOT Act (Title III of Pub. L. 107 56 (signed
into law October 26, 2001)).

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

“Permitted Acquisition” means one or more acquisitions by the Borrower or any
Subsidiary of all or substantially all of the equity or assets of any Person, or
the acquisition of such Person by one or more Borrowers in any transaction of
merger or consolidation, provided that:

(a) such acquisition is undertaken and consummated in accordance and in
compliance, in all material respects, with all applicable Laws (including all
applicable authorizations, permits and approvals of Governmental Authorities)
and all applicable material agreements;

(b) no Default or Event of Default has occurred and is continuing on the date
of, or will result after giving effect to, such acquisition;

(c) in connection with such acquisition, the Borrower has obtained and delivered
to the Lender the prior, effective written consent to such acquisition as duly
adopted by the board of directors or equivalent governing body of the Person or
business so acquired (the “Acquiree”);

(d) the Acquiree (or the business unit or division of Acquiree to be acquired)
shall be engaged in the same business as Borrower or the Subsidiary of Borrower
proposing to effect such Acquisition or in a Related Business;

 

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(e) the aggregate cash consideration (including all deferred debt or earn-out
obligations) to be paid by Borrower and any Subsidiary thereof (whether in one
or a series of transactions) for any such acquisition does not exceed
$35,000,000, and does not exceed $35,000,000 in the aggregate for all such
acquisitions consummated after the Closing Date over the term of the Loan;
provided that the amounts set forth in this clause (e) may be reset as provided
in, and subject to the conditions of, Section 7.02(g); and

(f) upon the closing of such Acquisition, a Responsible Officer of Borrower
shall deliver a certificate to the Lender (i) to the effect that each of clauses
(a) through (e), inclusive, of this definition has been satisfied and
(ii) detailing pro forma compliance with all financial covenants set forth in
Section 7.11 for each of the four consecutive Fiscal Periods following the
consummation of such acquisition.

“Permitted Liens” has the meaning specified in Section 7.01.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

“Pledge Agreement” means the Pledge Agreement made by the Borrower and the
Guarantors (as applicable), as pledgors, in favor of the Lender, substantially
in the form of Exhibit E.

“Pledged Domestic Subsidiary” has the meaning specified in Section 6.12(a).

“Pledged Foreign Subsidiary” has the meaning specified in Section 6.12(c).

“Pledged Subsidiaries” means, collectively, the Pledged Domestic Subsidiaries
and the Pledged Foreign Subsidiaries.

“PowerDsine” means PowerDsine, Inc., a New York corporation.

“Related Business” shall mean any business that is the same, similar or
otherwise reasonably related, ancillary or complementary to the businesses of
Borrower and its Subsidiaries on the Closing Date.

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

“Request for Credit Extension” means (a) with respect to a borrowing, conversion
or continuation of a Loan, a Loan Notice, and (b) with respect to an L/C Credit
Extension, a Letter of Credit Application.

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of a Loan Party. Any
document delivered hereunder that is signed

 

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by a Responsible Officer of a Loan Party shall be conclusively presumed to have
been authorized by all necessary corporate, partnership and/or other action on
the part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other equity
interest of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such capital stock or other such equity interest or of any
option, warrant or other right to acquire any such capital stock or other such
equity interest.

“SEC” means the United States Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.

“Secured Cash Management Agreement” means any Cash Management Agreement that is
entered into by and between any Loan Party and any Cash Management Bank.

“Solvent” means, as to any Person at any time, that (a) the fair value of the
property of such Person is greater than the amount of such Person’s liabilities
(including contingent liabilities) as such value is established and liabilities
evaluated for purposes of Section 101(32) of the United States Bankruptcy Code;
(b) the fair valuation of the property of such Person is not less than the
aggregate amount that will be required to pay the probable liability of such
Person on its then existing debts (including Guarantees and other contingent
obligations) as they become absolute and matured; (c) such Person is able to pay
its debts and other liabilities (including contingent liabilities) 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 or liabilities beyond such Person’s
ability to pay as such debts and liabilities mature; and (e) such Person is not
engaged in a business or a transaction for which such Person’s property would
constitute unreasonably small capital.

“Subordinated Indebtedness” means, as of any date of determination, Indebtedness
that is in any manner subordinated in right of payment or security in any
respect to Indebtedness evidenced by the Loan Documents, which subordination
provisions are in form and substance reasonably acceptable to the Lender.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
the Borrower.

 

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“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include the Lender or any Affiliate of
the Lender).

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

“Threshold Amount” means $1,000,000.

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

“Total Accounts Receivable” means the aggregate amount of all Accounts of the
Borrower and its Subsidiaries not subject to any Lien to the extent that
(a) each is not aged more than 90 days from the applicable original payment due
date, (b) each is not subject to any defense, offset, counterclaim or other
right to avoid or reduce the liability thereunder in favor of the applicable
account debtor, (c) the account debtor in respect thereof is not subject to a
proceeding under any Debtor Relief Law or made an assignment for the benefit of
creditors, and (d) the account debtor in respect thereof is not a Loan Party or
an officer, shareholder, director, employee or Affiliate thereof.

“Total Current Liabilities” means current liabilities of the Borrower and its
Subsidiaries on a consolidated basis determined in accordance with GAAP,
excluding the Existing UBS Indebtedness.

 

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“Total Unrestricted Cash and Cash Equivalents” means the aggregate amount of all
Cash and Cash Equivalents (determined based on the current value thereof) held
by the Borrower or any of its Subsidiaries that is (a) freely withdrawable (in
the case of any Cash) or transferable or saleable (in the case of Cash
Equivalents); (b) not subject to any Lien and (without limiting the
foregoing) not in escrow or constituting a sinking fund or otherwise dedicated
to a specific purpose or subject to any other restrictions on use, excluding any
Liens existing solely by virtue of any contractual, statutory or common law
provision relating to banker’s liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a depository
institution; (c) denominated and payable in freely transferable and freely
convertible currency; and (d) capable of being remitted to the Borrower (or any
Subsidiary thereof) in the United States.

“Trading with the Enemy Act” shall mean the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) and any enabling legislation or executive order relating thereto.

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

“UBS” means, collectively, UBS Bank USA and UBS Financial Services Inc.

“Unasserted Obligations” means, at any time, indemnity obligations under the
Loan Documents that are not then due and payable or for which no events or
claims that would give rise thereto are pending.

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

“Uniform Commercial Code” means the Uniform Commercial Code as in effect in the
applicable jurisdiction.

“Uninsured Liabilities” shall mean any losses, damages, costs, expenses and/or,
liabilities (including any losses, damages, costs, expenses or liabilities
resulting from property damage or casualty, general liability, workers’
compensation claims and business interruption) incurred by the Borrower or any
Subsidiary which are not covered by insurance, but with respect to which
insurance coverage is commercially available in the ordinary course of business
to Persons engaged in the same or similar business as the Borrower and its
Subsidiaries.

“United States” and “U.S.” mean the United States of America.

1.02 Other Interpretive Provisions.

With reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

 

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(b) (i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of
similar import when used in any Loan Document shall refer to such Loan Document
as a whole and not to any particular provision thereof.

(ii) Article, Section, Exhibit and Schedule references are to the Loan Document
in which such reference appears.

(iii) The term “including” is by way of example and not limitation.

(iv) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

(c) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(d) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

1.03 Accounting Terms.

(a) All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent
basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the Audited Financial Statements, except as otherwise
specifically prescribed herein.

(b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Lender shall so request, the Lender and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of the Lender), provided that, until so amended, (i) such ratio or requirement
shall continue to be computed in accordance with GAAP prior to such change
therein and (ii) the Borrower shall provide to the Lender financial statements
and other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

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1.04 Rounding.

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

1.05 References to Agreements and Laws.

Unless otherwise expressly provided herein, (a) references to Organization
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by any Loan Document; and (b) references to any
Law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Law.

1.06 Times of Day.

Unless otherwise specified, all references herein to times of day shall be
references to Pacific time (daylight or standard, as applicable).

1.07 Letter of Credit Amounts.

Unless otherwise specified, all references herein to the amount of a Letter of
Credit at any time shall be deemed to mean the maximum face amount of such
Letter of Credit after giving effect to all increases thereof contemplated by
such Letter of Credit or the Letter of Credit Application therefor, whether or
not such maximum face amount is in effect at such time.

ARTICLE II. THE COMMITMENT AND CREDIT EXTENSIONS

2.01 Loans.

Subject to the terms and conditions set forth herein, the Lender agrees to make
loans (each such loan, a “Loan”) to the Borrower from time to time, on any
Business Day during the Availability Period, in an aggregate amount not to
exceed at any time outstanding the amount of the Commitment; provided, however,
that after giving effect to any borrowing, the Total Outstandings shall not
exceed the Commitment. Within the limits of the Commitment, and subject to the
other terms and conditions hereof, the Borrower may borrow under this
Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01. A
Loan may be a Base Rate Loan or a Eurodollar Rate Loan, as further provided
herein.

2.02 Borrowings, Conversions and Continuations of Loans.

(a) Each borrowing, each conversion of a Loan from one Type to the other, and
each continuation of a Eurodollar Rate Loan shall be made upon the Borrower’s
irrevocable notice to the Lender, which may be given by telephone. Each such
notice must be received by the Lender not later than 10:00 a.m. (i) three
Business Days prior to the requested date of any borrowing of, conversion to or
continuation of a Eurodollar Rate Loan or of any conversion of a Eurodollar Rate
Loan to a Base Rate Loan, and (ii) on the requested date of any borrowing of a
Base Rate Loan. Notwithstanding anything to the contrary contained herein, but
subject to the provisions

 

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of Section 9.02(d), any such telephonic notice may be given by an individual who
has been authorized in writing to do so by a Responsible Officer of the
Borrower. Each such telephonic notice must be confirmed promptly by delivery to
the Lender of a written Loan Notice, appropriately completed and signed by a
Responsible Officer of the Borrower. Each borrowing of, conversion to or
continuation of a Eurodollar Rate Loan shall be in a principal amount of
$1,000,000 or a whole multiple of $100,000 in excess thereof. Each borrowing of
or conversion to a Base Rate Loan shall be in a principal amount of $500,000 or
a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether
telephonic or written) shall specify (i) whether the Borrower is requesting a
borrowing, a conversion of a Loan from one Type to the other, or a continuation
of a Eurodollar Rate Loan, (ii) the requested date of the borrowing, conversion
or continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of the Loan to be borrowed, converted or continued, (iv) the
Type of Loan to be borrowed or to which an existing Loan is to be converted, and
(v) if applicable, the duration of the Interest Period with respect thereto. If
the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower
fails to give a timely notice requesting a conversion or continuation, then the
applicable Loan shall be made as, or converted to, a Base Rate Loan. Any such
automatic conversion to a Base Rate Loan shall be effective as of the last day
of the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loan. If the Borrower requests a borrowing of, conversion to, or
continuation of a Eurodollar Rate Loan in any such Loan Notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.

(b) Upon satisfaction of the applicable conditions set forth in Section 4.02
(and, if a borrowing is the initial Credit Extension, Section 4.01), the Lender
shall make the proceeds of each Loan available to the Borrower either by
(i) crediting the account of the Borrower on the books of the Lender with the
amount of such proceeds or (ii) wire transfer of such proceeds, in each case in
accordance with instructions provided to (and reasonably acceptable to) the
Lender by the Borrower; provided, however, that if on the date of the Loan
Notice with respect to such borrowing is given there are drawings under Letters
of Credit that have not been reimbursed by the Borrower, then the proceeds of
such borrowing shall be applied, first, to the payment in full of any such
unreimbursed drawings, and second, to the Borrower as provided above.

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued
or converted only on the last day of an Interest Period for such Eurodollar Rate
Loan. During the existence of a Default, no Loan may be requested as, converted
to or continued as Eurodollar Rate Loans without the consent of the Lender.

(d) The Lender shall promptly notify the Borrower of the interest rate
applicable to any Interest Period for a Eurodollar Rate Loan upon determination
of such interest rate. The determination of the Eurodollar Rate by the Lender
shall be conclusive in the absence of manifest error. At any time that a Base
Rate Loan is outstanding, the Lender shall notify the Borrower of any change in
the Lender’s prime rate used in determining the Base Rate promptly following the
public announcement of such change.

(e) After giving effect to all borrowings, all conversions of Loans from one
Type to the other, and all continuations of Loans as the same Type, there shall
not be more than six Interest Periods in effect.

 

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2.03 Letters of Credit.

(a) The Letter of Credit Commitment.

(i) Subject to the terms and conditions set forth herein, the Lender agrees
(A) from time to time on any Business Day during the period from the Closing
Date until the Letter of Credit Expiration Date, to issue Letters of Credit for
the account of the Borrower, and to amend or renew Letters of Credit previously
issued by it, in accordance with subsection (b) below, and (B) to honor drafts
under the Letters of Credit; provided that the Lender shall not be obligated to
make any L/C Credit Extension with respect to any Letter of Credit if as of the
date of such L/C Credit Extension, (y) the Total Outstandings would exceed the
Commitment or (z) the Outstanding Amount of the L/C Obligations would exceed the
Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms
and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall
be fully revolving, and accordingly the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired
or that have been drawn upon and reimbursed.

(ii) The Lender shall be under no obligation to issue any Letter of Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the Lender from issuing such
Letter of Credit, or any Law applicable to the Lender or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Lender shall prohibit, or request that the
Lender refrain from, the issuance of letters of credit generally or such Letter
of Credit in particular or shall impose upon the Lender with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
Lender is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the Lender any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which the Lender in good faith
deems material to it;

(B) subject to Section 2.03(b)(iii), the expiry date of such requested Letter of
Credit would occur more than twelve months after the date of issuance or last
renewal;

(C) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date;

(D) the issuance of such Letter of Credit would violate one or more policies of
the Lender; or

(E) such Letter of Credit is in an initial amount less than $100,000, or is to
be denominated in a currency other than Dollars.

(iii) The Lender shall be under no obligation to amend any Letter of Credit if
(A) the Lender would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms hereof or (B) the beneficiary of such
Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

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(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal
Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to the Lender in the form of a Letter of
Credit Application, appropriately completed and signed by a Responsible Officer
of the Borrower. Such Letter of Credit Application must be received by the
Lender not later than 10:00 a.m., at least two Business Days (or such later date
and time as the Lender may agree in a particular instance in its sole
discretion) prior to the proposed issuance date or date of amendment, as the
case may be. In the case of a request for an initial issuance of a Letter of
Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the Lender: (A) the proposed issuance date of the requested
Letter of Credit (which shall be a Business Day); (B) the amount thereof;
(C) the expiry date thereof; (D) the name and address of the beneficiary
thereof; (E) the documents to be presented by such beneficiary in case of any
drawing thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G) such other matters as the
Lender may reasonably require. In the case of a request for an amendment of any
outstanding Letter of Credit, such Letter of Credit Application shall specify in
form and detail satisfactory to the Lender (A) the Letter of Credit to be
amended; (B) the proposed date of amendment thereof (which shall be a Business
Day); (C) the nature of the proposed amendment; and (D) such other matters as
the Lender may reasonably require.

(ii) Upon the Lender’s determination that the requested issuance or amendment is
permitted in accordance with the terms hereof, then, subject to the terms and
conditions hereof, the Lender shall, on the requested date, issue a Letter of
Credit for the account of the Borrower or enter into the applicable amendment,
as the case may be, in each case in accordance with the Lender’s usual and
customary business practices.

(iii) If the Borrower so requests in any applicable Letter of Credit
Application, the Lender may, in its sole and absolute discretion, agree to issue
a Letter of Credit that has automatic renewal provisions (each, an “Auto-Renewal
Letter of Credit”); provided that any such Auto-Renewal Letter of Credit must
permit the Lender to prevent any such renewal at least once in each twelve-month
period (commencing with the date of issuance of such Letter of Credit) by giving
prior notice to the beneficiary thereof not later than a day in each such
twelve-month period to be agreed upon at the time such Letter of Credit is
issued. Unless otherwise directed by the Lender, the Borrower shall not be
required to make a specific request to the Lender for any such renewal. Once an
Auto-Renewal Letter of Credit has been issued, the Lender shall, subject to the
terms and conditions set forth herein, permit the renewal of such Letter of
Credit to an expiry date not later than the Letter of Credit Expiration Date;
provided, however, that the Lender shall have no obligation to permit the
renewal of any Auto-Renewal Letter of Credit at any time if it has determined
that it would have no obligation at such time to issue such Letter of Credit in
its renewed form under the terms hereof (by reason of the provisions of
Section 2.03(a)(ii) or otherwise).

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the Lender will also deliver to the Borrower a true and complete copy
of such Letter of Credit or amendment.

 

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(c) Drawings and Reimbursements.

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the Lender shall notify the Borrower
thereof. Not later than 10:00 a.m. on the date of any payment by the Lender
under a Letter of Credit (each such date, an “Honor Date”), the Borrower shall
reimburse the Lender in an amount equal to the amount of such drawing. If the
Borrower fails to so reimburse the Lender, the Borrower shall be deemed to have
requested a borrowing of a Base Rate Loan to be disbursed on the Honor Date in
an amount equal to the amount of such unreimbursed drawing, without regard to
the minimum and multiples specified in Section 2.02 for the principal amount of
Base Rate Loans, but subject to the amount of the unutilized portion of the
Commitment and the conditions set forth in Section 4.02 (other than the delivery
of a Loan Notice).

(ii) If the Borrower fails to reimburse the Lender for any drawing under any
Letter of Credit (whether by means of a borrowing or otherwise), such
unreimbursed amount shall be due and payable on demand (together with interest)
and shall bear interest at the Default Rate.

(d) Obligations Absolute.

The obligation of the Borrower to reimburse the Lender for each drawing under
each Letter of Credit shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;

(ii) the existence of any claim, counterclaim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any transferee
of such Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), the Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

(iv) any payment by the Lender under such Letter of Credit against presentation
of a draft or certificate that does not strictly comply with the terms of such
Letter of Credit; or any payment made by the Lender under such Letter of Credit
to any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or

 

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(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrower.

The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will immediately notify the Lender. The Borrower shall be conclusively
deemed to have waived any such claim against the Lender and its correspondents
unless such notice is given as aforesaid.

(e) Role of Lender.

The Borrower agrees that, in paying any drawing under a Letter of Credit, the
Lender shall not have any responsibility to obtain any document (other than any
sight draft, certificates and documents expressly required by the Letter of
Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document. The Borrower hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Borrower’s pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. None of the
Lender, any of its Affiliates, any of the respective officers, directors,
employees, agents or attorneys-in-fact of the Lender and its Affiliates, nor any
of the respective correspondents, participants or assignees of the Lender shall
be liable or responsible for any of the matters described in clauses (i) through
(v) of Section 2.03(d); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrower may have a claim against the Lender, and
the Lender may be liable to the Borrower, to the extent, but only to the extent,
of any direct, as opposed to consequential or exemplary, damages suffered by the
Borrower which the Borrower proves were caused by the Lender’s willful
misconduct or gross negligence or the Lender’s willful failure to pay under any
Letter of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) strictly complying with the terms and conditions of a
Letter of Credit. In furtherance and not in limitation of the foregoing, the
Lender may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the Lender shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

(f) Cash Collateral.

Upon the request of the Lender, (i) if the Lender has honored any full or
partial drawing request under any Letter of Credit and such drawing has not been
reimbursed on the applicable Honor Date, or (ii) if, as of the Letter of Credit
Expiration Date, any Letter of Credit may for any reason remain outstanding and
partially or wholly undrawn, the Borrower shall immediately Cash Collateralize
the then Outstanding Amount of all L/C Obligations (in an amount equal to such
Outstanding Amount determined as of the applicable Honor Date or the Letter of
Credit Expiration Date, as the case may be). For purposes hereof, “Cash
Collateralize” means to pledge and deposit with or deliver to the Lender, as
collateral for the L/C Obligations, cash or deposit

 

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account balances or an irrevocable letter of credit from an issuer satisfactory
to the Lender pursuant to documentation in form and substance reasonably
satisfactory to the Lender. Derivatives of such term have corresponding
meanings. The Borrower hereby grants to the Lender a security interest in all
such cash, deposit accounts and all balances therein and all proceeds of the
foregoing. Cash collateral shall be maintained in blocked, non-interest bearing
deposit accounts at the Lender.

(g) Applicability of ISP98 and UCP.

Unless otherwise expressly agreed by the Lender and the Borrower when a Letter
of Credit is issued, (i) the rules (exclusive of Rule 3.14 thereof) of the
“International Standby Practices 1998” published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce (the “ICC”)
at the time of issuance (including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each commercial Letter of Credit.

(h) Letter of Credit Fees.

The Borrower shall pay to the Lender a Letter of Credit fee (the “Letter of
Credit Fee”) for each Letter of Credit equal to the daily maximum amount
available to be drawn under such Letter of Credit (whether or not such maximum
amount is then in effect under such Letter of Credit) multiplied by the
Applicable Rate for Letter of Credit Fees then in effect. Such Letter of Credit
Fees shall be computed on a quarterly basis in arrears and shall be due and
payable on the first Business Day after the end of each March, June, September
and December (commencing with the first such date to occur after the issuance of
such Letter of Credit), on the Letter of Credit Expiration Date and thereafter
on demand. If there is any change in the Applicable Rate during any quarter, the
daily maximum amount of each Letter of Credit shall be computed and multiplied
by the Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect.

(i) Documentary and Processing Charges Payable to Lender.

The Borrower shall pay to the Lender the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the Lender relating to letters of credit as from time to time in effect. Such
customary fees and standard costs and charges are due and payable on demand and
are nonrefundable.

 

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(j) Conflict with Letter of Credit Application.

In the event of any conflict between the terms hereof and the terms of any
Letter of Credit Application, the terms hereof shall control.

2.04 Prepayments.

(a) The Borrower may, upon notice to the Lender, at any time or from time to
time voluntarily prepay any Loan in whole or in part without premium or penalty;
provided that (i) such notice must be received by the Lender not later than
10:00 a.m. (A) three Business Days prior to any date of prepayment of a
Eurodollar Rate Loan, and (B) on the date of prepayment of a Base Rate Loan;
(ii) any prepayment of a Eurodollar Rate Loan shall be in a principal amount of
$1,000,000 or a whole multiple of $100,000 in excess thereof; and (iii) any
prepayment of a Base Rate Loan shall be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify
the date and amount of such prepayment and the Type(s) of Loan(s) to be prepaid.
If such notice is given by the Borrower, the Borrower shall make such prepayment
and the payment amount specified in such notice shall be due and payable on the
date specified therein. Any prepayment of a Eurodollar Rate Loan shall be
accompanied by all accrued interest thereon, together with any additional
amounts required pursuant to Section 3.05.

(b) If for any reason the Total Outstandings at any time exceed the Commitment
then in effect, the Borrower shall immediately prepay Loans and/or Cash
Collateralize the L/C Obligations in an aggregate amount equal to such excess;
provided, however, that the Borrower shall not be required to Cash Collateralize
the L/C Obligations pursuant to this Section 2.04(b) unless after the prepayment
in full of the Loans the Total Outstandings exceed the Commitment then in
effect.

2.05 Reduction or Termination of Commitment.

(a) The Borrower may, upon notice to the Lender, terminate the Commitment, or
from time to time permanently reduce the Commitment; provided that (i) any such
notice shall be received by the Lender not later than 10:00 a.m., five Business
Days prior to the date of termination or reduction, (ii) any such partial
reduction shall be in an aggregate amount of $1,000,000 or any whole multiple of
$100,000 in excess thereof, (iii) the Borrower shall not terminate or reduce the
Commitment if, after giving effect thereto and to any concurrent prepayments
hereunder, the Total Outstandings would exceed the Commitment, and (iv) if,
after giving effect to any reduction of the Commitment, the Letter of Credit
Sublimit exceeds the amount of the Commitment, such Sublimit shall be
automatically reduced by the amount of such excess. All commitment and Letter of
Credit Fees accrued until the effective date of any termination of the
Commitment shall be paid on the effective date of such termination.

(b) If not terminated earlier pursuant to the terms of this Agreement, the
Commitment of the Lender hereunder shall terminate in its entirety on the
Maturity Date.

 

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2.06 Repayment of Loans.

The Borrower shall repay to the Lender on the Maturity Date the aggregate
principal amount of Loans outstanding on such date.

2.07 Interest.

(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate.

(b) If any amount payable by the Borrower under any Loan Document is not paid
when due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Furthermore,
while any Event of Default exists, at the election of the Lender, the Borrower
shall pay interest on the principal amount of all outstanding Obligations
hereunder at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Accrued and
unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

2.08 Fees.

(a) Commitment Fee. The Borrower shall pay to the Lender a commitment fee equal
to the Applicable Rate multiplied by the actual daily amount by which the
Commitment exceeds the Total Outstandings. The commitment fee shall accrue at
all times during the Availability Period, including at any time during which one
or more of the conditions in Article IV is not met, and shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the Closing Date,
and on the Maturity Date. The commitment fee shall be calculated quarterly in
arrears, and if there is any change in the Applicable Rate during any quarter,
the actual daily amount shall be computed and multiplied by the Applicable Rate
separately for each period during such quarter that such Applicable Rate was in
effect.

(b) Other Fees. The Borrower shall pay to the Lender additional fees in the
amounts and at the times specified in the Fee Letter. Such fees shall be fully
earned when paid and shall not be refundable for any reason whatsoever.

 

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2.09 Computation of Interest and Fees.

All computations of interest for Base Rate Loans when the Base Rate is
determined by the Lender’s “prime rate” shall be made on the basis of a year of
365 or 366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the basis of a 365-day year). Interest shall
accrue on each Loan for the day on which the Loan is made, and shall not accrue
on a Loan, or any portion thereof, for the day on which the Loan or such portion
is paid, provided that any Loan that is repaid on the same day on which it is
made shall, subject to Section 2.11(a), bear interest for one day.

2.10 Evidence of Debt.

The Credit Extensions made by the Lender shall be evidenced by one or more
accounts or records maintained by the Lender in the ordinary course of business.
The accounts or records maintained by the Lender shall be conclusive absent
manifest error of the amount of the Credit Extensions made by the Lender to the
Borrower and the interest and payments thereon. Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to the
Obligations. Upon the request of the Lender, the Borrower shall execute and
deliver to the Lender a Note, which shall evidence the Lender’s Loans in
addition to such accounts or records. The Lender may attach schedules to the
Note and endorse thereon the date, Type, amount and maturity of each Loan and
payments with respect thereto.

2.11 Payments Generally.

(a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Lender at the applicable Lending Office in Dollars and in
immediately available funds not later than 12:00 noon on the date specified
herein.

(b) If any payment to be made by the Borrower shall come due on a day other than
a Business Day, payment shall be made on the next following Business Day, and
such extension of time shall be reflected in computing interest or fees, as the
case may be.

(c) Nothing herein shall be deemed to obligate the Lender to obtain the funds
for any Loan in any particular place or manner or to constitute a representation
by the Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) Any and all payments by the Borrower to or for the account of the Lender
under any Loan Document shall be made free and clear of and without deduction
for any and all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or

 

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similar charges, and all liabilities with respect thereto, excluding taxes
imposed on or measured by its overall net income, and franchise taxes imposed on
it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which the Lender is organized or
maintains a lending office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be
required by any Laws to deduct any Taxes from or in respect of any sum payable
under any Loan Document to the Lender, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.01), the Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable Laws, and (iv) within 30 days
after the date of such payment, the Borrower shall furnish to the Lender the
original or a certified copy of a receipt evidencing payment thereof.

(b) In addition, the Borrower agrees to pay any and all present or future stamp,
court or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under any Loan Document or from
the execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, any Loan Document (hereinafter referred to as “Other
Taxes”).

(c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes
from or in respect of any sum payable under any Loan Document to the Lender, the
Borrower shall also pay to the Lender, at the time interest is paid, such
additional amount that the Lender specifies is necessary to preserve the
after-tax yield (after factoring in all taxes, including taxes imposed on or
measured by net income) that the Lender would have received if such Taxes or
Other Taxes had not been imposed.

(d) The Borrower agrees to indemnify the Lender for (i) the full amount of Taxes
and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 3.01) paid by the Lender,
(ii) amounts payable under Section 3.01(c) and (iii) any liability (including
additions to tax, penalties, interest and expenses) arising therefrom or with
respect thereto, in each case whether or not such Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
Payment under this subsection (d) shall be made within 30 days after the date
the Lender makes a demand therefor.

3.02 Illegality.

If the Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for the Lender or its
Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine
or charge interest rates based upon the Eurodollar Rate, then, on notice thereof
by the Lender to the Borrower, any obligation of the Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until the Lender notifies the Borrower that the circumstances
giving rise to such determination no longer exist. Upon receipt of such notice,
the Borrower shall, upon demand from the Lender, prepay or, if applicable,
convert all Eurodollar Rate Loans to Base

 

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Rate Loans, either on the last day of the Interest Period therefor, if the
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day,
or immediately, if the Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted. The
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of the
Lender, otherwise be materially disadvantageous to the Lender.

3.03 Inability to Determine Eurodollar Rate.

If the Lender determines that for any reason adequate and reasonable means do
not exist for determining the Eurodollar Base Rate for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan, or that the Eurodollar
Base Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to the
Lender of funding such Loan, the Lender will promptly so notify the Borrower.
Thereafter, the obligation of the Lender to make or maintain Eurodollar Rate
Loans shall be suspended until the Lender revokes such notice. Upon receipt of
such notice, the Borrower may revoke any pending request for a borrowing of,
conversion to or continuation of a Eurodollar Rate Loan or, failing that, will
be deemed to have converted such request into a request for a borrowing of a
Base Rate Loan in the amount specified therein.

3.04 Increased Cost and Reduced Return; Capital Adequacy.

(a) If the Lender determines that as a result of the introduction of or any
change in or in the interpretation of any Law, or the Lender’s compliance
therewith, there shall be any increase in the cost to the Lender of agreeing to
make or making, funding or maintaining Eurodollar Rate Loans or issuing Letters
of Credit, or a reduction in the amount received or receivable by the Lender in
connection with any of the foregoing (excluding for purposes of this subsection
(a) any such increased costs or reduction in amount resulting from (i) Taxes or
Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis
of taxation of overall net income or overall gross income by the United States
or any foreign jurisdiction or any political subdivision of either thereof under
the Laws of which the Lender is organized or has its Lending Office, and
(iii) reserve requirements utilized in the determination of the Eurodollar
Rate), then from time to time upon demand of the Lender, the Borrower shall pay
to the Lender such additional amounts as will compensate the Lender for such
increased cost or reduction.

(b) If the Lender determines that the introduction of any Law regarding capital
adequacy or any change therein or in the interpretation thereof, or compliance
by the Lender (or its Lending Office) therewith, in each case after the date of
this Agreement, has the effect of reducing the rate of return on the capital of
the Lender or any corporation controlling the Lender as a consequence of the
Lender’s obligations hereunder (taking into consideration its policies with
respect to capital adequacy and the Lender’s desired return on capital), then
from time to time upon demand of the Lender, the Borrower shall pay to the
Lender such additional amounts as will compensate the Lender for such reduction.

(c) Notwithstanding the preceding clauses (a) and (b), the Lender shall not be
entitled to avail itself of the benefit of this Section 3.04 to the extent that
any such increased cost or

 

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reduction incurred was more than 180 days prior to the time it gives notice to
the Borrower of the relevant circumstance, unless such circumstance arose or
became applicable retroactively, in which case such 180 day period shall be
extended to include the entire period of such retroactive application, so long
as the Lender has given such notice no later than one (1) year from the time
such circumstance became known to the Lender.

3.05 Funding Losses.

Upon demand of the Lender from time to time, the Borrower shall promptly
compensate the Lender for and hold the Lender harmless from any loss, cost or
expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such
Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise); or

(b) any failure by the Borrower (for a reason other than the failure of the
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by the Borrower,
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by the
Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lender under
this Section 3.05, the Lender shall be deemed to have funded each Eurodollar
Rate Loan at the Eurodollar Base Rate used in determining the Eurodollar Rate
for such Loan by a matching deposit or other borrowing in the London interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Eurodollar Rate Loan was in fact so funded.

3.06 Requests for Compensation.

A certificate of the Lender claiming compensation under this Article III and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. In determining such amount, the
Lender may use any reasonable averaging and attribution methods.

3.07 Survival.

All of the Borrower’s obligations under this Article III shall survive
termination of the Commitment and repayment of all other Obligations hereunder.

 

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ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01 Conditions of Initial Credit Extension.

The obligation of the Lender to make its initial Credit Extension hereunder is
subject to satisfaction of the following conditions precedent:

(a) The Lender’s receipt of the following, each of which shall be originals or
facsimiles (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the signing Loan Party, each dated
the Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory
to the Lender and its legal counsel:

(i) executed counterparts of this Agreement, the Fee Letter, the Guaranty and
the Pledge Agreement, sufficient in number for distribution to the Lender and
the Borrower;

(ii) if requested by the Lender, a Note executed by the Borrower;

(iii) original certificates, if applicable, representing the equity interests of
the Pledged Subsidiaries under the Pledge Agreement, and undated assignments
separate from certificate, executed in blank, relating to such original
certificates;

(iv) evidence of the completion of all other actions, recordings and filings of
or with respect to the Pledge Agreement that the Lender may deem necessary or
desirable in order to perfect the Liens created thereby,

(v) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party as the
Lender may require evidencing the identity, authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer in
connection with this Agreement and the other Loan Documents to which such Loan
Party is a party;

(vi) such documents and certifications as the Lender may reasonably require to
evidence that each Loan Party is duly organized or formed, and that the Borrower
and each Loan Party is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such qualification, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect;

(vii) completed requests for information as the Lender may reasonably require,
dated on or before the date hereof, listing all effective financing statements
or other Liens filed in the jurisdictions referred to in clause (vi) above that
show any Loan Party as debtor, together with copies of such other financing
statements and other Liens;

(viii) a favorable opinion of O’Melveny & Myers LLP, counsel to the Loan
Parties, addressed to the Lender, as to such matters concerning the Loan Parties
and the Loan Documents as the Lender may reasonably request;

 

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(ix) a certificate of a Responsible Officer of each Loan Party either
(A) attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Loan Party and
the validity against such Loan Party of the Loan Documents to which it is a
party, and such consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or approvals are so
required;

(x) a certificate signed by a Responsible Officer of the Borrower certifying
(A) that the conditions specified in Sections 4.02(a), (b) and (c) have been
satisfied; and (B) that there has been no event or circumstance since June 28,
2009 that has had or could be reasonably expected to have, either individually
or in the aggregate, a Material Adverse Effect;

(xi) evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect;

(xii) [Intentionally omitted]; and

(xiii) such other assurances, certificates, documents, consents or opinions as
the Lender reasonably may require.

(b) Any fees required to be paid on or before the Closing Date as set forth in
the fee Letter shall have been paid.

(c) The Borrower shall have paid all Attorney Costs of the Lender to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute its reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude a final settling of accounts between
the Borrower and the Lender).

(d) [Intentionally omitted.]

(e) The Closing Date shall have occurred on or before October 5, 2009.

4.02 Conditions to all Credit Extensions.

The obligation of the Lender to make any Credit Extension is subject to the
following conditions precedent:

(a) The representations and warranties of the Borrower and each other Loan Party
contained:

(i) in this Agreement (including Article V), the Guaranty or the Pledge
Agreement shall be true and correct on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date, and except that for purposes of this
Section 4.02, the representations and warranties contained in subsections
(a) and (b) of Section 5.05 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01; and

 

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(ii) in any other Loan Document, or which are contained in any other document
furnished at any time under or in connection herewith or therewith, shall be
true and correct in all material respects (provided that to the extent any such
representation or warranty is already qualified as to “materiality” or words to
similar effect, the materiality qualifier of this clause (ii) shall be deemed
not to apply) on and as of the date of such Credit Extension, except to the
extent that any such representation or warranty specifically refers to an
earlier date, in which case it shall be deemed to be made as of such earlier
specified date.

(b) No Default or Event of Default shall exist, or would result from such
proposed Credit Extension.

(c) There has not occurred since June 28, 2009, any event or circumstance that
either individually or in the aggregate has resulted in or could reasonably be
expected to result in a material adverse change in, or a material adverse effect
upon, the operations, business, properties, assets, liabilities (actual or
contingent), condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole.

(d) The Lender shall have received a Request for Credit Extension in accordance
with the requirements hereof, and such Request for Credit Extension shall also
certify that the Consolidated Leverage Ratio, determined on a pro forma basis
after giving effect to the Credit Extension so requested, will be equal to or
less than 2:00 to 1:00. For purposes of calculating the Consolidated Leverage
Ratio in connection with a request for any such Credit Extension, (i) the
Consolidated Funded Indebtedness shall be determined as of the date of such
Credit Extension after giving effect on a pro forma basis to such Credit
Extension and (ii) the Consolidated EBITDA shall be determined as of the last
Fiscal Period for which financial statements have been delivered.

Each Request for Credit Extension (other than a Loan Notice requesting only a
conversion of a Loan to the other Type or a continuation of a Eurodollar Rate
Loan) submitted by the Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a), (b) and (c) have
been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V. REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lender that:

5.01 Existence, Qualification and Power; Compliance with Laws.

Each Loan Party (a) is a corporation, partnership or limited liability company,
as applicable, duly organized or formed, validly existing and in good standing
under the Laws of the jurisdiction of its incorporation or organization, (b) has
all requisite corporate, partnership or limited liability company power and
authority and all requisite governmental licenses, authorizations, consents and
approvals to (i) own its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, (c) is duly qualified and is licensed and in good standing under the Laws
of each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires such qualification or license, and (d) is
in compliance with all Laws; except in each case referred to in clause (b)(i),
(c) or (d), to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect.

 

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5.02 Authorization; No Contravention.

The execution, delivery and performance by each Loan Party of each Loan Document
to which such Person is party, have been duly authorized by all necessary
corporate or other organizational action, and do not and will not (a) contravene
the terms of any of such Person’s Organization Documents; (b) conflict with or
result in any breach or contravention of, or the creation of any Lien under,
(i) any Contractual Obligation to which such Person is a party or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Person or its property is subject; or (c) violate any Law,
except in each case referred to in clause (a), (b) or (c), to the extent that
any such contravention, conflict or violation, as the case may be, could not
reasonably be expected to have a Material Adverse Effect.

5.03 Governmental Authorization; Other Consents.

As of the Closing Date, no approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any other
Person is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, any Loan Party of this Agreement or any
other Loan Document, except for filings, notices and other actions required in
connection with the enforcement of the Loan Documents.

5.04 Binding Effect.

This Agreement has been, and each other Loan Document, when delivered hereunder,
will have been, duly executed and delivered by each Loan Party that is party
thereto. This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable against each Loan Party that is party thereto in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability.

5.05 Financial Statements; No Material Adverse Effect.

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present, in all material respects, the
financial condition of the Borrower and its Subsidiaries as of the date thereof
and their results of operations for the period covered thereby in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) show all indebtedness and other
liabilities, direct or contingent, of the Borrower and its Subsidiaries as of
the date thereof, including liabilities for taxes, material commitments and
Indebtedness that, in any such case, is material in relation to the business,
operations, properties, assets or condition (financial or otherwise) of Borrower
and its Subsidiaries.

 

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(b) The unaudited consolidated financial statements of the Borrower and its
Subsidiaries dated June 28, 2009, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for the Fiscal Period
ended on that date (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present, in all material respects, the financial
condition of the Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of
clauses (i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments. Schedule 5.05 sets forth all indebtedness and other liabilities,
direct or contingent, of the Borrower and its consolidated Subsidiaries as of
the date of such financial statements, including liabilities for taxes, material
commitments and Indebtedness that in any such case, is material in relation to
the business, operations, properties, assets or condition (financial or
otherwise) of Borrower and its Subsidiaries.

(c) Since June 28, 2009, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

5.06 Litigation.

There are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Borrower after due and diligent investigation, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower or any of its Subsidiaries or against any
of their properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the credit transactions
contemplated hereby, or (b) either individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.

5.07 No Default.

Neither the Borrower nor any Subsidiary is in default under or with respect to
any Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No Default has
occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

5.08 Ownership of Property; Liens.

Each of the Borrower and each Subsidiary has good record and marketable title in
fee simple to, or valid leasehold interests in, all real property necessary or
used in the ordinary conduct of its business, except for such defects in title
as could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The property of the Borrower and its Subsidiaries is
subject to no Liens, other than Liens permitted by Section 7.01.

5.09 Environmental Compliance.

The Borrower and its Subsidiaries conduct in the ordinary course of business a
review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, and as a result thereof
the Borrower has reasonably concluded that such Environmental Laws and claims
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

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5.10 Insurance.

The properties of the Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies reasonably acceptable to the Lender and
not Affiliates of the Borrower, in such amounts, with such deductibles and
covering such risks as are necessary to ensure that Uninsured Liabilities of the
Borrower and/or any Subsidiary are not reasonably likely to result in a Material
Adverse Effect.

5.11 Taxes.

The Borrower and its Subsidiaries have filed all Federal and state income and
other material tax returns and reports required to be filed, and have paid all
material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
the Borrower or any Subsidiary that would, if made, have a Material Adverse
Effect.

5.12 ERISA Compliance.

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required contributions to each Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

(c)(i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any material Unfunded Pension Liability; (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any material liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA);
(iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any material liability (and no event has occurred which, with
the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a
transaction that is subject to Sections 4069 or 4212(c) of ERISA.

 

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5.13 Subsidiaries.

As of the Closing Date, the Borrower has no Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 5.13 and has no equity
investments in any other corporation or entity other than those specifically
disclosed in Part (b) of Schedule 5.13.

5.14 Proceeds; Margin Regulations; Investment Company Act; Anti-Terrorism Laws.

(a) The Borrower will use the proceeds of the Credit Extensions in conformance
with the provisions set forth in Sections 6.11 and 7.10.

(b) The Borrower is not engaged and will not engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.

(c) The Borrower is not, and is not required to be registered as, an “investment
company” under the Investment Company Act of 1940.

(d) (i) Neither Borrower nor any of its Subsidiaries or Affiliates is in
violation of any Anti-Terrorism Law or engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law; (ii) neither Borrower nor any of its Subsidiaries or Affiliates or any of
their respective agents acting or benefiting in any capacity in connection with
the Loans or Letters of Credit or other transactions contemplated hereunder or
under any of the other Loan Documents is any of the following (each a “Blocked
Person”): (A) a Person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order No. 13224;(B) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, the Executive Order
No. 13224; (C) a Person with which the Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law; (D) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in the Executive Order No. 13224; (E) a Person that is named as a
“specially designated national” on the most current list published by the U.S.
Treasury Department Office of Foreign Asset Control at its official website or
any replacement website or other replacement official publication of such list,
or (F) a Person or entity who is affiliated or associated with a Person or
entity listed above; (iii) neither Borrower or any of its Subsidiaries or
Affiliates has engaged in any business or activity prohibited by the Trading
with the Enemy Act.

5.15 Disclosure.

The Borrower has disclosed to the Lender all agreements, instruments and
corporate or other restrictions to which it or any of its Subsidiaries is
subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
No report, financial statement, certificate or other information furnished

 

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(whether in writing or orally) by or on behalf of any Loan Party to the Lender
in connection with the transactions contemplated hereby and the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.

5.16 Compliance with Laws.

Each of the Borrower and each Subsidiary is in compliance in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its properties, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or
(b) the failure to comply therewith, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.

5.17 Intellectual Property; Licenses, Etc.

The Borrower and its Subsidiaries own, or possess the right to use, all of the
trademarks, service marks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intellectual property rights (collectively, “IP
Rights”) that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person, except to the
extent that could not reasonably be expected to have a Material Adverse Effect.
To the best knowledge of the Borrower, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes upon
any rights held by any other Person, except to the extent that could not
reasonably be expected to have a Material Adverse Effect. Except as specifically
disclosed in Schedule 5.17, no claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of the Borrower, threatened,
which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

5.18 Solvency.

The Borrower is Solvent and the Borrower and its Subsidiaries, taken together on
a consolidated basis, are Solvent.

 

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ARTICLE VI. AFFIRMATIVE COVENANTS

So long as the Commitment shall be in effect, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied (other than Unasserted
Obligations), or any Letter of Credit shall remain outstanding, the Borrower
shall, and shall (except in the case of the covenants set forth in Sections
6.01, 6.02, 6.03 and 6.11) cause each Subsidiary to:

6.01 Financial Statements.

Deliver to the Lender, in form and detail satisfactory to the Lender:

(a) as soon as available, but in any event within 90 days after the end of each
Fiscal Year of the Borrower, a consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such Fiscal Year, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for such
Fiscal Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all in reasonable detail and prepared in accordance with
GAAP, audited and accompanied by a report and opinion of an independent
certified public accountant of nationally recognized standing or otherwise
reasonably acceptable to the Lender, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and shall not be
subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit; and

(b) as soon as available, but in any event within 45 days after the end of each
of the first three Fiscal Periods of each Fiscal Year of the Borrower, a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such Fiscal Period, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such Fiscal Period and for
the portion of the Borrower’s Fiscal Year then ended, setting forth in each case
in comparative form the figures for the corresponding Fiscal Period of the
previous Fiscal Year and the corresponding portion of the previous Fiscal Year,
all in reasonable detail and certified by a Responsible Officer of the Borrower
as fairly presenting, in all material respects, the financial condition, results
of operations, shareholders’ equity and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes.

As to any information contained in materials furnished pursuant to
Section 6.02(c), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in subsections (a) and (b) above at the times specified
therein.

6.02 Certificates; Other Information.

Deliver to the Lender, in form and detail reasonably satisfactory to the Lender:

(a) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of the Borrower;

 

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(b) promptly after any request by the Lender, copies of any detailed audit
reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of the Borrower by
independent accountants in connection with the accounts or books of the Borrower
or any Subsidiary, or any audit of any of them;

(c) promptly after the same are available, copies of each annual report, proxy
or financial statement or other report or communication sent to the stockholders
of the Borrower, and copies of all annual, regular, periodic and special reports
and registration statements which the Borrower may file or be required to file
with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934,
and not otherwise required to be delivered to the Lender pursuant hereto; and

(d) promptly, such additional information regarding the business, financial or
corporate affairs of the Borrower or any Subsidiary, or compliance with the
terms of the Loan Documents, as the Lender may from time to time reasonably
request.

Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule 9.02; provided
that: (i) if the Lender so requests, the Borrower shall deliver paper copies of
such documents to the Lender until a written request to cease delivering paper
copies is given by the Lender and (ii) the Borrower shall notify (which may be
by facsimile or electronic mail) the Lender of the posting of any such
documents. Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(a) to the Lender.

6.03 Notices.

Promptly notify the Lender:

(a) of the occurrence of any Default or Event of Default;

(b) of any matter that has resulted or could reasonably be expected to result in
a Material Adverse Effect, including any of the following that has resulted or
could reasonably be expected to result in a Material Adverse Effect: (i) breach
or non-performance of, or any default under, a Contractual Obligation of the
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Borrower or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Borrower or any
Subsidiary, including pursuant to any applicable Environmental Laws;

(c) of the occurrence of any ERISA Event; and

(d) of any material change in accounting policies or financial reporting
practices by the Borrower or any Subsidiary.

 

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Each notice pursuant to this Section 6.03 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

6.04 Payment of Obligations.

Except as otherwise permitted hereunder, pay and discharge as the same shall
become due and payable, all its material obligations and liabilities, including
(a) all material tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by the Borrower or such Subsidiary;
(b) all lawful material claims which, if unpaid, would by law become a Lien upon
its property; and (c) all material Indebtedness, as and when due and payable,
but subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.

6.05 Preservation of Existence, Etc.

(a) Preserve, renew and maintain in full force and effect its legal existence
and good standing under the Laws of the jurisdiction of its organization except
in a transaction permitted by Section 7.04 or 7.05; (b) take all reasonable
action to maintain all rights, privileges, permits, licenses and franchises
necessary or desirable in the normal conduct of its business, except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (c) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.

6.06 Maintenance of Properties.

(a) Maintain, preserve and protect all of its material properties and equipment
necessary in the operation of its business in good working order and condition,
in all material respects, ordinary wear and tear excepted;

(b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect; and

(c) use the standard of care typical in the industry in the operation and
maintenance of its facilities in all material respects.

6.07 Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies reasonably acceptable to the Lender and not Affiliates of
the Borrower, insurance in such amounts, with such deductibles and covering such
risks as are necessary to ensure that Uninsured Liabilities of the Borrower
and/or any Subsidiary are not reasonably likely to result in a Material Adverse
Effect.

 

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6.08 Compliance with Laws.

Comply in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its business or
property, except in such instances in which (a) such requirement of Law or
order, write, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.

6.09 Books and Records.

(a) Maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Borrower or such Subsidiary, as the case may be; and

(b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Borrower or such Subsidiary, as the case may be.

6.10 Inspection Rights.

Permit representatives and independent contractors of the Lender to visit and
inspect any of its properties, to examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers, and independent
public accountants, all at the expense of the Borrower and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Borrower; provided, however, that when an
Event of Default exists the Lender (or any of its representatives or independent
contractors) may do any of the foregoing at the expense of the Borrower at any
time during normal business hours and without advance notice.

6.11 Use of Proceeds.

Use the proceeds of the Credit Extensions only to finance working capital,
capital expenditures and Permitted Acquisitions, and for other lawful corporate
uses; provided that notwithstanding the foregoing, the Borrower may not use the
proceeds of the Credit Extensions in contravention of any Law or the restrictive
provisions of any Loan Document.

6.12 Material Subsidiaries; Pledge Agreement; Additional Guarantors.

(a) Pledge, and cause each Material Domestic Subsidiary to pledge, pursuant the
Pledge Agreement, 100% of the issued and outstanding equity interests of each
Material Domestic Subsidiary held by the Borrower or such Material Domestic
Subsidiary (for purposes hereof, such Person, a “Pledged Domestic Subsidiary”),
and in each case, promptly do so (and in any event within 30 days) after the
creation or acquisition of such Material Domestic Subsidiary, or after any
Person becomes a Material Domestic Subsidiary pursuant to Section 6.12(b).

(b) Notify the Lender at the time that any Person becomes a Material Domestic
Subsidiary (as contemplated by clause (b) and the last sentence of such
definition), and promptly thereafter (and in any event within 30 days):

(i) cause such Material Domestic Subsidiary to become a Guarantor under the
Guaranty by executing and delivering to and in favor of the Lender a counterpart
of the Guaranty; and

 

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(ii) (A) if the direct parent of such Material Domestic Subsidiary is not the
Borrower or an existing Guarantor and is a Domestic Subsidiary, cause such
direct parent to become a Guarantor under the Guaranty by executing and
delivering to and in favor of the Lender a counterpart of the Guaranty, or
(B) if the direct parent of such Material Domestic Subsidiary is not the
Borrower or an existing Guarantor and is a Foreign Subsidiary, cause the nearest
indirect domestic parent of such Material Foreign Subsidiary, if such domestic
parent is not the Borrower or an existing Guarantor, to become a Guarantor under
the Guaranty by executing and delivering to and in favor of the Lender a
counterpart of the Guaranty; and

(iii) if the direct parent of such Material Domestic Subsidiary is a Domestic
Subsidiary and the equity interests of such Material Domestic Subsidiary have
not been pledged, cause 100% of the issued and outstanding equity interests of
such Material Domestic Subsidiary to be pledged by its direct parent under the
Pledge Agreement; and

(iv) cause such Material Domestic Subsidiary and its direct parent to
(A) execute and deliver such other documents as the Lender shall deem reasonably
necessary or advisable for such purposes described in the preceding clauses (i),
(ii) and (iii), (B) execute and deliver all other agreements, documents,
instruments and certificates required by applicable Law or reasonably deemed
necessary or advisable by the Lender in connection herewith, and (C) deliver to
the Lender documents of the types referred to in clauses (v) and (vi) of
Section 4.01(a) and favorable opinions of counsel to such Person (which shall
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to in clauses (i), (ii) and
(iii) hereof); all in form, content and scope reasonably satisfactory to the
Lender.

(c) Notify the Lender at the time that any Person becomes a Material Foreign
Subsidiary (as contemplated by clause (b) and the last sentence of such
definition), and promptly thereafter (and in any event within 30 days):

(i) cause such Material Foreign Subsidiary to become a Pledged Foreign
Subsidiary (as defined below), provided, however, that if the direct parent of
such Material Foreign Subsidiary is a Foreign Subsidiary, then the Borrower
shall cause the nearest indirect domestic parent of such Material Foreign
Subsidiary (which may be the Borrower or a Domestic Subsidiary) to (A) pledge
66% of the issued and outstanding voting interests and 100% of the non-voting
equity interests of the Foreign Subsidiary directly owned by such domestic
parent under the Pledge Agreement as a Pledged Foreign Subsidiary, and
(B) become a Guarantor by concurrently executing and delivering to and in favor
of the Lender a counterpart of the Guaranty if such domestic parent is not the
Borrower or already a Guarantor (for purposes hereof, a “Pledged Foreign
Subsidiary” shall mean a Foreign Subsidiary whose direct or indirect domestic
parent has pledged 66% of the issued and outstanding voting equity interests,
and 100% of the non-voting equity interests, of the relevant Foreign Subsidiary
in favor of the Lender pursuant to the Pledge Agreement, as provided under this
subclause (i)); and

 

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(ii) cause such direct or indirect parent of such Material Foreign Subsidiary,
as the case may be, to (A) execute and deliver such other documents as the
Lender shall deem reasonably necessary or advisable for such purposes described
in the preceding clause (i), (B) execute and deliver all other agreements,
documents, instruments and certificates required by applicable Law or reasonably
deemed necessary or advisable by the Lender in connection therewith, and
(C) deliver to the Lender documents of the types referred to in clauses (v) and
(vi) of Section 4.01(a) and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to in clause (i) hereof), all in
form, content and scope reasonably satisfactory to the Lender.

(d) Notwithstanding the preceding clauses (a) through (c), the Borrower agrees
that to the extent that the aggregate annual revenues, as measured on a trailing
four Fiscal Period basis based on the most recent financial statements required
to have been delivered to the Borrower pursuant to Section 6.01, of the Borrower
and the Subsidiaries who collectively are Guarantors and Pledged Foreign
Subsidiaries does not equal or exceed 85% of the aggregate annual revenues for
such period of the Borrower’s consolidated Subsidiaries, then the Borrower shall
cause (i) one or more non-Material Domestic Subsidiaries to become Guarantors
under the Guaranty in accordance with this Section 6.12 and/or (ii) one or more
Foreign Subsidiaries to become Pledged Foreign Subsidiaries in accordance with
this Section 6.12, such that the aggregate annual revenues, as measured on a
trailing four Fiscal Period basis based on the most recent financial statement
required to have been delivered to the Borrower pursuant to Section 6.01, of the
Borrower and all Subsidiaries who collectively are Guarantors and Pledged
Foreign Subsidiaries equals or exceeds 85% of the aggregate annual revenues for
such period of the Borrower’s consolidated Subsidiaries.

(e) For the avoidance of doubt, the Borrower may at any time (i) cause any
Subsidiary (even if it is not a Material Domestic Subsidiary) to execute a
counterpart to the Guaranty and become a Guarantor in accordance with the
procedures of this Section 6.12 or (ii) pledge the stock, or cause any Pledged
Subsidiary to pledge the stock, of any Subsidiary (even if it is not a Material
Domestic Subsidiary or a Material Foreign Subsidiary) in accordance with the
procedures of this Section 6.12, at which time such Subsidiary shall become a
Pledged Subsidiary hereunder.

 

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6.13 Further Assurances.

Promptly upon reasonable request by the Lender, (a) correct any material defect
or error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all
such further acts, certificates, assurances and other instruments as the Lender
may reasonably require from time to time in order to (i) carry out more
effectively the purposes of the Loan Documents, (ii) to the fullest extent
permitted by applicable Law, subject any Loan Party’s properties, assets, rights
or interests to the Liens now or hereafter intended to be covered by any of the
Collateral Documents, (iii) perfect and maintain the validity, effectiveness and
priority of any of the Collateral Documents and any of the Liens intended to be
created thereunder and (iv) assure, convey, grant, assign, transfer, preserve,
protect and confirm more effectively unto the Lender the rights granted or now
or hereafter intended to be granted to the Lender under any Loan Document or
under any other instrument executed in connection with any Loan Document to
which any Loan Party or any of its Subsidiaries is or is to be a party, and
cause each of its Subsidiaries to do so.

6.14 Post-Closing; Additional Matters.

(a) Within one year after the Closing Date, transfer to the Lender and
Affiliates of the Lender, its and its Subsidiaries’ primary depository and
operating accounts, and primary Cash Management Services, to the extent located
within the United States or within any foreign country (provided, that in the
case of a foreign country, only to the extent the Lender is reasonably able to
provide such accounts and Cash Management Services at competitive rates), and
thereafter maintain, at all times, such accounts and Cash Management Services
arrangements with such Lender and Affiliates of the Lender.

(b) As soon as practical, and in any event no later than 30 days after the
Closing Date, deliver to the Lender a copy of the amended organizational
documents of the Borrower’s Subsidiary, Microsemi Corp. - International (“MSC
International”), certified by the Cayman Island Registrar of Companies, which
amended organizational documents shall (i) be in full force and effect,
(ii) have removed certain restrictive provisions affecting the Borrower’s pledge
of shares in MSC International under the Pledge Agreement, and (iii) otherwise
be satisfactory, in form and substance, to the Lender in its reasonable
discretion.

ARTICLE VII. NEGATIVE COVENANTS

So long as the Commitment shall be in effect, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied (other than Unasserted
Obligations), or any Letter of Credit shall remain outstanding, the Borrower
shall not, nor shall it permit any Subsidiary to, directly or indirectly:

7.01 Liens.

Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than the
following (“Permitted Liens”):

(a) Liens pursuant to any Loan Document;

 

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(b) Liens existing on the date hereof and listed on Schedule 7.01 and any
renewals or extensions thereof, provided that the property covered thereby is
not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.03(b);

(c) Liens for taxes not yet due or which are being contested in good faith and
by appropriate proceedings diligently conducted, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

(d) Liens imposed by laws, including carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens, arising in the ordinary course
of business which are not overdue for a period of more than 30 days or which are
being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person;

(e) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;

(f) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety bonds (other than bonds
related to judgments or litigation), performance bonds and other obligations of
a like nature incurred in the ordinary course of business;

(g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;

(h) Liens securing judgments for the payment of money not constituting an Event
of Default under Section 8.01(h) or securing appeal or other surety bonds
related to such judgments;

(i) Liens securing Indebtedness permitted under Sections 7.03(e) and 7.03(i);
provided that (i) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and (ii) the Indebtedness secured
thereby does not exceed the cost or fair market value, whichever is lower, of
the property being acquired on the date of acquisition;

(j) leases or subleases granted to other Persons not materially interfering with
the conduct of the business of the Borrower or any of its Subsidiaries;

(k) precautionary financing statement filings regarding operating leases;

(l) statutory and common law landlords’ liens under leases to which the Borrower
or any of its Subsidiaries is a party;

 

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(m) licenses (with respect to IP Rights) granted to other Persons that do not
interfere in any material respect with the conduct of the business of the
Borrower or any of its Subsidiaries;

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

(o) other Liens securing Indebtedness not at any time exceeding $5,000,000 in
the aggregate.

7.02 Investments.

Make any Investments, except:

(a) Investments held by the Borrower or such Subsidiary in the form of cash
equivalents or short-term marketable debt securities;

(b) Investments existing on the date hereof and listed on Schedule 7.02;

(c) Investments consisting of those certain auction rate securities held by the
Borrower and subject to the “put” arrangement under the Existing UBS Credit
Agreement;

(d) advances to officers, directors and employees of the Borrower and
Subsidiaries in an aggregate amount not to exceed $5,000,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;

(e) Investments of the Borrower in any Guarantor or Pledged Subsidiary, and
Investments of any Guarantor or Pledged Subsidiary in the Borrower or in any
other Guarantor or Pledged Subsidiary;

(f) Investments of the Borrower, any Guarantor or any Pledged Subsidiary in a
Subsidiary that is not a Guarantor or Pledged Subsidiary in an aggregate amount
not to exceed $75,000,000, inclusive of all Investments consisting of loans or
advances made from the Borrower, any Guarantor or any Pledged Subsidiary to a
Subsidiary that is not a Guarantor or Pledged Subsidiary which are outstanding
as of the Closing Date;

(g) Permitted Acquisitions (it being understood that the Lender shall have the
right, in its sole discretion, to give written consent to an acquisition, at the
time of such acquisition, by the Borrower and its Subsidiaries which would
otherwise qualify as a Permitted Acquisition except that such acquisition would
exceed the aggregate cash purchase consideration limitation set forth in clause
(e) of “Permitted Acquisition”, and thereby allow such aggregate limitation to
reset to the full amount set forth in clause (e), provided, however, that such
understanding shall not constitute an agreement by the Lender to give such
consent to any such acquisition);

(h) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

 

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(i) Investments in respect of Swap Contracts and related transactions as
permitted by Section 7.03(d);

(j) Investments of any Person existing at the time such Person becomes a
Subsidiary or consolidates or merges with the Borrower or any Subsidiary
(including in connection with a Permitted Acquisition) so long as such
Investments were not made in contemplation of such Person becoming a Subsidiary
or of such consolidation or merger;

(k) Investments constituting deposits made in connection with the performance of
leases or the purchase of goods or services in the ordinary course of business;

(l) Investments received in connection with the Disposition of any assets
permitted by Section 7.05;

(m) Guarantees permitted by Section 7.03; and

(n) other Investments not exceeding $5,000,000 in the aggregate in any Fiscal
Year of the Borrower.

7.03 Indebtedness.

Create, incur, assume or suffer to exist any Indebtedness, except:

(a) Indebtedness under the Loan Documents;

(b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and
any refinancings, refundings, renewals or extensions thereof; provided that the
amount of such Indebtedness is not increased at the time of such refinancing,
refunding, renewal or extension except by an amount equal to a reasonable
premium or other reasonable amount paid, and fees and expenses reasonably
incurred, in connection with such refinancing and by an amount equal to any
existing commitments unutilized thereunder;

(c) Guarantees of the Borrower or any Subsidiary in respect of Indebtedness or
other obligations otherwise permitted hereunder of the Borrower or any
wholly-owned Subsidiary;

(d) obligations (contingent or otherwise) of the Borrower or any Subsidiary
existing or arising under any Swap Contract, provided that (i) such obligations
are (or were) entered into by such Person in the ordinary course of business for
the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a “market view”; and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

 

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(e) Indebtedness of any Person that becomes a Subsidiary after the hereof;
provided that such Indebtedness exists at the time such Person becomes a
Subsidiary and is not created in contemplation of or in connection with such
Person becoming a Subsidiary, and any refinancings, refundings, renewals or
extensions thereof; provided that the amount of such Indebtedness is not
increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized
thereunder;

(f) Indebtedness owed to any Person (including obligations in respect to letters
of credit for the benefit of such Person) providing workers’ compensation,
health, disability or other employee benefits or property, casualty or liability
insurance, pursuant to reimbursement or indemnification obligations to such
Person, in each case incurred in the ordinary course of business;

(g) unsecured Subordinated Indebtedness, provided that, at the time of issuance
thereof, no Event of Default has occurred and is continuing or would result from
the incurrence of such Subordinated Indebtedness, and that the incurrence of
such Subordinated Indebtedness would not violate any financial covenant set
forth in Section 7.11 on a pro forma basis after taking into account the funding
of such Subordinated Indebtedness;

(h) Indebtedness arising from judgments or decrees not constituting an Event of
Default under Section 8.01(h);

(i) Indebtedness in respect of capital leases, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets within the limitations
set forth in Section 7.01(i); provided, however, that the aggregate amount of
all such Indebtedness at any one time outstanding shall not exceed $5,000,000;
and

(j) any deposit to secure the performance of bids, trade contracts or leases
(other than Indebtedness), statutory obligations, surety bonds (other than bonds
related to judgments or litigation), performance bonds and other obligations of
a like nature, in each case incurred in the ordinary course of business;

(k) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is extinguished
within ten Business Days of incurrence;

(l) Indebtedness arising in connection with endorsement of instruments for
deposit in the ordinary course of business;

(m) Indebtedness of Borrower or any Subsidiary that may be deemed to exist in
connection with agreements providing for indemnification, purchase price
adjustments and similar obligations in connection with acquisitions or sales of
assets and/or businesses;

(n) Intercompany Indebtedness from a Loan Party to another Loan Party or to a
Subsidiary that is not a Loan Party, in each case as permitted by Section 7.02;
and

 

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(o) other unsecured Indebtedness in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding.

7.04 Fundamental Changes.

(a) Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that, so long as no Default exists or would
result therefrom:

(i) any Subsidiary may merge with (A) the Borrower, provided that the Borrower
shall be the continuing or surviving Person, or (B) any one or more other
Subsidiaries, provided that (X) when any Guarantor is merging with another
Subsidiary that is not a Guarantor, the Guarantor shall be the continuing or
surviving Person, and (Y) when any Pledged Subsidiary is merging with another
Subsidiary that is not a Borrower, Guarantor or Pledged Subsidiary, then such
Pledged Subsidiary shall be the continuing or surviving Person;

(ii) any Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or to another Subsidiary;
provided that if the transferor in such a transaction is (A) a Guarantor, then
the transferee must either be the Borrower or a Guarantor, or (B) a Pledged
Subsidiary that is not a Guarantor, then the transferee must either be the
Borrower, a Guarantor or another Pledged Subsidiary; and

(iii) the Borrower or any Subsidiary may merge with another Person in connection
with a Permitted Acquisition; provided that, in the case of any merger involving
the Borrower, the Borrower shall be the continuing or surviving Person; provided
further that, in the case of any merger (other than a merger involving the
Borrower) involving a Guarantor, the Guarantor shall be the surviving Person or
the surviving Person will become a Guarantor in connection with such Permitted
Acquisition; and provided further that, in the case of any merger (other than a
merger involving the Borrower or a Guarantor) involving a Pledged Subsidiary,
the Pledged Subsidiary shall be the surviving Person or the surviving Person
will become a Pledged Subsidiary in connection with such Permitted Acquisition;

(iv) the Borrower or any Subsidiary may Dispose of its real property owned in
fee as permitted by Section 7.05.

(b) Acquire by purchase or otherwise all or any substantial part of the business
or assets of any other Person (whether by stock purchase or otherwise), except
that:

(i) so long as no Default or Event of Default exists or would result therefrom,
the Borrower may consummate any Permitted Acquisition;

(ii) the Borrower and/or any Subsidiary may make Investments to the extent
permitted by Section 7.02; and

(iii) so long as no Default or Event of Default exists or would result
therefrom, any Subsidiary of any Borrower that has complied with Section 7.04(c)
may acquire by purchase or otherwise all or any substantial part of the business
or assets of any other Subsidiary of any Borrower that has complied with
Section 7.04(c).

 

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(c) Form or acquire (or cause or permit the formation or acquisition of) any
Subsidiary, unless concurrent with such formation or acquisition, whether or not
such transaction constitutes a Permitted Acquisition, the Borrower shall, and
shall cause such Subsidiary to comply with the applicable requirements of
Section 6.12.

7.05 Dispositions.

Make any Disposition or enter into any agreement to make any Disposition,
except:

(a) Dispositions of obsolete, damaged, uneconomic or worn out machinery, parts,
property or equipment, or property or equipment no longer used or useful, in the
conduct of its business, whether now owned or hereafter acquired;

(b) Dispositions of inventory in the ordinary course of business;

(c) the Borrower or any Subsidiary may Dispose of owned or leased vehicles in
the ordinary course of business;

(d) Dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property;

(e) Dispositions of property by any Subsidiary to the Borrower or to a
wholly-owned Subsidiary; provided that if the transferor of such property is a
Guarantor, the transferee thereof must either be the Borrower or a Guarantor;

(f) Dispositions, mergers and consolidations permitted by Section 7.04;

(g) Dispositions of leases entered into in the ordinary course of business, to
the extent that they do not materially interfere with the business of the
Borrower or any Subsidiary, taken as a whole;

(h) non-exclusive licenses of IP Rights in the ordinary course of business and
substantially consistent with past practice;

(i) one-time Dispositions of the properties currently located at, or comprising,
the Borrower’s Broomfield, Colorado facility for fair market value, not to
exceed $5,000,000 in the aggregate for all such Dispositions;

(j) Dispositions of real property owned in fee by the Borrower and its
Subsidiaries for fair market value not to exceed $15,000,000 in the aggregate
for all such Dispositions from the Closing Date; and

 

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(k) Dispositions by the Borrower and its Subsidiaries not otherwise permitted
under this Section 7.05; provided that (i) at the time of such Disposition, no
Default or Event of Default shall exist or would result from such Disposition,
(ii) the aggregate book value of all property Disposed of in reliance on this
clause (j) in any Fiscal Year shall not exceed $5,000,000, and (iii) any such
Dispositions shall be for fair market value.

7.06 Restricted Payments.

Declare or make, directly or indirectly, any Restricted Payment, or incur any
obligation (contingent or otherwise) to do so, except that:

(a) each Subsidiary may make Restricted Payments to the Borrower and to
wholly-owned Subsidiaries (and, in the case of a Restricted Payment by a
non-wholly-owned Subsidiary, to the Borrower and any Subsidiary and to each
other owner of capital stock or other equity interests of such Subsidiary on a
pro rata basis based on their relative ownership interests);

(b) the Borrower and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock or other common equity
interests of such Person;

(c) provided that no Default or Event of Default has occurred and is continuing
or would result therefrom, the Borrower may purchase, redeem or otherwise
acquire shares of its common stock or other common equity interests or warrants
or options to acquire any such shares, in each case, to the extent consideration
therefor consists of the proceeds received from the substantially concurrent
issue of new shares of its common stock or other common equity interests; and

(d) provided that (i) no Default or Event of Default has occurred and is
continuing or would result therefrom and (ii), after taking into account such
dividend, purchase, redemption or other acquisition, as applicable, the
Consolidated Leverage Ratio, as measured on a pro forma basis as of such date of
declaration, payment, purchase, redemption or other acquisition, as applicable,
would not exceed 1.75:1.00, the Borrower may declare or pay cash dividends to
its stockholders and purchase, redeem or otherwise acquire shares of its capital
stock or warrants, rights or options to acquire any such shares for cash.

7.07 Change in Nature of Business.

Engage in any material line of business substantially different from those lines
of business conducted by the Borrower and its Subsidiaries on the date hereof or
any business substantially related or incidental thereto or any Related
Business.

7.08 Transactions with Affiliates.

Enter into any transaction of any kind with any Affiliate of the Borrower,
whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to the Borrower or such Subsidiary
as would be obtainable by the Borrower or such Subsidiary at the time in a
comparable arm’s length transaction with a Person other than an Affiliate,
except (i) transactions between or among the Borrower and any of its wholly
owned

 

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Subsidiaries, (ii) loans or advances to employees permitted under
Section 7.02(c), (iii) the payment of reasonable fees to directors of the
Borrower or any Subsidiary who are not employees of the Borrower or any
Subsidiary, and compensation and employee benefit arrangements paid to, and
indemnities provided for the benefit of, directors, officers or employees of the
Borrower or any Subsidiary in the ordinary course of business, (iv) (A) any
issuances of securities or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment agreements, stock
options and stock ownership plans approved by the Borrower’s board of directors
and (B) any repurchases of any issuances, awards or grants issued pursuant to
clause (A), in each case, to the extent permitted by Section 7.06,
(v) employment arrangements entered into in the ordinary course of business
between the Borrower or any Subsidiary and any employee thereof, and (vi) any
Restricted Payment permitted by Section 7.06.

7.09 Burdensome Agreements; Negative Pledge.

(a) Enter into any Contractual Obligation (other than this Agreement or any
other Loan Document) that (i) limits the ability (A) of any Subsidiary to make
Restricted Payments to the Borrower or any Guarantor or to otherwise transfer
property to the Borrower or any Guarantor, (B) of any Subsidiary to Guarantee
the Indebtedness of the Borrower or (C) of the Borrower or any Subsidiary to
create, incur, assume or suffer to exist Liens on property of such Person;
provided, however, that this clause (C) shall not prohibit any negative pledge
incurred or provided in favor of any holder of Indebtedness permitted under
Section 7.03(i) solely to the extent any such negative pledge relates to the
property financed by or the subject of such Indebtedness; or (ii) requires the
grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person; provided that the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary or any assets pending such sale, provided that such
restrictions and conditions apply only to the Subsidiary or assets that is or
are to be sold and such sale is permitted hereunder.

(b) Create, incur, permit, assume or suffer to exist any Lien upon any of the
property or assets of the Borrower or any Subsidiary, or any income, revenue or
profits from any such property or assets, whether now owned or hereafter
acquired, other than Liens permitted under Section 7.1; provided that the
foregoing shall not apply to (i) customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary or any assets pending such
sale, provided that such restrictions and conditions apply only to the
Subsidiary or assets that is or are to be sold and such sale is permitted
hereunder, (ii) restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness, and
(iii) customary provisions in leases and other contracts restricting the
assignment thereof.

7.10 Use of Proceeds.

Use the proceeds of any Credit Extension, whether directly or indirectly, and
whether immediately, incidentally or ultimately, to purchase or carry margin
stock (within the meaning of Regulation U of the FRB) or to extend credit to
others for the purpose of purchasing or carrying margin stock or to refund
indebtedness originally incurred for such purpose, or in violation of
Section 6.11.

 

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7.11 Financial Covenants.

(a) Maximum Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio
as of the last day of any Fiscal Period to be greater than 2.00:1.00.

(b) Minimum Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated
Fixed Charge Coverage Ratio as of the end of any Fiscal Period of the Borrower
to be less than 3.00:1.00.

(c) Minimum Consolidated Liquidity Ratio. Permit the Consolidated Liquidity
Ratio as of the last day of each Fiscal Period to be less than 1.50:1.00.

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default.

Any of the following shall constitute an Event of Default:

(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and
as required to be paid herein, any amount of principal of any Loan or any L/C
Obligation, or (ii) within three days after the same becomes due, any interest
on any Loan or on any L/C Obligation, or any commitment or other fee due
hereunder, or (iii) within five days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10,
6.11 or 6.12 or Article VII; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days; or

(d) Representations and Warranties. (i) Any representation or warranty made or
deemed made by or on behalf of the Borrower or any other Loan Party herein
(including Article V), or in the Guaranty or Pledge Agreement, shall not be true
and correct when made or deemed made; (ii) any representation, warranty or
certification made or deemed made by or on behalf of the Borrower or any other
Loan Party in any other Loan Document, or in any other document delivered in
connection herewith or therewith, shall not be true and correct, in any material
respect (provided that to the extent any such representation, warranty or
certification is already qualified by “materiality” or words to such effect, the
materiality qualifier of this clause (ii) shall be deemed not to apply), when
made or deemed made; or

(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or (B) fails to

 

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observe or perform any other agreement or condition relating to any such
Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event is to cause, or to permit the holder or holders
of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any event
of default under such Swap Contract as to which the Borrower or any Subsidiary
is the Defaulting Party (as defined in such Swap Contract) or (B) any
Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower or such Subsidiary as a
result thereof is greater than the Threshold Amount; or

(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is
instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding; or

(g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
30 days after its issue or levy; or

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

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Borrower or any ERISA

 

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Affiliate fails to pay when due, after the expiration of any applicable grace
period, any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of the Threshold Amount; or

(j) Invalidity of Loan Documents. (i) Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or any Loan Party or any other Person contests in any manner
the validity or enforceability of any Loan Document; or any Loan Party denies
that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document, (ii) any Collateral
Document after delivery thereof shall for any reason (other than pursuant to the
terms thereof) cease to create a valid and perfected first priority Lien
(subject to Liens permitted by Section 7.01) on (A) 100% of the issued and
outstanding equity interests of a Domestic Subsidiary pledged under the Pledge
Agreement, and (B) 66% of the issued and outstanding voting equity interests,
and 100% of the non-voting equity interests, of a Foreign Subsidiary pledged
under the Pledge Agreement; or

(k) Change of Control. There occurs any Change of Control with respect to the
Borrower, or Borrower fails to own, directly or indirectly, 100% of the equity
interests of any Subsidiary other than PowerDsine.

8.02 Remedies Upon Event of Default.

If any Event of Default occurs and is continuing, the Lender may take any or all
of the following actions:

(a) declare the Commitment to be terminated, whereupon the Commitment shall be
terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and

(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and

(d) exercise all rights and remedies, legal, equitable or otherwise, available
to it under the Loan Documents or applicable law, and all rights and remedies
will be cumulative in nature;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the Commitment shall automatically terminate, the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable, and the obligation of the
Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Lender.

 

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8.03 Application of Funds.

After the exercise of remedies provided for in Section 8.02 (or after the Loans
have automatically become immediately due and payable and the L/C Obligations
have automatically been required to be Cash Collateralized as set forth in the
proviso to Section 8.02), any amounts received on account of the Obligations
shall be applied by the Lender in such order as it elects in its sole
discretion.

ARTICLE IX. MISCELLANEOUS

9.01 Amendments; Etc.

No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by the Borrower or any other Loan
Party therefrom, shall be effective unless in writing signed by the Lender and
the Borrower or the applicable Loan Party, as the case may be, and each such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

9.02 Notices and Other Communications; Facsimile Copies.

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by
facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the address, facsimile number or (subject to subsection (c) below)
electronic mail address specified for notices to the applicable party on
Schedule 9.02; or to such other address, facsimile number or electronic mail
address as shall be designated by such party in a notice to the other party. All
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the telephone number specified for notices to the
applicable party on Schedule 9.02, or to such other telephone number as shall be
designated by such party in a notice to the other party. All such notices and
other communications shall be deemed to be given or made upon the earlier to
occur of (i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by courier, when signed for by or on behalf of the relevant
party hereto; (B) if delivered by mail, four Business Days after deposit in the
mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has
been confirmed by telephone; and (D) if delivered by electronic mail (which form
of delivery is subject to the provisions of subsection (c) below), when
delivered; provided, however, that notices and other communications to the
Lender pursuant to Article II shall not be effective until actually received by
the Lender. In no event shall a voicemail message be effective as a notice,
communication or confirmation hereunder.

(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable Law, have the same force and effect
as manually-signed originals and shall be binding on all Loan Parties and the
Lender. The Lender may also require that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however, that the
failure to request or deliver the same shall not limit the effectiveness of any
facsimile document or signature.

 

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(c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet
websites may be used only to distribute routine communications, such as
financial statements and other information as provided in Sections 6.01 and
6.02, and to distribute Loan Documents for execution by the parties thereto, and
may not be used for any other purpose.

(d) Reliance by Lender. The Lender shall be entitled to rely and act upon any
notices (including telephonic Loan Notices) purportedly given by or on behalf of
the Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrower shall indemnify
the Lender, its Affiliates, and their respective officers, directors, employees,
agents and attorneys-in-fact from all losses, costs, expenses and liabilities
resulting from the reliance by such Person on each notice purportedly given by
or on behalf of the Borrower; provided that such indemnity shall not be
available to the extent such licenses, costs, expenses or liabilities are
determined by a court of competent jurisdiction by final and non-appealable
judgment to have resulted from the gross negligence or willful misconduct of
such indemnitee. All telephonic notices to and other communications with the
Lender may be recorded by the Lender, and the Borrower hereby consents to such
recording.

9.03 No Waiver; Cumulative Remedies.

No failure by the Lender to exercise, and no delay by the Lender in exercising,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

9.04 Attorney Costs, Expenses and Taxes.

The Borrower agrees (a) to pay or reimburse the Lender for all reasonable costs
and expenses incurred in connection with the development, due diligence,
preparation, negotiation and execution of this Agreement and the other Loan
Documents and any amendment, waiver, consent or other modification of the
provisions hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated), and the consummation and administration of
the transactions contemplated hereby and thereby, including all Attorney Costs,
and (b) to pay or reimburse the Lender for all costs and expenses incurred in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Loan Documents (including
all such costs and expenses incurred during any “workout” or restructuring in
respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs. The
foregoing costs and expenses shall include all search, filing, recording, title
insurance and appraisal charges and fees and documentary, transfer or other
similar taxes related thereto, and other out-of-pocket expenses incurred by the
Lender and the cost of independent public accountants and other outside experts
retained by the Lender. All amounts due under this Section 9.04 shall be payable
within ten Business Days after demand therefor. The agreements in this
Section 9.04 shall survive the termination of the Commitment and repayment,
satisfaction or discharge of all other Obligations.

 

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9.05 Indemnification by the Borrower.

Whether or not the transactions contemplated hereby are consummated, the
Borrower shall indemnify and hold harmless the Lender, its Affiliates, and their
respective directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the “Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time be imposed on, incurred by or
asserted against any such Indemnitee in any way relating to or arising out of or
in connection with (a) the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter or instrument
delivered in connection with the transactions contemplated thereby or the
consummation of the transactions contemplated thereby, (b) the Commitment, any
Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the Lender to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (c) any actual or
alleged presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by the Borrower, any Subsidiary or any
other Loan Party, or any Environmental Liability related in any way to the
Borrower, any Subsidiary or any other Loan Party, or (d) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory (including
any investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”), in all cases, whether or not caused by or arising, in whole or in
part, out of the negligence of the Indemnitee; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee. No Indemnitee
shall have any liability for any indirect or consequential damages relating to
this Agreement or any other Loan Document or arising out of its activities in
connection herewith or therewith (whether before or after the Closing Date). All
amounts due under this Section 9.05 shall be payable within ten Business Days
after demand therefor. The agreements in this Section 9.05 shall survive the
termination of the Commitment and the repayment, satisfaction or discharge of
all the other Obligations.

9.06 Payments Set Aside.

To the extent that any payment by or on behalf of the Borrower is made to the
Lender, or the Lender exercises its right of set-off, and such payment or the
proceeds of such set-off or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred.

 

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9.07 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Lender and the Lender may not assign or otherwise transfer any of its rights
or obligations hereunder except (i) to an Eligible Assignee in accordance with
the provisions of subsection (b) of this Section 9.07, (ii) by way of
participation in accordance with the provisions of subsection (c) of this
Section 9.07, or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of subsection (e) of this Section 9.07(and any other
attempted assignment or transfer by any party hereto shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in subsection
(c) of this Section 9.07 and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

(b) The Lender may at any time assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of the Commitment, the Loans and L/C Obligations at the time owing to
it) in a minimum amount of $5,000,000 (provided, that no minimum shall apply
(i) to any assignment to an Affiliate of the Lender or an Approved Fund or
(ii) if such assignment an assignment is of all the entire remaining Commitment
of the Lender and all Loans then owed to the Lender) pursuant to documentation
acceptable to the Lender and the assignee, it being understood and agreed that
with respect to any Letters of Credit outstanding at the time of any such
assignment, the Lender may sell to the assignee a ratable participation in such
Letters of Credit. From and after the effective date specified in such
documentation, such Eligible Assignee shall be a party to this Agreement and, to
the extent of the interest assigned by the Lender, have the rights and
obligations of the Lender under this Agreement, and the Lender shall, to the
extent of the interest so assigned, be released from its obligations under this
Agreement (and, in the case of an assignment of all of the Lender’s rights and
obligations under this Agreement, shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 9.04 and
9.05 with respect to facts and circumstances occurring prior to the effective
date of such assignment, and shall continue to have all of the rights provided
hereunder to the Lender in its capacity as issuer of any Letters of Credit
outstanding at the time of such assignment). Upon request, the Borrower (at its
expense) shall execute and deliver new or replacement Notes to the Lender and
the assignee, and shall execute and deliver any other documents reasonably
necessary or appropriate to give effect to such assignment and to provide for
the administration of this Agreement after giving effect thereto.

(c) An assignee that is not a “United Stated person” within the meaning of
Section 7701(a)(30) of the Code shall not be entitled to the benefits of
Section 3.01 unless the Borrower is notified of the assignment to such assignee
and such assignee agrees, for the benefit of the Borrower, to provide to the
Lender such tax forms prescribed by the IRS as are necessary or desirable to
establish an exemption from, or reduction of, U.S. withholding tax.

 

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(d) The Lender may at any time, without the consent of, or notice to, the
Borrower, sell participations to any Person (other than a natural person or the
Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of the Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the
outstanding Letters of Credit and/or the Loans and/or the reimbursement
obligations in respect of Letters of Credit); provided that (i) the Lender’s
obligations under this Agreement shall remain unchanged, (ii) the Lender shall
remain solely responsible to the Borrower for the performance of such
obligations and (iii) the Borrower shall continue to deal solely and directly
with the Lender in connection with the Lender’s rights and obligations under
this Agreement. Any agreement or instrument pursuant to which the Lender sells
such a participation shall provide that the Lender shall retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such agreement or instrument
may provide that the Lender will not, without the consent of the Participant,
agree to any amendment, waiver or other modification that would (i) postpone any
date upon which any payment of money (other than a mandatory prepayment) is
scheduled to be made to such Participant, (ii) reduce the principal, interest,
fees or other amounts payable to such Participant (provided, however, that the
Lender may, without the consent of the Participant, (A) amend any financial
covenant hereunder (or any defined term used therein) even if the effect of such
amendment would be to reduce the rate of interest on any Loan or Letter of
Credit reimbursement obligation or to reduce any fee payable hereunder and
(B) waive the right to be paid interest at the Default Rate), and (iii) release
any Guarantor from the Guaranty or the Pledge Agreement. Subject to subsection
(d) of this Section 9.07, the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as
if it were the Lender and had acquired its interest by assignment pursuant to
subsection (b) of this Section 9.07. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.09 as though it
were the Lender.

(e) A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04 than the Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent. A Participant that is not a “United States person” within the meaning
of Section 7701(a)(30) of the Code shall not be entitled to the benefits of
Section 3.01 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
provide to the Lender such tax forms prescribed by the IRS as are necessary or
desirable to establish an exemption from, or reduction of, U.S. withholding tax.

(f) The Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under the Note, if
any) to secure obligations of the Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release the Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for the Lender as a party hereto.

 

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(g) As used herein, the following terms have the following meanings:

“Eligible Assignee” means (a) an Affiliate of the Lender; (b) an Approved Fund;
and (c) any other Person (other than a natural person) who is approved by the
Borrower (such approval not to be unreasonably withheld, conditioned or
delayed); provided that no such approval shall be required if an Event of
Default has occurred and is continuing; and provided further that,
notwithstanding the foregoing, “Eligible Assignee” shall not include the
Borrower or any Subsidiary or Affiliate of the Borrower.

“Fund” means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

“Approved Fund” means any Fund that is administered or managed by (a) the Lender
or (b) an Affiliate of the Lender.

9.08 Confidentiality.

The Lender agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
hereto, (e) in connection with the exercise of any remedies hereunder or under
any other Loan Document or any action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section 9.08, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section 9.08 or (y) becomes available to the Lender on a nonconfidential
basis from a source other than the Borrower. For purposes of this Section 9.08,
“Information” means all information received from any Loan Party relating to any
Loan Party or any of their respective businesses, other than any such
information that is available to the Lender on a nonconfidential basis prior to
disclosure by any Loan Party, provided that, in the case of information received
from a Loan Party after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section 9.08 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

9.09 Set-off.

In addition to any rights and remedies of the Lender provided by law, upon the
occurrence and during the continuance of any Event of Default, the Lender is
authorized at any

 

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time and from time to time, without prior notice to the Borrower or any other
Loan Party, any such notice being waived by the Borrower (on its own behalf and
on behalf of each Loan Party) to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held by, and other indebtedness at any time owing by, the
Lender to or for the credit or the account of the respective Loan Parties
against any and all Obligations owing to the Lender hereunder or under any other
Loan Document, now or hereafter existing, irrespective of whether or not the
Lender shall have made demand under this Agreement or any other Loan Document
and although such Obligations may be contingent or unmatured or denominated in a
currency different from that of the applicable deposit or indebtedness. The
Lender agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application.

9.10 Interest Rate Limitation.

Notwithstanding anything to the contrary contained in any Loan Document, the
interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by applicable Law (the “Maximum
Rate”). If the Lender shall receive interest in an amount that exceeds the
Maximum Rate, the excess interest shall be applied to the principal of the Loans
or, if it exceeds such unpaid principal, refunded to the Borrower. In
determining whether the interest contracted for, charged, or received by the
Lender exceeds the Maximum Rate, the Lender may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.

9.11 Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

9.12 Integration.

This Agreement, together with the other Loan Documents, comprises the complete
and integrated agreement of the parties on the subject matter hereof and thereof
and supersedes all prior agreements, written or oral, on such subject matter. In
the event of any conflict between the provisions of this Agreement and those of
any other Loan Document, the provisions of this Agreement shall control;
provided that the inclusion of supplemental rights or remedies in favor of the
Lender in any other Loan Document shall not be deemed a conflict with this
Agreement. Each Loan Document was drafted with the joint participation of the
respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.

9.13 Survival of Representations and Warranties.

All representations and warranties made hereunder and in any other Loan Document
or other document delivered pursuant hereto or thereto or in connection herewith
or therewith shall

 

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survive the execution and delivery hereof and thereof. Such representations and
warranties have been or will be relied upon by the Lender, regardless of any
investigation made by the Lender or on its behalf and notwithstanding that the
Lender may have had notice or knowledge of any Default at the time of any Credit
Extension, and shall continue in full force and effect as long as any Loan or
any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter
of Credit shall remain outstanding.

9.14 Severability.

If any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Agreement and the other Loan Documents shall
not be affected or impaired thereby and (b) the parties shall endeavor in good
faith negotiations to replace the illegal, invalid or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to
that of the illegal, invalid or unenforceable provisions. The invalidity of a
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

9.15 Governing Law.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE LENDER SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN
THE COUNTY OF SAN FRANCISCO OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF
SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER AND
THE LENDER EACH CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER AND THE LENDER EACH
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER AND THE
LENDER EACH WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

9.16 Waiver of Jury Trial; Judicial Reference.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO WAIVE THEIR RIGHT
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON
THIS AGREEMENT, THE OTHER LOAN

 

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DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF
DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE PARTIES
TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS
COUNSEL.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A JURY TRIAL, IF THE ABOVE WAIVER OF THE RIGHT TO A JURY
TRIAL IS NOT ENFORCEABLE, THE PARTIES HERETO AGREE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE OR RETIRED JUDGE APPLYING THE APPLICABLE LAW. THEREFORE, THE
PARTIES HERETO THEN AGREE TO REFER, FOR A COMPLETE AND FINAL ADJUDICATION, ANY
AND ALL ISSUES OF FACT OR LAW INVOLVED IN ANY LITIGATION OR PROCEEDING
(INCLUDING ALL DISCOVERY AND LAW AND MOTION MATTERS, PRETRIAL MOTIONS, TRIAL
MATTERS, AND POST-TRIAL MOTIONS (E.G., MOTIONS FOR RECONSIDERATION, NEW TRIAL
AND TO TAX COSTS, ATTORNEY FEES AND PREJUDGMENT INTEREST)) UP TO AND INCLUDING
FINAL JUDGMENT, BROUGHT TO RESOLVE ANY DISPUTE (WHETHER SOUNDING IN CONTRACT,
TORT, UNDER ANY STATUTE, OR OTHERWISE) BETWEEN THE LENDER AND THE BORROWER
ARISING OUT OF, CONNECTED WITH, OR RELATED OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THE PARTIES IN CONNECTION WITH THIS AGREEMENT, THE LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED HERETO AND THERETO, TO A JUDICIAL REFEREE
WHO SHALL BE APPOINTED UNDER A GENERAL REFERENCE PURSUANT TO CALIFORNIA CODE OF
CIVIL PROCEDURE SECTION 638. THE REFEREE’S DECISION WOULD STAND AS THE DECISION
OF THE COURT, WITH JUDGMENT TO BE ENTERED ON HIS STATEMENT OF DECISION IN THE
SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE LENDER AND THE
BORROWER SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL BE A RETIRED STATE OR
FEDERAL JUDGE WITH AT LEAST FIVE YEARS OF JUDICIAL EXPERIENCE IN CIVIL MATTERS.
IN THE EVENT THAT THE LENDER AND THE BORROWER CANNOT AGREE UPON A REFEREE, THE
REFEREE SHALL BE APPOINTED BY THE COURT. THE BORROWER SHALL BEAR THE FEES AND
EXPENSES OF THE REFEREE UNLESS THE REFEREE OTHERWISE PROVIDES IN THE STATEMENT
OF DECISION. EACH PARTY AGREES THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9.16 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE REFERENCE TO A JUDICIAL
REFEREE AS PROVIDED ABOVE.

9.17 USA Patriot Act Notice.

The Lender hereby notifies the Borrower that pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow the Lender to identify the
Borrower in accordance with the Act.

 

70

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9.18 Reinstatement.

To the maximum extent not prohibited by applicable law, this Agreement and the
other Loan Documents (and the indebtedness hereunder, to the extent restored,
refunded or returned) will be reinstated (as though such payment(s) had not been
made) if at any time any amount received by the Lender in respect of any Loan
Document is rescinded or must otherwise be restored, refunded or returned by the
Lender to the Borrower or any other Person (a) upon or as a result of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any other Person, or (b) upon or as a result of the appointment of
any receiver, intervenor, conservator, trustee or similar official for the
Borrower or any other Person or for any substantial part of the Property of the
Borrower or any other Person, or (c) for any other reason.

[Remainder of page intentionally left blank]

 

71

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

MICROSEMI CORPORATION By:  

/s/    JOHN W. HOHENER        

Name:   John W. Hohener Title:  

Vice President, Chief Financial Officer,

Treasurer and Secretary

[SIGNATURE PAGE TO CREDIT AGREEMENT]

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

BANK OF AMERICA, N.A. By:  

/s/    SUGEET MANCHANDA MADAN

Name:   Sugeet Manchanda Madan Title:   Senior Vice President

[SIGNATURE PAGE TO CREDIT AGREEMENT]

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

SCHEDULE 9.02

NOTICE ADDRESSES AND LENDING OFFICE

MICROSEMI CORPORATION

2381 Morse Avenue

Irvine, CA 92614

 

Attention:   John Hohener Telephone:   (949) 221-7100 Facsimile:   (949)
756-2053 Electronic Mail: jhohener@microsemi.com

LENDER:

Lending Office for Loans, payments with

respect thereto and payments of fees:

BANK OF AMERICA, N.A.

2001 Clayton Rd. — Bldg. B.

Concord, CA 94520-2405

Mail Code: CA4-702-02-25

Attn:       Jesse C. Phalen   Telephone: (925) 675-8458   Facsimile:
 888-969-9228   Electronic Mail: jesse.c.phalen@bankofamerica.com   Bank of
America, N.A.   Account No. 3750836479   Ref: Microsemi   ABA# 026009593

Notices (other than Requests for Credit Extensions);

Credit Matters Contact:

BANK OF AMERICA, N.A.

315 Montgomery St. — 6th Floor

San Francisco, CA 94104

Mail Code: CA5-704-06-37

Attn:       Sugeet Manchanda Madan, Sr. Vice President   Telephone:  
(415) 913-2798   Facsimile:   (415) 913-2358   Electronic mail:
s_manchanda.madan@bankofamerica.com

 

1

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Notices for Letter of Credit Issuances/Amendments:

BANK OF AMERICA, N.A.

Trade Finance Service Center

1000 W. Temple St.

Los Angeles, CA 90012-1514

Mail Code: CA9-705-07-05

Attn:       Bolivar G. Carrillo, Asst. V.P.   Telephone:   (213) 481-7842  
Facsimile:   (213) 457-8841   Electronic mail:
bolivar.carrillo@bankofamerica.com

 

2

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EXHIBIT A

FORM OF LOAN NOTICE

Date:                     

To: Bank of America, N.A.

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of October 5, 2009
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), between Microsemi Corporation, a Delaware corporation, and
Bank of America, N.A.

The undersigned hereby requests (select one):

¨ A Loan                                                          ¨ A Conversion
or Continuation of a Loan

1. On                                          (a Business Day).

2. In the amount of $             .

3. Comprised of                      .

[Type of Loan requested]

4. For a Eurodollar Rate Loan: with an Interest Period of      months.

The borrowing requested herein complies with the proviso to the first sentence
of Section 2.01 of the Agreement.

The Consolidated Leverage Ratio, determined on a pro forma basis after giving
effect to the Credit Extension requested hereby and calculated in accordance
with Section 4.02(d) of the Agreement, is equal to or less than 2.00 to 1
(Maximum permitted: 2.00 to 1).

 

MICROSEMI CORPORATION

By:

 

 

Name:

 

 

Title:

 

 

 

1

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EXHIBIT B

FORM OF NOTE

 

$50,000,000   October 5, 2009

FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to
the order of BANK OF AMERICA, N.A. (the “Lender”), on the Maturity Date (as
defined in the Credit Agreement referred to below) the principal amount of Fifty
Million Dollars ($50,000,000), or such lesser principal amount of Loans (as
defined in such Credit Agreement) due and payable by the Borrower to the Lender
on the Maturity Date under that certain Credit Agreement, dated as of October 5,
2009 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), between the Borrower and the Lender.

The Borrower promises to pay interest on the unpaid principal amount of each
Loan from the date of such Loan until such principal amount is paid in full, at
such interest rates, and at such times as are specified in the Agreement. All
payments of principal and interest shall be made to the Lender in Dollars in
immediately available funds at the Lender’s Lending Office. If any amount is not
paid in full when due hereunder, such unpaid amount shall bear interest, to be
paid upon demand, from the due date thereof until the date of actual payment
(and before as well as after judgment) computed at the per annum rate set forth
in the Agreement.

This Note is the Note referred to in the Agreement, is entitled to the benefits
thereof and is subject to optional prepayment in whole or in part as provided
therein. This Note is also entitled to the benefits of the Guaranty and is
secured by the Collateral. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of the Loans and payments
with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.

 

1

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THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.

 

MICROSEMI CORPORATION

By

 

 

Name

 

 

Title

 

 

 

2

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LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

 

Type of

Loan Made

 

Amount of

Loan Made

 

End of

Interest

Period

 

Amount of

Principal or

Interest

Paid This

Date

 

Outstanding
Principal

Balance

This Date

 

Notation

Made By

__________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________ __________   __________   __________   __________  

__________

 

__________

  __________

 

3

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EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:                     

To: Bank of America, N.A.

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of October 5, 2009,
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), between Microsemi Corporation, a Delaware corporation (the
“Borrower”), and Bank of America, N.A. (the “Lender”).

The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the                                          of the Borrower, and
that, as such, he/she is authorized to execute and deliver this Compliance
Certificate to the Lender on the behalf of the Borrower, and that:

[Use following paragraph 1 for Fiscal Year-end financial statements]

1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.01(a) of the Agreement for the Fiscal Year of the Borrower
ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.

[Use following paragraph 1 for Fiscal Period-end financial statements]

1. Attached hereto as Schedule 1 are the unaudited financial statements required
by Section 6.01(b) of the Agreement for the Fiscal Period of the Borrower ended
as of the above date. Such financial statements fairly present, in all material
respects, the financial condition, results of operations, shareholders’ equity
and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as
at such date and for such period, subject only to normal year-end audit
adjustments and the absence of footnotes.

2. The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the
Borrower during the accounting period covered by the attached financial
statements.

3. A review of the activities of the Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Borrower performed and observed all its
Obligations under the Loan Documents, and

 

1

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

[select one:]

[to the best knowledge of the undersigned during such fiscal period, the
Borrower performed and observed each covenant and condition of the Loan
Documents applicable to it.]

—or—

[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default and its nature and status:]

4. The representations and warranties of the Borrower and each other Loan Party
contained:

(a) in the Agreement (including Article V thereof), the Guaranty and the Pledge
Agreement are true and correct on and as of the date of hereof, except to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct as of such earlier date, and
except that for purposes of this Compliance Certificate, the representations and
warranties contained in subsections (a) and (b) of Section 5.05 of the Agreement
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.01 of the Agreement, including
statements in connection with which this Compliance Certificate is delivered;
and

(b) in any other Loan Document, or which are contained in any other document
furnished at any time under or in connection therewith or with the Agreement,
are true and correct in all material respects (provided that to the extent any
such representation or warranty is already qualified as to “materiality” or
words to similar effect, the materiality qualifier of this clause (b) shall be
deemed not to apply) on and as of the date hereof, except to the extent that any
such representation or warranty specifically refers to an earlier date, in which
case it is deemed to be made as of such earlier specified date.

5. The financial covenant analyses and information set forth on Schedules 1 and
2 attached hereto are true and accurate on and as of the date of this
Certificate.

6. The total aggregate cash consideration (including all deferred debt or
earn-out obligations) paid by the Borrower and/or any Subsidiary (whether in one
or a series of transactions) for all acquisitions that are Permitted
Acquisitions (a) during the Fiscal Period of the Borrower ended as of the above
date is $        , and (b) [since the Closing Date][OR, if applicable,][since
                        , 20    , which is the date of the most recent reset of
the aggregate cash purchase consideration limitation, as approved by the Lender
in writing pursuant to Section 7.02(g) of the Agreement,] is $        . (Maximum
allowed: $35,000,000)

 

2

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

7. The amount of all Investments made in accordance with Section 7.02(f) of the
Agreement by the Borrower, any Guarantor or any Pledged Subsidiary in a
Subsidiary that is not a Guarantor or Pledged Subsidiary, inclusive of all
Investments consisting of loans or advances made from the Borrower, any
Guarantor or any Pledged Subsidiary to a Subsidiary that is not a Guarantor or
Pledged Subsidiary which are outstanding as of the Closing Date, is
$            , as of the above date. (Maximum allowed: $75,000,000)

[Use following paragraph 8 with delivery of Fiscal Year-end financial
statements]

8. As of the date above, the following is a listing of each Material Domestic
Subsidiary and each Material Foreign Subsidiary, together with the following
information regarding such Person’s jurisdiction of formation, revenues and
total assets:

 

Name of Material Subsidiary

   Jurisdiction of
Formation    Subsidiary’s
revenues for four
consecutive Fiscal
Periods ending on
above date    Consolidated
revenues for four
consecutive Fiscal
Periods ending on
above date (after
intercompany
eliminations)    Subsidiary’s total
assets as of above
date    Consolidated total
assets as of above
date (after
intercompany
eliminations)       $                             $                            
$                             $                                $
                            $                             $
                            $                                $
                            $                             $
                            $                                $
                            $                             $
                            $                                $
                            $                             $
                            $                         

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
            ,             .

 

MICROSEMI CORPORATION

By:

 

 

Name:

 

 

Title:

 

 

 

3

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

For the Period/Year ended                     (“Statement Date”)

SCHEDULE 1

to the Compliance Certificate

($ in 000’s)

I. Section 7.11 (a) – Maximum Consolidated Leverage Ratio.

 

A.

   Consolidated EBITDA for four consecutive Fiscal Periods ending on above date
(“Subject Period”):    $                 1.    Consolidated Net Income for
Subject Period:    $                 2.    Consolidated Interest Charges for
Subject Period:    $                 3.    Provision for income taxes for
Subject Period:    $                 4.    Depreciation expenses for Subject
Period:    $                 5.    Amortization expenses for Subject Period:   
$                 6.    Non-cash stock-based compensation expense for Subject
Period:    $                 7.    Nonrecurring cash expenses and charges,
including any restructuring charges and any losses on related sales of personal
and real property, not to exceed $5,000,000 in the aggregate incurred in
connection with the closure of the Borrower’s Broomfield, Colorado facility, for
Subject Period:    $                 8.    Nonrecurring cash expenses and
charges, including any restructuring charges and any losses on related sales of
personal and real property, incurred in connection with the closure of any other
operational facilities for Subject Period (which charges and expenses added back
do not exceed $25,000,000 in the aggregate for all such closures over the term
of the Loan):    $                 9.    Non-cash acquired research and
development efforts that are expensed at the time of, or immediately following,
acquisition for Subject Period:    $                 10.    Nonrecurring
expenses created by contingent consideration in connection with any business
combination or acquisition to the extent required to be expensed under SFAS 141R
for Subject Period, provided that the contingent consideration from any such
business combination or acquisition does not exceed 25% of the “all-in”
consideration (inclusive of such contingent consideration) of such acquisition
for Subject Period:   

$

            

 

4

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

   11.    Nonrecurring transaction costs incurred or paid in connection with an
acquisition of any entity or business division or line charges to the extent
required to be expensed under SFAS 141R for Subject Period:    $                
12.    Other expenses reducing such Consolidated Net Income which do not
represent a cash item in Subject Period or any future period, for Subject
Period:    $                 13.    Interest income for Subject Period:    $
                14.    Income tax benefits included in Consolidated Net Income
for Subject Period:    $                 15.    Income created by or relating to
contingent consideration in connection with any business combination or
acquisition to the extent required under SFAS 141R for Subject Period:    $
                16.    Nonrecurring income created by or relating to transaction
items included in Consolidated Net Income in connection with an acquisition of
any entity or business division or line charges for Subject Period:    $
                17.    Non-cash items increasing Consolidated Net Income for
Subject Period:    $                 18.    Consolidated EBITDA (Lines I.A.1 + 2
+ 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 + 11 + 12 - 13 - 14 - 15 - 16 -17):    $
            

B.

   Consolidated Funded Indebtedness at Statement Date (exclusive of Line I.C):
   $             

C.

   Total Outstandings at Statement Date:    $             

D.

   Consolidated Leverage Ratio

(Line I.B + Line I.C)÷Line I.A.18):

                  to 1    Maximum permitted:      2.00 to 1

II. Section 7.11 (b) – Consolidated Fixed Charge Coverage Ratio.

 

A.    Consolidated EBITDA Subject Period (Line I.A.18 above):    $             
B.    Consolidated Capital Expenditures for Subject Period:    $              C.
   Consolidated Interest Charges for Subject Period:    $              D.   

Current portion of Consolidated Long Term Indebtedness

(excluding the Existing UBS Indebtedness) as of Statement Date:

   $              E.    Provision for income taxes for Subject Period:    $
             F.    Cash dividends to equity holders of Borrower for Subject
Period:    $             

 

5

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

G.    Consolidated Fixed Charge Coverage Ratio (Line II.A. - Line II.B ( (Line
II.C + Line II.D + Line II.E + Line II.F )):                 to 1   

Minimum required:

   3.00 to 1

III. Section 7.11(c) – Minimum Consolidated Liquidity Ratio.

 

A.    Total Unrestricted Cash and Cash Equivalents at Statement Date:    $
             B.    Total Accounts Receivable at Statement Date:    $
             C.    Total Current Liabilities at Statement Date:    $
             D.    Consolidated Senior Funded Indebtedness at Statement Date:   
$              E.    Liquidity (Line I.A + Line I.B ( (Line I.C + Line I.D)):   
               to 1    Minimum required:      1.50 to 1

 

6

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

For the Quarter/Year ended                      (“Statement Date”)

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

Consolidated EBITDA (in accordance with the definition set forth in the
Agreement)

 

Consolidated EBITDA

   Fiscal
Period
Ended
[        ]    Fiscal
Period
Ended
[        ]    Fiscal
Period
Ended
[        ]    Fiscal
Period
Ended
[        ]    Twelve
Months
Ended
[        ]

Consolidated Net Income for Subject Period

              

+Consolidated Interest Charges for Subject Period

              

+Provision for income taxes for Subject Period

              

+Depreciation expenses for Subject Period

              

+Amortization expenses for Subject Period

              

+Non-cash stock-based compensation expense for Subject Period

              

+Nonrecurring cash expenses and charges, including any restructuring charges and
any losses on related sales of personal and real property, not to exceed
$5,000,000 in the aggregate incurred in connection with the closure of the
Borrower’s Broomfield, Colorado facility, for Subject Period

              

+Nonrecurring cash expenses and charges, including any restructuring charges and
any losses on related sales of personal and real property, incurred in
connection with the closure of any other operational facilities for Subject
Period (which charges and expenses added back do not exceed $25,000,000 in the
aggregate for all such closures over the term of the Loan)

              

 

1

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

Consolidated EBITDA

   Fiscal
Period
Ended
[        ]    Fiscal
Period
Ended
[        ]    Fiscal
Period
Ended
[        ]    Fiscal
Period
Ended
[        ]    Twelve
Months
Ended
[        ]

+Non-cash acquired research and development efforts that are expensed at the
time of, or immediately following, acquisition for Subject Period

              

+Nonrecurring expenses created by contingent consideration in connection with
any business combination or acquisition to the extent required to be expensed
under SFAS 141R for Subject Period, provided that the contingent consideration
from any such business combination or acquisition does not exceed 25% of the
“all-in” consideration (inclusive of such contingent consideration) of such
acquisition for Subject Period

              

+Nonrecurring transaction costs incurred or paid in connection with an
acquisition of any entity or business division or line charges to the extent
required to be expensed under SFAS 141R for Subject Period

              

+Other expenses reducing such Consolidated Net Income which do not represent a
cash item in Subject Period or any future period, for Subject Period

              

–Interest income for Subject Period

              

–Income tax benefits included in Consolidated Net Income for Subject Period

              

–Income created by or relating to contingent consideration in connection with
any business combination or acquisition to the extent required under SFAS 141R
for Subject Period

              

 

2

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

Consolidated EBITDA

   Fiscal
Period
Ended
[        ]    Fiscal
Period
Ended
[        ]    Fiscal
Period
Ended
[        ]    Fiscal
Period
Ended
[        ]    Twelve
Months
Ended
[        ]

–Nonrecurring income created by or relating to transaction items included in
Consolidated Net Income in connection with an acquisition of any entity or
business division or line charges for Subject Period

              

–Non-cash items increasing Consolidated Net Income for Subject Period

              

= Consolidated EBITDA

              

 

3

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

EXHIBIT D

FORM OF GUARANTY

(SUBSIDIARIES OF MICROSEMI CORPORATION)

THIS CONTINUING GUARANTY dated as of October 5, 2009 (as the same may from time
to time hereafter be amended, modified, supplemented or restated, the
“Guaranty”), is entered into and made by each of the entities that are signatory
hereto (together with any other entity that may become a party hereto pursuant
to Section 6.12 of the Credit Agreement (as defined below) by executing and
delivering to the Lender (as defined below) an Assumption Agreement in the form
attached to this Guaranty as Exhibit A, a “Guarantor” and collectively, the
“Guarantors”) in favor of BANK OF AMERICA, N.A. and any other subsidiaries or
affiliates of Bank of America Corporation and its successors and assigns
(collectively, the “Lender”).

RECITALS

A. MICROSEMI CORPORATION, a Delaware corporation (the “Borrower”), and the
Lender are concurrently herewith entering into a Credit Agreement dated as of
the date hereof (as the same from time to time hereafter may be amended,
modified, supplemented or restated, the “Credit Agreement”), pursuant to which
the Lender has agreed to make certain extensions of credit to the Borrower on
the terms, and subject to the conditions, set forth therein.

B. The Borrower is a member of an affiliated group of companies that includes
each Guarantor.

C. The proceeds of the extensions of credit under the Credit Agreement will be
available to be used in part to enable the Borrower to make valuable transfers
to one or more of the Guarantors in connection with the operation of their
respective businesses.

D. The Lender is willing to make the extensions of credit pursuant to the credit
Agreement to the Borrower on and after the date of the Closing Date, but only
upon the condition, among others, that each Guarantor currently existing as of
the date hereof shall have executed and delivered this Guaranty to the Lender
and that each Subsidiary of the Borrower required under Section 6.12 the Credit
Agreement to become a Guarantor shall execute and deliver to the Lender an
Assumption Agreement to this Guaranty, thereby becoming a Guarantor hereunder.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing Recitals, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, each Guarantor, jointly and
severally with each other Guarantor, hereby represents, warrants, covenants and
agrees as follows:

1. Definitions. All capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement. Rules of construction set forth
in Article 1 of the Credit Agreement shall apply to this Guaranty to the same
extent as they apply to the Credit Agreement.

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

2. Guaranty. Each Guarantor hereby, jointly and severally, absolutely,
irrevocably and unconditionally guarantees, as a guaranty of payment and
performance and not merely as a guaranty of collection, prompt payment when due,
whether at stated maturity, by required prepayment, upon acceleration, demand or
otherwise, and at all times thereafter, of any and all existing and future
indebtedness and liabilities of every kind, nature and character, direct or
indirect, absolute or contingent, liquidated or unliquidated, voluntary or
involuntary and whether for principal, interest, premiums, fees, indemnities,
damages, costs, expenses or otherwise, of the Borrower to the Lender arising
under the Credit Agreement, any Letter of Credit, the other Loan Documents and
any instruments, agreements or other documents of any kind or nature now or
hereafter executed in connection with the Credit Agreement, any Letter of Credit
or the other Loan Documents or of the Borrower or any other Guarantor to the
Lender or any of its Affiliates under or in respect of any Swap Contract or
Secured Cash Management Agreement entered into with the Lender or any such
Affiliate of the Lender (including, in each case, all renewals, extensions,
amendments, refinancings and other modifications thereof and all costs,
attorneys’ fees and expenses incurred by the Lender in connection with the
collection or enforcement thereof), and whether recovery upon such indebtedness
and liabilities may be or hereafter become unenforceable or shall be an allowed
or disallowed claim under any proceeding or case commenced by or against any
such Guarantor or the Borrower under the Bankruptcy Code (Title 11, United
States Code), any successor statute or any other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally (collectively, “Debtor Relief
Laws”), and including interest that accrues after the commencement by or against
the Borrower of any proceeding under any Debtor Relief Laws (collectively, the
“Guaranteed Obligations”). The Lender’s books and records showing the amount of
the Guaranteed Obligations shall be admissible in evidence in any action or
proceeding, and shall be binding upon each Guarantor and conclusive, absent
manifest error, for the purpose of establishing the amount of the Guaranteed
Obligations. This Guaranty shall not be affected by the genuineness, validity,
regularity or enforceability of the Guaranteed Obligations or any instrument or
agreement evidencing any Guaranteed Obligations, or by the existence, validity,
enforceability, perfection, non-perfection or extent of any collateral therefor,
or by any fact or circumstance relating to the Guaranteed Obligations which
might otherwise constitute a defense to the obligations of any Guarantor under
this Guaranty, and each Guarantor hereby irrevocably waives any defenses it may
now have or hereafter acquire in any way relating to any or all of the
foregoing.

Anything contained herein to the contrary notwithstanding, the obligations of
each Guarantor hereunder at any time shall be limited to an aggregate amount
equal to the largest amount that would not render its obligations hereunder
subject to avoidance as a fraudulent transfer or conveyance under Section 548 of
the Bankruptcy Code (Title 11, United States Code) or any comparable provisions
of any similar federal or state law.

 

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3. No Setoff or Deductions; Taxes; Payments. Each Guarantor represents and
warrants that it is organized and resident in the United States of America. Each
Guarantor shall make all payments hereunder without setoff or counterclaim and
free and clear of and without deduction for any Taxes (as defined in the Credit
Agreement) unless such Guarantor is compelled by law to make such deduction or
withholding. If any such obligation (other than one arising with respect to
taxes based on or measured by the income or profits of the Lender) is imposed
upon any Guarantor with respect to any amount payable by it hereunder, such
Guarantor will pay to the Lender, on the date on which such amount is due and
payable hereunder, such additional amount in Dollars as shall be necessary to
enable the Lender to receive the same net amount which the Lender would have
received on such due date had no such obligation been imposed upon such
Guarantor. Each Guarantor will deliver promptly to the Lender certificates or
other valid vouchers for all taxes or other charges deducted from or paid with
respect to payments made by such Guarantor hereunder. The obligations of each
Guarantor under this paragraph shall survive the payment in full of the
Guaranteed Obligations and termination of this Guaranty.

4. Rights of the Lender. Each Guarantor consents and agrees that the Lender may,
at any time and from time to time, without notice or demand, and without
affecting the enforceability or continuing effectiveness hereof: (a) amend,
extend, renew, compromise, discharge, accelerate or otherwise change the time
for payment or the terms of the Guaranteed Obligations or any part thereof;
(b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or
otherwise dispose of any security for the payment of this Guaranty or any
Guaranteed Obligations; (c) apply such security and direct the order or manner
of sale thereof as the Lender in its sole discretion may determine; and
(d) release or substitute one or more of any endorsers or other guarantors,
including any other Guarantor, of any of the Guaranteed Obligations. Without
limiting the generality of the foregoing, each Guarantor consents to the taking
of, or failure to take, any action which might in any manner or to any extent
vary the risks of such Guarantor under this Guaranty or which, but for this
provision, might operate as a discharge of such Guarantor.

5. Certain Waivers. Each Guarantor waives (a) any defense arising by reason of
any disability or other defense of the Borrower or any other guarantor,
including any other Guarantor, or the cessation from any cause whatsoever
(including any act or omission of the Lender) of the liability of the Borrower;
(b) any defense based on any claim that such Guarantor’s obligations exceed or
are more burdensome than those of the Borrower; (c) the benefit of any statute
of limitations affecting such Guarantor’s liability hereunder; (d) any right to
require the Lender to proceed against the Borrower, proceed against or exhaust
any security for the Indebtedness, or pursue any other remedy in the Lender’s
power whatsoever; (e) any benefit of and any right to participate in any
security now or hereafter held by the Lender; and (f) to the fullest extent
permitted by law, any and all other defenses or benefits that may be derived
from or afforded by applicable law limiting the liability of or exonerating
guarantors or sureties. Each Guarantor expressly waives all setoffs and
counterclaims and all presentments, demands for payment or performance, notices
of nonpayment or nonperformance, protests, notices of protest, notices of
dishonor and all other notices or demands of any kind or nature whatsoever with
respect to the Guaranteed Obligations, and all notices of acceptance of this
Guaranty or of the existence, creation or incurrence of new or additional
Guaranteed Obligations. Each Guarantor waives any rights and defenses that are
or may become available to the Guarantor by reason of Sections 2787 to 2855,
inclusive, 2899 and 3433 of the California Civil Code.

 

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6. Obligations Independent. The obligations of each Guarantor hereunder are
those of primary obligor, and not merely as surety, and are independent of the
Guaranteed Obligations and the obligations of any other guarantor, including any
other Guarantor, and a separate action may be brought against each Guarantor to
enforce this Guaranty whether or not the Borrower or any other person or entity,
including any other Guarantor, is joined as a party.

7. Subrogation. No Guarantor shall exercise any right of subrogation,
contribution, indemnity, reimbursement or similar rights with respect to any
payments it makes under this Guaranty until all of the Guaranteed Obligations
and any amounts payable under this Guaranty have been paid and performed in full
and any commitments of the Lender or facilities provided by the Lender with
respect to the Guaranteed Obligations are terminated. If any amounts are paid to
any Guarantor in violation of the foregoing limitation, then such amounts shall
be held in trust for the benefit of the Lender and shall forthwith be paid to
the Lender to reduce the amount of the Guaranteed Obligations, whether matured
or unmatured.

8. Termination; Reinstatement. This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Obligations now or hereafter existing and shall
remain in full force and effect until all Guaranteed Obligations and any other
amounts payable under this Guaranty are paid in full in cash and any commitments
of the Lender or facilities provided by the Lender with respect to the
Guaranteed Obligations are terminated in their entirety. Notwithstanding the
foregoing, this Guaranty shall continue in full force and effect or be revived,
as the case may be, if any payment by or on behalf of the Borrower or any
Guarantor is made, or the Lender exercises its right of setoff, in respect of
the Guaranteed Obligations and such payment or the proceeds of such setoff or
any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Laws or otherwise, all as if such payment had not been made or such
setoff had not occurred and whether or not the Lender is in possession of or has
released this Guaranty and regardless of any prior revocation, rescission,
termination or reduction. The obligations of each Guarantor under this Section 8
shall survive termination of this Guaranty.

9. Subordination. Each Guarantor hereby subordinates the payment of all
obligations and indebtedness of the Borrower owing to the Guarantor, whether now
existing or hereafter arising, including but not limited to any obligation of
the Borrower to such Guarantor as subrogee of the Lender or resulting from such
Guarantor’s performance under this Guaranty, to the payment in full in cash of
all Guaranteed Obligations. If the Lender so requests, any such obligation or
indebtedness of the Borrower to such Guarantor shall be enforced and performance
received by such Guarantor as trustee for the Lender and the proceeds thereof
shall be paid over to the Lender on account of the Guaranteed Obligations, but
without reducing or affecting in any manner the liability of any Guarantor under
this Guaranty.

10. Stay of Acceleration. In the event that acceleration of the time for payment
of any of the Guaranteed Obligations is stayed, in connection with any case
commenced by or against any Guarantor or the Borrower under any Debtor Relief
Laws, or otherwise, all such amounts shall nonetheless be payable by the
Guarantors, severally and jointly, immediately upon demand by the Lender.

 

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11. Expenses. Each Guarantor agrees, severally and jointly, to pay on demand all
out-of-pocket expenses (including attorneys’ fees and expenses and the allocated
cost and disbursements of internal legal counsel) in any way relating to the
enforcement or protection of the Lender’s rights under this Guaranty or in
respect of the Guaranteed Obligations, including any incurred during any
“workout” or restructuring in respect of the Guaranteed Obligations and any
incurred in the preservation, protection or enforcement of any rights of the
Lender in any proceeding any Debtor Relief Laws. The obligations of the
Guarantors under this paragraph shall survive the payment in full of the
Guaranteed Obligations and termination of this Guaranty.

12. Miscellaneous. No provision of this Guaranty may be waived, amended,
supplemented or modified, except by a written instrument executed by the Lender
and each Guarantor. No failure by the Lender to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy or power
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law or in equity. The unenforceability
or invalidity of any provision of this Guaranty shall not affect the
enforceability or validity of any other provision herein. Unless otherwise
agreed by the Lender and each Guarantor in writing, this Guaranty is not
intended to supersede or otherwise affect any other guaranty now or hereafter
given by the Guarantors for the benefit of the Lender or any term or provision
thereof.

13. Condition of the Borrower. Each Guarantor acknowledges and agrees that it
has the sole responsibility for, and has adequate means of, obtaining from the
Borrower and any other guarantor such information concerning the financial
condition, business and operations of the Borrower and any such other guarantor
as each individual Guarantor requires, and that the Lender has no duty, and no
Guarantor is relying on the Lender at any time, to disclose to such Guarantor
any information relating to the business, operations or financial condition of
the Borrower or any other guarantor (the guarantor waiving any duty on the part
of the Lender to disclose such information and any defense relating to the
failure to provide the same).

14. Setoff. If and to the extent any payment is not made when due hereunder, the
Lender may setoff and charge from time to time any amount so due against any or
all of any Guarantor’s accounts or deposits with the Lender.

15. Representations and Warranties. Each Guarantor represents and warrants that
(a) it is duly organized and in good standing under the laws of the jurisdiction
of its organization and has full capacity and right to make and perform this
Guaranty, and all necessary authority has been obtained; (b) this Guaranty
constitutes its legal, valid and binding obligation enforceable in accordance
with its terms except as enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles;
(c) the making and performance of this Guaranty does not and will not violate
the provisions of any applicable law, regulation or order, and does not and will
not result in the breach of, or constitute a default or

 

8

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require any consent under, any material agreement, instrument, or document to
which it is a party or by which it or any of its property may be bound or
affected; and (d) all consents, approvals, licenses and authorizations of, and
filings and registrations with, any governmental authority required under
applicable law and regulations for the making and performance of this Guaranty
have been obtained or made and are in full force and effect.

16. Indemnification and Survival. Without limitation on any other obligations of
any Guarantor or remedies of the Lender under this Guaranty, each Guarantor
shall, severally and jointly, to the fullest extent permitted by law, indemnify,
defend and save and hold harmless the Lender from and against, and shall pay on
demand, any and all damages, losses, liabilities and expenses (including
attorneys’ fees and expenses and the allocated cost and disbursements of
internal legal counsel) that may be suffered or incurred by the Lender in
connection with or as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their terms. The obligations of the Guarantors
under this paragraph shall survive the payment in full of the Guaranteed
Obligations and termination of this Guaranty.

17. GOVERNING LAW; Assignment; Jurisdiction; Notices. THIS GUARANTY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA. This Guaranty shall (a) bind each Guarantor and its successors and
assigns, provided that no Guarantor may assign its rights or obligations under
this Guaranty without the prior written consent of the Lender (and any attempted
assignment without such consent shall be void), and (b) inure to the benefit of
the Lender and its successors and assigns and the Lender may, without notice to
any Guarantor and without affecting each Guarantor’s several and joint
obligations hereunder, assign, sell or grant participations in the Guaranteed
Obligations and this Guaranty, in whole or in part. Each Guarantor hereby
irrevocably (i) submits to the non-exclusive jurisdiction of any United States
Federal or State court sitting in San Francisco, California in any action or
proceeding arising out of or relating to this Guaranty, and (ii) waives to the
fullest extent permitted by law any defense asserting an inconvenient forum in
connection therewith. Service of process by the Lender in connection with such
action or proceeding shall be binding on each Guarantor if sent to such
Guarantor by registered or certified mail at its address specified below or such
other address as from time to time notified by such Guarantor. Each Guarantor
agrees that the Lender may disclose to any assignee of or participant in, or any
prospective assignee of or participant in, any of its rights or obligations of
all or part of the Guaranteed Obligations any and all information in the
Lender’s possession concerning the Guarantors, this Guaranty and any security
for this Guaranty. All notices and other communications to any Guarantor under
this Guaranty shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by facsimile to
such Guarantor at its address set forth below or at such other address in the
United States as may be specified by such Guarantor in a written notice
delivered to the Lender at such office as the Lender may designate for such
purpose from time to time in a written notice to such Guarantor.

18. WAIVER OF JURY TRIAL; JUDICIAL REFERENCE. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH GUARANTOR AND, BY ACCEPTING THIS GUARANTY, THE LENDER WAIVE
THEIR RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS

 

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GUARANTY, THE GUARANTEED OBLIGATION, THE OTHER LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER
INTO THIS AGREEMENT AND THE LENDER TO ENTER INTO THE CREDIT AGREEMENT. EACH SUCH
PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A JURY TRIAL, IF THE ABOVE WAIVER OF THE RIGHT TO A JURY
TRIAL IS NOT ENFORCEABLE, EACH GUARANTOR AND, BY ACCEPTING THIS GUARANTY, THE
LENDER AGREE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE OR RETIRED JUDGE
APPLYING THE APPLICABLE LAW. THEREFORE, EACH GUARANTOR, AND BY ACCEPTING THIS
GUARANTY, THE LENDER, THEN AGREE TO REFER, FOR A COMPLETE AND FINAL
ADJUDICATION, ANY AND ALL ISSUES OF FACT OR LAW INVOLVED IN ANY LITIGATION OR
PROCEEDING (INCLUDING ALL DISCOVERY AND LAW AND MOTION MATTERS, PRETRIAL
MOTIONS, TRIAL MATTERS, AND POST-TRIAL MOTIONS (E.G., MOTIONS FOR
RECONSIDERATION, NEW TRIAL AND TO TAX COSTS, ATTORNEY FEES AND PREJUDGMENT
INTEREST)) UP TO AND INCLUDING FINAL JUDGMENT, BROUGHT TO RESOLVE ANY DISPUTE
(WHETHER SOUNDING IN CONTRACT, TORT, UNDER ANY STATUTE, OR OTHERWISE) BETWEEN
THE LENDER AND SUCH GUARANTOR ARISING OUT OF, CONNECTED WITH, OR RELATED OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE PARTIES IN CONNECTION
WITH THIS GUARANTY, THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO AND
THERETO, TO A JUDICIAL REFEREE WHO SHALL BE APPOINTED UNDER A GENERAL REFERENCE
PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638. THE REFEREE’S
DECISION WOULD STAND AS THE DECISION OF THE COURT, WITH JUDGMENT TO BE ENTERED
ON HIS OR HER STATEMENT OF DECISION IN THE SAME MANNER AS IF THE ACTION HAD BEEN
TRIED BY THE COURT. THE LENDER AND THE AFFTECTED GUARANTOR(S) SHALL SELECT A
SINGLE NEUTRAL REFEREE, WHO SHALL BE A RETIRED STATE OR FEDERAL JUDGE WITH AT
LEAST FIVE YEARS OF JUDICIAL EXPERIENCE IN CIVIL MATTERS. IN THE EVENT THAT THE
LENDER AND SUCH GUARANTOR(S) CANNOT AGREE UPON A REFEREE, THE REFEREE SHALL BE
APPOINTED BY THE COURT. THE GUARANTORS SHALL BEAR THE FEES AND EXPENSES OF THE
REFEREE UNLESS THE REFEREE OTHERWISE PROVIDES IN THE STATEMENT OF DECISION. EACH
GUARANTOR AND, BY ACCEPTING THIS GUARANTY, THE LENDER AGREE THAT ANY GUARANTOR
OR THE LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 18 WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE REFERENCE TO
A JUDICIAL REFEREE AS PROVIDED ABOVE.

19. FINAL AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

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20. ADDITIONAL GUARANTORS. Each Subsidiary of the Borrower that is required to
become a party to this Guaranty pursuant to Section 6.12 of the Credit Agreement
shall become a Guarantor for all purposes of this Guaranty upon execution and
delivery to the Lender by such Subsidiary of an Assumption Agreement in the form
of Exhibit A hereto.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Continuing Guaranty
to be duly executed and delivered by its duly authorized officer as of the day
and year first set forth above.

 

MICROSEMI CORP. – SCOTTSDALE, an Arizona corporation By:  

 

 

Name:

 

 

Title:

 

MICROSEMI CORP. – MASSACHUSETTS,

a Delaware corporation

By:  

 

 

Name:

 

 

Title:

 

MICROSEMI CORP. – POWER MANAGEMENT GROUP HOLDING,

a California corporation

By:  

 

 

Name:

 

 

Title:

 

MICROSEMI CORP. – POWER MANAGEMENT GROUP,

a California corporation

By:  

 

 

Name:

 

 

Title:

 

[SIGNATURE PAGE TO CONTINUING GUARANTY]

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Address for each Guarantor:   c/o Microsemi Corporation   2381 Morse Avenue  
Irvine, California 92614   Attention: John Hohener   Telephone: (949) 221-7100  
Facsimile: (949) 756-2053

 

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Exhibit A to Continuing Guaranty

ASSUMPTION AGREEMENT

(SUBSIDIARIES OF MICROSEMI CORPORATION)

THIS ASSUMPTION AGREEMENT (“Assumption Agreement”) dated as of
[                    ], 200[  ], is entered into and made by
[                            ] (the “Additional Guarantor”) in favor of BANK OF
AMERICA, N.A. and any other subsidiaries or affiliates of Bank of America
Corporation and its successors and assigns (collectively the “Lender”). All
capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement (as defined below).

RECITALS

A. MICROSEMI CORPORATION, a Delaware corporation (the “Borrower”), and Lender
have entered into a Credit Agreement dated as of October 5, 2009 (as amended,
modified, supplemented or restated from time to time, the “Credit Agreement”),
pursuant to which the Lender has agreed to make certain extensions of credit to
the Borrower on the terms, and subject to the conditions, set forth therein.

B. The Borrower is a member of an affiliated group of companies that includes
the Additional Guarantor.

C. The proceeds of the extensions of credit under the Credit Agreement are
available to be used in part to enable the Borrower to make valuable transfers
to the Additional Guarantor in connection with the operation of its business.

D. In connection with the Credit Agreement, certain of the Borrower’s
Subsidiaries (other than the Additional Guarantor) have entered into that
Continuing Guaranty dated as of October 5, 2009 (as amended, modified,
supplemented or restated from time to time, the “Guaranty”) in favor of the
Lender,

E. Section 6.12 of the Credit Agreement requires that the Additional Guarantor
become a party to, and a Guarantor under, the Guaranty.

F. The Additional Guarantor has agreed to execute and deliver this Assumption
Agreement in order to become a party to, and a Guarantor under, the Guaranty.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing Recitals, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, the Additional Guarantor hereby
agrees as follows:

 

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1. Guaranty Agreement. By executing and delivering this Assumption Agreement,
the Additional Guarantor, as provided in Section 20 of the Guaranty, hereby
becomes a party to the Guaranty as a Guarantor thereunder with the same force
and effect as if originally named therein as a Guarantor and, without limiting
the generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Guarantor thereunder. The Additional Guarantor hereby
represents and warrants that each of the representations and warranties
contained in Section 15 of the Guaranty is true and correct on and as of the
date hereof (after giving effect to this Assumption Agreement) with respect to
such Additional Guarantor as if made on and as of such date.

2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

IN WITNESS WHEREOF, each of the undersigned has caused this Assumption Agreement
to be duly executed and delivered by its duly authorized officer as of the day
and year first set forth above.

 

[NAME OF ADDITIONAL GUARANTOR] By:  

 

Name:   Title:   Address:  

 

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EXHIBIT E

FORM OF PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT dated as of October 5, 2009 (as the same may hereafter be
amended, supplemented, modified or restated, this “Agreement”), is entered into
and made by MICROSEMI CORPORATION, a Delaware corporation (the “Borrower”), and
each of the other entities that are signatory hereto (the Borrower and each such
other entity that is a signatory hereto, together with any other entity that may
become a party hereto pursuant to Section 6.12 of the Credit Agreement (as
defined below) by executing and delivering to the Lender (as defined below) a
Joinder Agreement in the form of Annex I attached hereto, a “Pledgor” and
collectively, the “Pledgors”) in favor of BANK OF AMERICA, N.A. (together with
its successors and assigns, the “Lender”).

ARTICLE I

DEFINITIONS

1.1 Definitions. All capitalized terms used but not defined herein shall have
the respective meanings given to them in the Credit Agreement. In addition, the
following terms shall have the following meanings:

“Proceeds” means all proceeds (including proceeds of proceeds) of any of the
Pledged Collateral, including all: (a) rights, benefits, distributions,
premiums, profits, dividends, interest, cash, instruments, documents of title,
accounts, contract rights, general intangibles, payment intangibles and other
property from time to time received, receivable, or otherwise distributed in
respect of or in exchange for, or as a replacement of or a substitution for, any
of the Pledged Collateral, or proceeds thereof (including any cash, Equity
Interests, or other instruments issued after any recapitalization, readjustment,
reclassification, merger or consolidation with respect to the Pledged Entities
and any security entitlements, as defined in Section 8102(a)(17) of the UCC,
with respect thereto); (b) “proceeds,” as such term is defined in
Section 9102(a)(64) of the UCC; (c) proceeds of any insurance, indemnity,
warranty, or guaranty (including guaranties of delivery) payable from time to
time with respect to any of the Pledged Collateral, or proceeds thereof; and
(d) payments (in any form whatsoever) made or due and payable to a Pledgor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Pledged Collateral, or proceeds
thereof.

1.2 UCC Definitions; Rules of Construction. Unless otherwise defined herein or
the context otherwise requires, terms for which meanings are provided in the UCC
are used in this Agreement, including its preamble and recitals, with such
meanings. Article I of the Credit Agreement, including those provisions relating
to rules of contract construction and interpretation, are incorporated into and
shall apply to this Agreement in the same way and manner as they apply to the
Credit Agreement (provided that all references to “Agreement” shall refer to
this Agreement and not the Credit Agreement).

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ARTICLE II

PLEDGE

2.1 Pledge and Grant of Security Interest. As security for the full, complete
and final payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations and any and all other debts,
liabilities and reimbursement obligations, indemnity obligations and other
obligations for monetary amounts (including reimbursement and indemnity
obligations), fees, expenses, costs or other sums (including reasonable
attorneys’ fees) chargeable to the Pledgors under or pursuant to any of the Loan
Documents, including the Credit Agreement, any Note, the Guaranty and this
Agreement (collectively, the “Secured Obligations”), each Pledgor hereby,
jointly and severally, assigns, conveys, mortgages, pledges, hypothecates and
transfers to the Lender, and hereby grants to the Lender, a security interest in
and to all of such Pledgor’s right, title and interest in, to and under each of
the following, whether now existing or hereafter acquired (all of which being
hereinafter collectively called the “Pledged Collateral”):

(a) all Equity Interests now or hereafter acquired or held by such Pledgor in
the Pledged Entities;

(b) all of such Pledgor’s claims, rights, powers, privileges, authority, puts,
calls, options, security interests, liens and remedies, if any, in respect of
the foregoing;

(c) all of such Pledgor’s rights to exercise and enforce any and every right,
power, remedy, authority, option and privilege of such Pledgor relating to any
of the foregoing including, without limitation, any power to (i) terminate,
cancel or modify any agreement, (ii) execute any instruments and to take any and
all other action on behalf of and in the name of such Pledgor in respect of any
of the foregoing and the applicable Issuer thereof, (iii) exercise voting rights
or make determinations, (iv) exercise any election (including, but not limited
to, election of remedies), (v) exercise any “put”, right of first offer or first
refusal, or other option, (vi) exercise any right of redemption or repurchase,
(vii) give or receive any notice, consent, amendment, waiver or approval,
(viii) demand, receive, enforce, collect or receipt for any of the foregoing,
and (ix) file any claims and to take any action in connection with any of the
foregoing;

(d) all certificates and instruments representing or evidencing any of the
foregoing;

(e) all other rights, titles, interests, powers, privileges and preferences
pertaining to any of the foregoing; and

(f) all Proceeds of any of the foregoing;

Each Pledgor hereby agrees to cause the Pledged Entities to promptly register
the pledge of the Equity Interests covered in this Section 2.1 on their
respective books and records, and otherwise register such pledge pursuant to
Articles 8 and 9 of the UCC.

 

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2.2 Continuing Security Interest. This Agreement shall create a continuing
security interest in the Pledged Collateral and shall:

(a) remain in full force and effect until the full, complete and final payment
of the Secured Obligations and the termination of all commitments of the Lender
under the Loan Documents to extend further credit;

(b) be binding upon each Pledgor and its respective successors, transferees and
assigns; and

(c) inure, together with the rights and remedies of the Lender hereunder, to the
benefit of the Lender.

2.3 No Assumption. This Agreement is executed and delivered to the Lender for
collateral security purposes only. Notwithstanding anything herein to the
contrary:

(a) Each Pledgor shall remain liable under the contracts and agreements included
in the Pledged Collateral to the extent set forth therein, and shall perform all
of its duties and obligations under such contracts and agreements to the same
extent as if this Agreement had not been executed;

(b) the exercise by the Lender of any of its rights hereunder shall not release
any Pledgor from any of its duties or obligations under any such contracts or
agreements included in the Pledged Collateral; and

(c) the Lender shall not have any obligation or liability under any such
contracts or agreements included in the Pledged Collateral by reason of this
Agreement, nor shall the Lender be obligated to perform any of the obligations
or duties of any Pledgor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder, and the Lender shall not hereunder or
otherwise (i) assume any obligation or liability under or in connection with any
Charter Document or the certificates representing the Pledged Equity to any
Person, and any such assumption is hereby expressly disclaimed, or (ii) be
deemed to have or be vested with the duties, responsibilities or powers of the
management of any of the Pledged Entities.

2.4 Distributions Under Charter Documents. Subject to, and except as prohibited
by, the Credit Agreement, the Pledgors shall be entitled to receive any and all
distributions on account of its equity interests in the Pledged Entities and all
other rights to payment from such Pledged Entities, including, without
limitation, those rights set forth in Section 2.1 above, to the extent entitled
thereto under the Charter Documents.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties. Each Pledgor hereby represents and warrants
to the Lender, as at the date of each pledge and delivery hereunder by such
Pledgor to the Lender of any Pledged Collateral, as set forth in the following
Sections 3.1(a) through 3.1(p), inclusive:

(a) Organization. Such Pledgor is duly formed and validly existing under the
laws of the state of its organization and has all requisite organizational power
and authority to enter into and perform its obligations under this Agreement.

 

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(b) Capacity; Due Authorization; Non-Contravention. The execution, delivery and
performance by such Pledgor of this Agreement and each other Loan Document
executed or to be executed by it have been duly authorized by all necessary
action, and do not contravene its organizational documents; and in each case do
not:

(i) contravene any material contractual restriction, law or governmental
regulation or court decree or order binding on or affecting such Pledgor; or

(ii) result in, or require the creation or imposition of, any Lien on any of
such Pledgor’s properties or assets except as contemplated hereby.

(c) Binding Obligations. This Agreement constitutes, and each other Loan
Document executed by such Pledgor will, on the due execution and delivery
thereof, constitute, the legal, valid and binding obligations of such Pledgor,
enforceable against such Pledgor in accordance with their respective terms,
except as enforcement hereof may be limited by bankruptcy, insolvency or other
laws affecting the enforcement of creditors’ rights generally and by general
principles of equity.

(d) Filing. No presently effective UCC financing statement covering any of the
Pledged Collateral is on file in any public office, except for UCC financing
statements in favor of the Lender and any financing statement filed in error
will be promptly terminated.

(e) Ownership; No Liens. Such Pledgor is the legal and beneficial owner of, and
has all rights and good title to (and has full right and authority to pledge and
assign) all Pledged Collateral pledged by such Pledgor hereunder, free and clear
of all adverse claims or other Liens, except the Lien granted herein to the
Lender.

(f) Charter Documents. Such Pledgor has furnished to the Lender a true and
correct copy of the Charter Documents and all amendments thereto, which Charter
Documents constitute the valid, binding and enforceable obligation of all
parties thereto, set forth the entire agreement of the parties thereto with
respect to the subject matter thereof, have not been further amended or modified
(except as permitted under Section 4.7 below) and remain in full force and
effect.

(g) Equity Interests. The true and accurate character of such Pledgor’s interest
in each Pledged Entity and such Pledgor’s percentage interest in each Pledged
Entity’s profits are as set forth in Exhibits A and B attached hereto.

(h) Certificate. No interest of such Pledgor in any Pledged Entity that is to be
pledged hereunder as described on Exhibits A and B attached hereto is
represented by a certificate of interest or similar instrument, except, if any,
such certificates or instruments (together with all necessary instruments of
transfer or assignment, duly executed in blank) as have been delivered to the
Lender or the Lender’s designated bailee and are held in its possession.

(i) Performance of Obligations. Such Pledgor has performed all of its material
obligations to date under each Charter Document to which it is a party.

 

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(j) Compliance with Securities Laws. The offering and sale of all equity
interests in the Pledged Entities have been conducted, in all material respects,
in compliance with all applicable state, federal and foreign securities laws and
regulations, as applicable.

(k) Information. All information with respect to the Pledged Collateral set
forth in any schedule, certificate or other writing at any time furnished by
such Pledgor to the Lender is and shall be true and correct in all material
respects as of the date furnished.

(l) Records. The address of the location of the records of such Pledgor
concerning the Pledged Collateral and the address of Pledgor’s principal place
of business and chief executive office are set forth in Schedule I attached
hereto.

(m) Authorization; Approval. No authorization, approval, or other action by, and
no notice to or filing with, any Governmental Authority, or any other Person is
required either:

(i) for the pledge by such Pledgor of any Pledged Collateral pursuant to this
Agreement or for the execution, delivery, and performance of this Agreement by
such Pledgor; or

(ii) for the exercise by the Lender of (a) the voting or other rights provided
for in this Agreement, or (b) the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except, in the case of this clause (ii)(b), as may
be required in connection with a disposition of such Pledged Collateral by laws
affecting the offering and sale of securities generally, or as may be required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and regulations
issued relating thereto.

(n) Litigation. To such Pledgor’s knowledge, there is no claim, investigation,
action, suit or proceeding affecting either of such Pledgor or any Pledged
Entity pending or overtly threatened by or before any court, arbitrator or
Governmental Authority which could with reasonable likelihood have a material
adverse effect on the ability of such Pledgor to perform its obligations under
this Agreement.

(o) Continuation of Representations and Warranties. Such Pledgor covenants,
warrants and represents to the Lender that all representations and warranties
contained in this Agreement shall be true and accurate in all material respects
at the time of Pledgor’s execution of this Agreement and, shall continue to be
true and accurate in all material respects until the Secured Obligations have
been finally paid in full in cash and performed and all commitments of the
Lender under the Loan Documents to extend further credit have been terminated.

ARTICLE IV

COVENANTS

4.1 Protect Pledged Collateral; Further Assurances. Each Pledgor covenants and
agrees not to sell, assign, transfer, pledge or otherwise encumber the Pledged
Collateral in any manner (except for the pledge granted herein to the Lender),
except to the extent permitted by the Credit Agreement. Each Pledgor warrants
and agrees to defend the right and title granted by

 

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this Agreement to the Lender in and to the Pledged Collateral (and all right,
title and interest represented by the Pledged Collateral) against the claims and
demands of all Persons whomsoever. Each Pledgor agrees that, at any time, and
from time to time, at the expense of such Pledgor, such Pledgor shall promptly
execute and deliver all further instruments, and take all further action that
may be necessary or desirable, or that the Lender may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Lender to exercise and enforce its rights and
remedies hereunder with respect to any of the Pledged Collateral as set forth in
Article V below.

4.2 Voting Rights. If an Event of Default shall have occurred and be continuing
and the Lender shall have notified in writing any Pledgor of the Lender’s
intention to exercise its voting power under this Section 4.2, such notified
Pledgor agrees:

(a) that the Lender may exercise (to the exclusion of such Pledgor) the voting
power to the extent, if any, provided in the Charter Documents, and all other
incidental rights of ownership with respect to the Pledged Collateral and such
Pledgor hereby grants the Lender, from the date hereof until the final repayment
in full in cash of the Secured Obligations and termination of all commitments of
the Lender under the Loan Documents to extend further credit, an irrevocable
proxy, coupled with an interest exercisable under such circumstances, to vote
such Pledged Collateral; and

(b) to deliver promptly to the Lender such additional proxies and other
documents as may be necessary to allow the Lender to exercise such voting power.

4.3 Filings; Recordings. Each Pledgor authorizes the Lender to file such
financing statements (and any amendment thereto) and execute and deliver or
cause to be filed or registered other documents (and pay the cost of filing or
recording the same in all public offices deemed necessary or appropriate by the
Lender), and do such other acts and things, all as the Lender may from time to
time reasonably request to establish and maintain a valid, perfected pledge of,
and security interest in, the Pledged Collateral in favor of the Lender.

4.4 Maintenance of Records. Subject to the provisions of Section 4.5 below, each
Pledgor shall keep at its address indicated on Schedule I attached hereto all
its records concerning the Pledged Collateral.

4.5 Notice of Change of Address; Change of Jurisdiction of Registration. Each
Pledgor shall furnish to the Lender prior written notice of any change in the
address of such Pledgor’s principal place of business or chief executive office
(as described on Schedule I attached hereto) or in the name of such Pledgor. No
Pledgor shall change its state of formation without the prior written consent of
the Lender, such consent not to be unreasonably withheld.

4.6 Information. Each Pledgor shall furnish to the Lender such information
concerning the Pledged Collateral as the Lender may from time to time reasonably
request, and will permit the Lender and its designees, from time to time during
normal business hours, to inspect, audit and make copies of and extracts from
all records and all other papers in the possession of such Pledgor which pertain
to the Pledged Collateral, and shall upon the request of the Lender, deliver to
the Lender copies of all of such records and papers.

 

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4.7 No Amendment of Operating Agreements; Article 8 of the UCC. No Pledgor shall
enter into any amendment or supplement to, or modification or waiver of, any
term or provision of the organizational documents of any Pledged Entity,
including any Charter Document, that is in any manner adverse to the Lender,
without the prior written approval of the Lender, or except as otherwise
expressly permitted by the Credit Agreement. If any Pledged Entity is organized
as a limited liability company or a partnership, then the Pledgors shall cause
such Pledged Entity at all times to provide in its operating agreement or
partnership agreement, as the case may be, that all equity interests in such
Pledged Entity are “financial assets” for purposes of, and as defined in,
Article 8 of the UCC, and are not securities governed by Article 8 of the UCC,
or otherwise “opt out” of Article 8 of the UCC.

4.8 Notice of Dissolution. Each Pledgor shall promptly notify the Lender in
writing upon learning of the occurrence of any event which might or would cause
termination and/or dissolution of any of the Pledged Entities.

ARTICLE V

THE LENDER

5.1 The Lender Appointed Attorney-in-Fact. Each Pledgor hereby irrevocably
appoints the Lender to be such Pledgor’s attorney-in-fact, with full authority
in the place and stead of such Pledgor and in the name of such Pledgor or
otherwise, from time to time in the Lender’s discretion after the occurrence and
during the continuance of an Event of Default, to take any action and to execute
any instrument which the Lender may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including:

(a) after the occurrence and during the continuance of an Event of Default, to
ask, demand, collect, sue for, recover, compromise, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Pledged Collateral;

(b) to receive, endorse, and collect any drafts or other instruments, documents
and chattel paper, in connection with clause (a), above; and

(c) to file any claims or take any action or institute any proceedings which the
Lender may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of the Lender with respect to any
of the Pledged Collateral.

5.2 Lender May Perform. If any Pledgor fails to perform any agreement contained
herein, the Lender may itself perform, or cause performance of, such agreement
for the benefit of the Lender and not for such Pledgor and the reasonable
expenses of the Lender incurred in connection therewith shall be payable by the
Pledgors pursuant to Section 6.5 below.

5.3 Lender Has No Duty. The powers conferred on the Lender hereunder are solely
to protect its interest in the Pledged Collateral and shall not impose any duty
on it to exercise any such powers. The Lender shall have no duty as to any
Pledged Collateral or responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Pledged Collateral, whether or not the Lender has or is deemed
to have knowledge of such matters, or (b) taking any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Pledged
Collateral. Without limiting the generality

 

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of the preceding sentence, the Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Pledged Collateral
if it takes such action for that purpose as Pledgor reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Event of Default. Failure of the Lender to comply with any such request at
any time shall not in itself be deemed a failure to exercise reasonable care.

ARTICLE VI

DEFAULTS AND REMEDIES

6.1 Events of Default. It shall be an “Event of Default” hereunder if any Event
of Default (as defined in the Credit Agreement) shall occur.

6.2 Certain Remedies. If any Event of Default shall have occurred and be
continuing:

(a) The Lender may exercise in respect of the Pledged Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or
not the UCC applies to the affected Pledged Collateral) and/or any other
applicable law, and also may, without notice except as specified below, sell the
Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Lender’s offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the Lender may deem
commercially reasonable. Each Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten (10) days’ prior notice to Pledgor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Lender shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. The Lender may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.

(b) The Lender may:

(i) transfer all or any part of the Pledged Collateral into the name of the
Lender or its nominee, with or without disclosing that such Pledged Collateral
is subject to the Lien hereunder;

(ii) notify the parties obligated on any of the Pledged Collateral to make
payment to the Lender of any amount due or to become due thereunder;

(iii) enforce collection of any of the Pledged Collateral by suit or otherwise,
and surrender, release or exchange all or any part thereof, or compromise or
extend or renew for any period (whether or not longer than the original period)
any obligations of any nature of any party with respect thereto;

(iv) endorse any checks, drafts, or other writings in any Pledgor’s name to
allow collection of the Pledged Collateral;

(v) take control of any Proceeds of the Pledged Collateral; and

 

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(vi) execute (in the name, place and stead of Pledgor) endorsements, assignments
and other instruments of conveyance or transfer with respect to all or any of
the Pledged Collateral.

(c) If, at any time when the Lender shall determine to exercise its right to
sell the whole or any part of the Pledged Collateral hereunder, such Pledged
Collateral or the part thereof to be sold shall not, for any reason whatsoever,
be effectively registered under Securities Act of 1933, as amended (as so
amended the “Act”), the Lender may, in its discretion (subject only to
applicable requirements of law), sell such Pledged Collateral or part thereof by
private sale in such manner and under such circumstances as the Lender may deem
necessary or advisable, but subject to the other requirements of this
Section 6.2(c), and shall not be required to effect such registration or cause
the same to be effected. Without limiting the generality of the foregoing, in
any such event the Lender may, in its sole discretion, (i) in accordance with
applicable securities laws, proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Collateral or part thereof could be or shall have been filed under the Act;
(ii) approach and negotiate with a single possible purchaser to effect such
sale; and (iii) restrict such sale to a purchaser who will represent and agree
that such purchaser is purchasing for its own account, for investment, and not
with a view to the distribution or sale of such Pledged Collateral or part
thereof. In addition to a private sale as provided above in this Section 6.2(c),
if any of the Pledged Collateral shall not be freely distributable to the public
without registration under the Act at the time of any proposed sale hereunder,
then the Lender shall not be required to effect such registration or cause the
same to be effected but may, in its sole discretion (subject only to applicable
requirements of law), require that any sale hereunder (including a sale at
auction) be conducted subject to such restrictions as the Lender may, in its
sole discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure so to register) may be effected in compliance with
the applicable federal, state or foreign bankruptcy, insolvency, receivership or
similar law and other laws affecting the enforcement of creditors’ rights and
the Act and all applicable state securities laws.

(d) Each Pledgor agrees that a breach of any covenants contained in this Article
VI with the effect of denying the Lender the realization of the practical
benefits to be provided by this Agreement will cause irreparable injury to the
Lender, that in such event the Lender would have no adequate remedy at law in
respect of such breach and, as a consequence, agrees that in such event each and
every covenant contained in this Article VI shall be specifically enforceable
against such Pledgor, and such Pledgor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that the Secured Obligations are not then due and payable.

6.3 Compliance with Restrictions. Each Pledgor agrees that in any sale of any of
the Pledged Collateral, whether at a foreclosure sale or otherwise, the Lender
is hereby authorized to comply with any limitation or restriction in connection
with such sale as it may be advised by counsel is necessary in order to avoid
any violation of applicable law (including compliance with such procedures as
may restrict the number of prospective bidders and purchasers, require that such
prospective bidders and purchasers have certain qualifications and restrict such
prospective bidders and purchasers to persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or

 

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resale of such Pledged Collateral), or in order to obtain any required approval
of the sale or of the purchaser by any Governmental Authority, and Pledgor
further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Lender nor the Lender be liable nor accountable to Pledgor for any
discount allowed by the reason of the fact that such Pledged Collateral is sold
in compliance with any such limitation or restriction.

6.4 Application of Proceeds. All cash proceeds received by the Lender in respect
of any sale of, collection from, or other realization upon, all or any part of
the Pledged Collateral shall be applied, first, to the payment of all reasonable
costs and expenses of holding and selling the Pledged Collateral, including
reasonable attorneys’ fees, fees of any accountants and court costs; second, to
the full and complete payment of all of the Secured Obligations other than the
unpaid principal balance of the Obligations; and third, to the full and complete
payment of the unpaid principal balance of the Loans. Any surplus of such cash
or cash proceeds held by the Lender and remaining after payment in full of all
of the Secured Obligations, and the termination of all commitments of the Lender
to extend credit under the Loan Documents, shall be paid over to the Pledgors or
as required by law.

6.5 Indemnity and Expenses. The Pledgors hereby, severally and jointly,
indemnify and hold harmless the Lender from and against any and all claims,
losses, and liabilities arising out of or resulting from this Agreement
(including enforcement of this Agreement), except claims, losses, or liabilities
resulting solely from the gross negligence or willful misconduct of the Lender.
Upon demand, the Pledgors shall pay to the Lender the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents (including attorneys’ fees, whether
related to a suit or action or any reviews of or appeals from a judgment or
decree therein or in connection with non-judicial action) which the Lender may
incur in connection with (a) the custody, preservation, use, or operation of, or
the sale of, collection from, or other realization upon, any of the Pledged
Collateral, (b) the exercise or enforcement of any of the rights of the Lender
hereunder, or (c) the failure by any Pledgor to perform or observe any of the
provisions hereof.

ARTICLE VII

MISCELLANEOUS PROVISIONS

7.1 Loan Document. This Agreement is a Loan Document executed pursuant to the
Credit Agreement and shall (unless otherwise expressly indicated herein) be
construed, administered and applied in accordance with the terms and provisions
thereof.

7.2 The Pledged Collateral. Each Pledgor acknowledges that it has, independently
of and without reliance on the Lender, made its own credit analysis of each of
the Pledgors and each of the Pledged Entities, and performed its own legal
review of this Agreement and the other Loan Documents and is not relying on the
Lender with respect to any of the aforesaid items. Each Pledgor agrees to keep
adequately informed from such means of any facts, events or circumstances which
might in any way affect such Pledgor’s risks hereunder. The Lender makes no
representation of its interest in, or the priority or perfection of the Lender’s
security interest in and to, any of the Pledged Collateral.

 

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7.3 Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective if at any time payment of the Secured Obligations, or
any part thereof, is, pursuant to applicable law, avoided, rescinded or reduced
in amount, or must otherwise be restored or returned by any obligee of the
Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment or performance had not
been made. In the event that any payment, or any part thereof, is avoided,
rescinded, reduced, restored, or returned, the Secured Obligations, shall be
reinstated and deemed reduced only by such amount paid and not so avoided,
rescinded, reduced, restored, or returned.

7.4 Amendments; Waivers. No amendment to or waiver of any provision of this
Agreement nor consent to any departure by any Pledgor from any provision in this
Agreement shall in any event be effective unless the same shall be in writing
and signed by the Lender, and, in the case of any such amendment or
modification, by the Pledgors. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it is
given.

7.5 Protection of Pledged Collateral. The Lender may from time to time, at its
option, perform any act which any Pledgor agrees hereunder to perform and which
such Pledgor shall fail to perform after being requested in writing so to
perform (it being understood that no such request need be given after the
occurrence and during the continuance of any Event of Default) and the Lender
may from time to time take any other action which the Lender reasonably deems
necessary for the maintenance, preservation or protection of any of the Pledged
Collateral or of its security interest therein, all such actions being for the
express benefit of the Lender and not any of the Pledgors.

7.6 Addresses for Notices. All notices and other communications provided for
hereunder shall be in writing or by facsimile and addressed, delivered or
transmitted to such party at its address or facsimile number set forth below its
signature on this Agreement or at such other address or addresses or facsimile
number(s) as may be designated by such party in a notice to the other party. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted.

7.7 Right of Set-Off. Upon the occurrence and during the continuance of any
Event of Default, the Lender is hereby authorized, at any time, and from time to
time, without notice to any Pledgor (any such notice being expressly waived by
each Pledgor), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at
any time owing by such Lender or any of its affiliates to or for the credit of
the account of the Pledgors against the Secured Obligations of the Pledgors to
the Lender now or hereafter existing irrespective of whether or not the Lender
shall have made any demand under this Agreement, the Credit Agreement or any of
the other Loan Documents, and although such obligations may be unmatured. The
rights of the Lender under this Section 7.7 are in addition to all other rights
and remedies (including other rights of set-off) which the Lender may have. Each
Pledgor grants to the Lender a security interest in any and all such deposit
accounts as security for satisfaction of the foregoing obligations.

 

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7.8 Section Captions. Section captions used in this Agreement are for
convenience of reference only, and shall not affect the construction of this
Agreement.

7.9 Severability; Headings. Wherever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

7.10 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so delivered shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. Each such
agreement shall become effective upon the execution of a counterpart hereof or
thereof by each of the parties hereto.

7.11 Governing Law; Entire Agreement. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

7.12 JURY TRIAL WAIVER; JUDICIAL REFERENCE.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
day and year first above written.

 

By:

 

 

Name:   Title:  

By:

 

 

Name:   Title:   Address for notices for each Pledgor: c/o Microsemi Corporation
2381 Morse Avenue Irvine, California 92614 Attention:   John Hohener Telephone:
(949) 221-7100 Facsimile:   (949) 756-2053

 

By:

 

 

Name:   Title:  

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LOCATIONS

 

I. Address of the Location of each Pledgor’s Records Concerning the Pledged
Collateral:

 

PLEDGOR

  

ADDRESS

Microsemi Corporation   

2381 Morse Avenue

Irvine, California 92614

Microsemi Corp. - Power

Management Group Holding

  

2381 Morse Avenue

Irvine, California 92614

[Schedule I to Pledge Agreement]

 

II. Address of each Pledgor’s Location (meaning its place of business, if it has
one, or its chief executive office if it has more than one place of business, in
each case if different from the address set forth above in Part I of this
Schedule I):

As above.

 

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EXHIBIT A TO PLEDGE AGREEMENT

PLEDGED EQUITY

OF

PLEDGED DOMESTIC ENTITIES

 

PLEDGOR

  

PLEDGED DOMESTIC ENTITY

   CLASS    CERTIFICATE
NUMBER    NUMBER OF
SHARES,
UNITS,
INTERESTS    PERCENTAGE
OWNERSHIP  

Borrower

  

MSC Scottsdale

   Common    2    25,000 shares    100 % 

Borrower

  

MSC Massachusetts

   Common    1    1,000 shares    100 % 

Borrower

  

MSC Power Holding

   Common    MS-1    3,000 shares    100 % 

MSC - Power Holding

  

MSC Power

   Common    MS-1    1,000 shares    100 % 

[Exhibit A to Pledge Agreement]

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EXHIBIT B TO PLEDGE AGREEMENT

PLEDGED EQUITY

OF

PLEDGED FOREIGN ENTITIES

 

PLEDGOR

  

PLEDGED

FOREIGN ENTITY

   CLASS    CERTIFICATE
NUMBER    NUMBER OF
SHARES,
UNITS,
INTERESTS    PERCENTAGE
OWNERSHIP  

Borrower

  

MSC International

   Common    2    66 shares    66 % (voting) 

[Exhibit A to Pledge Agreement]

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ANNEX I TO PLEDGE AGREEMENT

FORM OF JOINDER AGREEMENT

THIS JOINDER AGREEMENT dated as of             , 20     (this “Joinder
Agreement”) is executed and delivered by                             , a
                             (the “New Pledgor”) in favor of BANK OF AMERICA,
N.A. (together with its successors and assigns, the “Lender”).

RECITALS

C. The Borrower owns, directly or indirectly, all of the issued and outstanding
Equity Interests in each of the Guarantors, each of whom obtains substantial
direct and indirect benefits from the extensions of credit made by the Lender
under the Credit Agreement and the other Loan Documents.

D. In order to secure the obligations owing by the Borrower and the Guarantors
under the Credit Agreement and the other Loan Documents, the Borrower and the
Guarantors party to the Guaranty (Borrower and each such Guarantor being
referred to therein and herein as an “Pledgor” and, collectively, as the
“Pledgors”) have executed and delivered that Pledge Agreement dated as of
October 5, 2009 (as the same may from time to time be amended, modified,
supplemented or restated from time to time, the “Pledge Agreement”) in favor of
the Lender.

F. It is a condition precedent to the continued extension and maintenance by the
Lender under the Loan Documents of such financial accommodations that the New
Pledgor execute this Joinder Agreement to become a party to, and an additional
Pledgor under, the Pledge Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the above premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the New Pledgor, the New Pledgor hereby agrees as follows:

Section 1. Accession to Pledge Agreement; Grant of Security Interest. The New
Pledgor hereby agrees to join and be bound by the Pledge Agreement, jointly and
severally with the other Pledgors, as a new “Pledgor” thereunder and assumes all
obligations of a “Pledgor” thereunder, all as if the New Pledgor had been an
original signatory to the Pledge Agreement. Without limiting the generality of
the foregoing, the New Pledgor hereby:

(a) mortgages, pledges and hypothecates to the Lender, and grants to the Lender,
a security interest in and lien on all of such Grantor’s right, title and
interest in, to and under the Pledged Collateral of such Pledgor, all as
collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the
Secured Obligations;

 

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(b) makes to the Lender as of the date hereof each of the representations and
warranties contained in Article III of the Pledge Agreement and agrees to be
bound by each of the covenants contained in the Security Agreement, including
without limitation, those contained in Article IV thereof; and

(c) consents and agrees to each other provision set forth in the Pledge
Agreement.

Section 2. Supplement to Schedule I and Exhibit A of the Pledge Agreement . The
information set forth in Annex 1 attached hereto is hereby added to the
information set forth in Schedules I and Exhibit A of the Pledge Agreement.

SECTION 3. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE
TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

Section 4. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have their respective defined meanings given them in the Pledge
Agreement.

 

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IN WITNESS WHEREOF, the New Pledgor has caused this Joinder Agreement to be duly
executed and delivered by its duly authorized officers as of the date first
written above.

 

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