Exhibit 10.1

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of December 1, 2009

between

PLANAR SYSTEMS, INC.,

as Borrower,

and

BANK OF AMERICA, N.A.,

as Lender

LOGO [g84536ex10_1pg001.jpg]

 

 

 

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TABLE OF CONTENTS

 

SECTION

   PAGE ARTICLE I.   DEFINITIONS AND ACCOUNTING TERMS    1

1.01 Defined Terms

   1

1.02 Other Interpretive Provisions

   16

1.03 Accounting Terms

   16

1.04 Rounding

   16

1.05 References to Agreements and Laws

   16

1.06 Letter of Credit Amounts

   16 ARTICLE II.   THE COMMITMENTS AND CREDIT EXTENSIONS    17

2.01 Loans

   17

2.02 Borrowings, Conversions and Continuations of Loans

   17

2.03 Letters of Credit

   18

2.04 Prepayments

   21

2.05 Reduction or Termination of Commitment

   22

2.06 Repayment of Loans

   22

2.07 Interest

   22

2.08 Fees

   22

2.09 Computation of Interest and Fees

   23

2.10 Evidence of Debt

   23

2.11 Payments Generally

   23

2.12 Security

   24 ARTICLE III.   TAXES, YIELD PROTECTION AND ILLEGALITY    24

3.01 Taxes

   24

3.02 Illegality

   24

3.03 Inability to Determine Rates

   25

3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar
Rate Loans

   25

3.05 Funding Losses

   25

3.06 Matters Applicable to all Requests for Compensation

   26

3.07 Survival

   26 ARTICLE IV.   CONDITIONS PRECEDENT TO CREDIT EXTENSIONS    26

4.01 Conditions of Initial Credit Extension

   26

4.02 Conditions to all Credit Extensions and Conversions and Continuations

   27 ARTICLE V.   REPRESENTATIONS AND WARRANTIES    28

5.01 Existence, Qualification and Power; Compliance with Laws

   28

5.02 Authorization; No Contravention

   28

5.03 Governmental Authorization

   28

5.04 Binding Effect

   28

5.05 Financial Statements; No Material Adverse Effect

   28

5.06 Litigation

   29

5.07 No Default

   29

5.08 Ownership of Property; Liens

   29

5.09 Environmental Compliance

   29

5.10 Insurance

   29

5.11 Taxes

   29

5.12 ERISA Compliance

   29

 

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5.13 Subsidiaries

   30

5.14 Disclosure

   30

5.15 Compliance with Laws

   30

5.16 Intellectual Property; Licenses, Etc.

   30

5.17 Margin Regulations; Investment Company Act

   30

5.18 Rights in Collateral; Priority of Liens

   31 ARTICLE VI.   AFFIRMATIVE COVENANTS    31

6.01 Financial Statements

   31

6.02 Certificates; Other Information

   31

6.03 Notices

   32

6.04 Payment of Obligations

   32

6.05 Preservation of Existence, Etc.

   32

6.06 Maintenance of Properties

   33

6.07 Maintenance of Insurance

   33

6.08 Compliance with Laws

   33

6.09 Books and Records

   33

6.10 Inspection Rights

   33

6.11 Use of Proceeds

   33

6.12 Financial Covenants

   33

6.13 Additional Guarantors; Pledge of Capital Stock

   34

6.14 Collateral Records

   34

6.15 Security Interests

   34

6.16 Banking Relationships

   34 ARTICLE VII.   NEGATIVE COVENANTS    35

7.01 Liens

   35

7.02 Investments

   36

7.03 Indebtedness

   36

7.04 Fundamental Changes

   37

7.05 Dispositions

   37

7.06 Restricted Payments

   38

7.07 Change in Nature of Business

   38

7.08 Transactions with Affiliates

   38

7.09 Burdensome Agreements

   38

7.10 Margin Regulations

   38

7.11 Capital Expenditures

   38 ARTICLE VIII.   EVENTS OF DEFAULT AND REMEDIES    38

8.01 Events of Default

   38

8.02 Remedies Upon Event of Default

   40

8.03 Application of Funds

   41 ARTICLE IX.   MISCELLANEOUS    41

9.01 Amendments, Etc.

   41

9.02 Notices and Other Communications; Facsimile Copies

   41

9.03 No Waiver; Cumulative Remedies

   42

9.04 Attorney Costs, Expenses and Taxes

   42

9.05 Indemnification by Borrower

   43

9.06 Payments Set Aside

   43

9.07 Successors and Assigns

   43

9.08 Confidentiality

   44

9.09 Set-off

   45

9.10 Interest Rate Limitation

   45

 

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9.11 Counterparts

   45

9.12 Integration

   45

9.13 Survival of Representations and Warranties

   45

9.14 Severability

   46

9.15 Governing Law

   46

9.16 Arbitration and Waiver of Right to Trial by Jury

   46

9.17 Time of the Essence

   47

9.18 Certain Agreements Not Enforceable

   47

9.19 Amendment and Restatement

   47

9.20 USA PATRIOT Act Notice

   47 SCHEDULES   

5.06         Litigation

  

5.09         Environmental Matters

  

5.13         Subsidiaries

  

7.01         Existing Liens

  

7.03         Existing Indebtedness

   EXHIBITS   

Form of

  

A             Loan Notice

  

B             Note

  

C             Guaranty

  

D             Security Agreement

  

E             Pledge Agreement

  

F             Contribution Agreement

  

G             Borrowing Base Certificate

  

H             Compliance Certificate

  

 

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AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of
December 1 2009, among PLANAR SYSTEMS, INC., an Oregon corporation (the
“Borrower”), and BANK OF AMERICA, N.A., a national banking association (the
“Lender”).

RECITALS

A. Borrower, Lender and Bank of America, N.A., a national banking association,
as administrative Lender for Lender (In such capacity, the “Agent”), are parties
to that certain Credit Agreement dated as of December 16, 2003 (as amended,
restated, supplemented or otherwise modified, together with all exhibits and
schedules attached thereto from time to time, the “Existing Credit Agreement”),
pursuant to which Lender has made, or committed to make, revolving loans to
Borrower and Agent has issued, or committed to issue, letters of credit for the
account of Borrower.

B. Lender and Agent are parties to that certain Assignment Agreement dated as of
December 1, 2009 (the “Assignment Agreement”) pursuant to which, among other
things, Agent assigned to Lender all of its right, title and interest under the
Existing Credit Agreement.

C. Borrower has requested Lender to extend the period during which Lender will
commit to make revolving loans to Borrower and to issue letters of credit for
the account of Borrower, and to make certain other modifications to, and amend
and restate in its entirety, the Existing Credit Agreement, which Lender has
agreed to do on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto hereby
agree to amend and restate the Existing Credit Agreement 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:

“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. 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 equivalent governing body of such
Person.

“Agreement” means this Amended and Restated Credit Agreement.

“Applicable Rate” means a per annum rate equal to:

 

  (a) with respect to Eurodollar Floating Rate Loans, 3.50%;

 

  (b) with respect to Eurodollar Rate Loans, 3.50%;

 

  (c) with respect to Letters of Credit, 2.00%; and

 

  (d) with respect to the commitment fee, 0.50%.

“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 expenses and
disbursements of internal counsel.

 

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“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
Borrower and its Subsidiaries for the fiscal year ended September 25, 2009, and
the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of Borrower and its Subsidiaries,
including the notes thereto.

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Commitment pursuant to Section 2.05, and (c) the date of termination of the
Commitment pursuant to Section 8.02.

“Average Monthly Balance” means, for any period, with respect to any
Unrestricted Cash and Cash Equivalents of Borrower and its Subsidiaries, the
quotient of (i) the sum of the aggregate balance of all such Unrestricted Cash
and Cash Equivalents on the last day of each month ended during such period
divided by (ii) the number of months ended during such period.

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

“Borrowing” means a borrowing consisting of simultaneous Loans of the same Type
and, in the case of Eurodollar Fixed Rate Loans, having the same Interest Period
made by Lender pursuant to Section 2.01.

“Borrowing Base Amount” means, at any time, 80% of the Value of Eligible
Accounts.

“Borrowing Base Certificate” means a certificate substantially in the form of
Exhibit G.

“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 of Oregon 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.

“Capital Expenditure” means, with respect to any Person, any liability incurred
or expenditure made (net of any casualty insurance proceeds or condemnation
awards used to replace fixed assets following a casualty event or condemnation
with respect thereto) by such Person in respect of the purchase or other
acquisition of any fixed or capital asset.

“Capital Stock” means (a) in the case of a corporation, capital stock, (b) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (c) in the case of a partnership, partnership interests (whether general
or limited), (d) in the case of a limited liability company, membership
interests and (e) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

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

“Change of Control” means,

(a) with respect to Borrower, an event or series of events by which:

(i) 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, Lender or other fiduciary or administrator of any such
plan) becomes the “beneficial owner” (as defined in

 

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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 25% 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

(ii) 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: (A) who were members of that board or equivalent
governing body on the first day of such period, (B) whose election or nomination
to that board or equivalent governing body was approved by individuals referred
to in clause (A) above constituting at the time of such election or nomination
at least a majority of that board or equivalent governing body or (C) whose
election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (A) and (B) 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 (B) and clause
(C), 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). No committee of the board of directors shall be considered
an equivalent governing body.

(b) with respect to each Guarantor, an event or series of events by which
Borrower ceases to directly own and control all of the Capital Stock and other
equity securities of such Guarantor.

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

“Code” means the Internal Revenue Code of 1986.

“Collateral” shall mean any and all assets and rights and interests in or to
property of Borrower and each of the other Loan Parties, whether real or
personal, tangible or intangible, in which a Lien is granted or purported to be
granted pursuant to the Collateral Documents.

“Collateral Documents” means, collectively, the Security Agreement, the Pledge
Agreement and all other agreements, instruments and documents now or hereafter
executed and delivered in connection with this Agreement pursuant to which Liens
are granted or purported to be granted to Lender in Collateral securing all or
part of the Obligations, each in form and substance satisfactory to Lender.

“Commitment” means the obligation of Lender to make Loans and L/C Credit
Extensions hereunder in an aggregate principal amount at any one time not to
exceed the Commitment Amount, as such amount may be adjusted from time to time
in accordance with this Agreement.

“Commitment Amount” means $12,000,000.

“Contribution Agreement” means the Indemnity, Subrogation and Contribution
Agreement dated as of December 1, 2009 made by Borrower and Guarantors in
substantially the form of Exhibit F, and to be entered into by additional
Domestic Subsidiaries from time to time thereafter in accordance with this
Agreement, as it may be amended, restated, supplemented or otherwise modified
from time to time.

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

 

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“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 a Borrowing, or an L/C Credit Extension.

“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 an interest rate equal to (a) the Eurodollar Floating Rate
plus (b) the Applicable Rate, if any, applicable to Eurodollar Floating Rate
Loans plus (c) 6% per annum; provided, however, that with respect to a
Eurodollar Fixed Rate Loan, the Default Rate shall be an interest rate equal to
the interest rate (including any Applicable Rate) otherwise applicable to such
Loan plus 6% 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 and existing under
the laws of the United States or any state or commonwealth thereof or under the
laws of the District of Columbia.

“EBITDA” means, for any period, for Borrower and its Subsidiaries on a
consolidated basis, an amount equal to the net income for such period plus
(a) the following to the extent deducted in calculating net income: (i) Interest
Charges for such period, (ii) federal, state, local and foreign income tax for
such period, (iii) depreciation, depletion and amortization expense deducted in
determining net income for such period, (iv) foreign exchange losses, and
(v) other expenses reducing net income for such period which did not or will not
require a cash settlement in such period or any future period (including but not
limited to impairment charges, costs associated with exit or disposal
activities, in-process research and development charges, and stock based
compensation), and minus (b) the following to the extent added in calculating
net income: (i) foreign exchange gains, and (ii) all items increasing net income
for such period which did not or will not result in a cash settlement in such
period or any future period. EBITDA shall be adjusted for sales of all or a
portion of an ongoing business, the financial results of which have been
included in Borrower’s financial statement, and for Permitted Acquisitions of
all or a portion of a business, the financial results of which will be included
with Borrower’s under the equity method of accounting in accordance with GAAP,
in each case, pursuant to the definition of “Pro Forma Basis.” Sale of a
business does not include a sale of assets of all or a portion of a business
that Borrower has decided to abandon or discontinue. EBITDA shall not include
any gain resulting from the transaction of the sale of all or a portion of an
ongoing business.

“Eligible Accounts” means Accounts (as defined in Article 9 of the UCC) of
Borrower and Guarantors subject to the Lien of the Collateral Documents, the
value of which shall be determined by taking into consideration, among other
factors, their book value determined in accordance with GAAP; provided, however,
that none of the following classes of Accounts shall be deemed to be Eligible
Accounts:

 

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(a) Accounts that do not arise out of sales of goods or rendering of services in
the ordinary course of Borrower’s or the relevant Guarantor’s business;

(b) Accounts payable other than in Dollars or that are otherwise on terms other
than those normal or customary in Borrower’s or the relevant Guarantor’s
business;

(c) Accounts owing from any Person that is an Affiliate of Borrower;

(d) Accounts more than 90 days past original invoice date or more than 60 days
past the date due;

(e) Accounts owing from any Person from which an aggregate amount of more than
25% of the Accounts owing therefrom are excluded for any reason under one or
more subclauses of this definition;

(f) Accounts owing from any Person, when aggregated with other Accounts owing by
such Person and its Affiliates, exceed 10% of the value of Eligible Accounts;
provided that for purposes of subclause (f), such Accounts shall be excluded
only to the extent the aggregate amount of such Accounts exceeds 10% of the
Value of Eligible Accounts at any date of determination;

(g) Accounts owing from any Person that (i) has disputed liability for any
Account owing from such Person or (ii) has otherwise asserted any claim, demand
or liability against Borrower or any of its Subsidiaries, whether by action,
suit, counterclaim or otherwise; provided that for purposes of subclause (g)(i),
such Accounts shall be excluded only to the extent of the amounts being disputed
by such Person at any date of determination;

(h) Accounts owing from any Person that shall take or be the subject of any
action or proceeding of a type described in Section 8.01(g);

(i) Accounts (i) owing from any Person that is also a supplier to or creditor of
Borrower or any of its Subsidiaries unless such Person has waived any right of
setoff in a manner acceptable to Lender or (ii) representing any manufacturer’s
or supplier’s credits, discounts, incentive plans or similar arrangements
entitling Borrower or any of its Subsidiaries to discounts on future purchase
therefrom;

(j) Accounts arising out of sales to account debtors outside the United States,
unless such Accounts are fully backed by an irrevocable letter of credit on
terms, and issued by a financial institution, acceptable to Lender and such
irrevocable letter of credit is in the possession of Lender;

(k) Accounts arising out of sales on a bill-and-hold, guaranteed sale,
sale-or-return, sale on approval or consignment basis or subject to any right of
return, setoff or charge back;

(l) Accounts owing from an account debtor that is an agency, department or
instrumentality of the United States or any state thereof;

(m) Accounts with respect to which the representations and warranties set forth
in Section 5 of the Security Agreement applicable to Accounts are not correct;
and

(n) Accounts in respect of which the Security Agreement, after giving effect to
the related filings of financing statements that have then been made, if any,
does not or has ceased to create a valid and perfected first priority lien or
security interest in favor of Lender, securing the Obligations.

“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

 

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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 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 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).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by 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 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 might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any 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 Borrower or
any ERISA Affiliate.

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

 

Eurodollar Fixed Rate =

 

Eurodollar Base Rate

     1.00 – Eurodollar Reserve Percentage   

Where,

“Eurodollar Base Rate” means, for such Interest Period the rate per annum equal
to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source providing quotations of BBA
LIBOR as designated by Lender from time to time) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, for Dollar deposits (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period. If such rate is not
available at such time for any reason, then the “Eurodollar Base Rate” for such
Interest Period shall be the rate per annum determined by Lender to be the rate
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 by Lender and with a term equivalent to such
Interest Period would be offered by Lender’s London Branch to major banks in the
London interbank eurodollar market at their request at approximately 11:00 a.m.
(London time) two Business Days prior to the commencement of such Interest
Period.

“Eurodollar Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, carried out to five decimal
places) in effect on such day, whether or not applicable to Lender, under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System of the United States for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to

 

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Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The
Eurodollar Fixed Rate for each outstanding Eurodollar Fixed Rate Loan shall be
adjusted automatically as of the effective date of any change in the Eurodollar
Reserve Percentage.

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

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

 

Eurodollar Floating Rate =

  

Eurodollar Base Rate

      1.00 – Eurodollar Reserve Percentage   

Where,

“Eurodollar Base Rate” means, for any day the rate per annum equal to the
British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters
(or other commercially available source providing quotations of BBA LIBOR as
designated by the Lender from time to time) at approximately 11:00 a.m., London
time, on such day, for Dollar deposits (for delivery on such day) with a term of
one day; provided that if such day is not a Business Day, the Eurodollar Base
Rate for such day shall be such rate as so published by Reuters (or other
commercially available source providing quotations of BBA LIBOR as designated by
Lender from time to time) at approximately 11:00 a.m., London time, on the next
preceding Business Day. If such rate is not available at such time for any
reason, then the “Eurodollar Base Rate” for such day shall be the rate per annum
determined by the Lender to be the rate at which deposits in Dollars for
delivery on such day in same day funds in the approximate amount of the
Eurodollar Rate Loan being made, continued or converted by Lender and with a
term of one day would be offered by Lender’s London Branch to major banks in the
London interbank eurodollar market at their request at approximately 11:00 a.m.
(London time) on such day.

“Eurodollar Reserve Percentage” means, for any day, the reserve percentage
(expressed as a decimal, carried out to five decimal places) in effect on such
day, whether or not applicable to Lender, under regulations issued from time to
time by the Board of Governors of the Federal Reserve System of the United
States 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
Floating Rate for each outstanding Eurodollar Floating Rate Loan shall be
adjusted automatically as of the effective date of any change in the Eurodollar
Reserve Percentage.

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

“Eurodollar Rate” means (i) with respect to a Eurodollar Floating Rate Loan, the
Eurodollar Floating Rate and (ii) with respect to a Eurodollar Fixed Rate Loan,
the Eurodollar Fixed Rate.

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

“Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio
of (a) EBITDA for the period of one prior fiscal quarter most recently ended,
minus taxes paid in cash during such period, to (b) the sum of (i) interest
charges actually paid in cash during such period plus (ii) principal payments
scheduled to have been paid during such period on Funded Debt (not including
payments required by Section 2.04(b)), plus (iii) cash payments required to be
made during such period on any Swap Contract, reduced by cash receipts during
such period from any Swap Contract, plus (iv) cash expenditures for fixed assets
net of disposition of fixed assets.

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

 

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“Funded Debt” means, for Borrower and its Subsidiaries on a consolidated basis,
a total of all outstanding liabilities for borrowed money and other
interest-bearing liabilities, including current and long term liabilities, but
excluding accounts payable and operating leases.

“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.

“Guarantors” means, collectively, Planar China, LLC, an Oregon limited liability
company, Clarity, A Division Of Planar Systems, Inc., an Oregon corporation,
Runco International, LLC, an Oregon limited liability company, formerly known as
Runco International Inc., Planar Taiwan, LLC, an Oregon limited liability
company, and each other Person from time to time a party to the Guaranty.

“Guaranty” means the Amended and Restated Continuing Guaranty in favor of
Lenders dated as of December 1, 2009 made by Guarantors in substantially the
form of Exhibit C, and to be entered into by additional Domestic Subsidiaries
from time to time thereafter in accordance with this Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time.

“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.

“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;

 

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(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;

(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Capital Stock or other equity
interest in such Person or any other Person, valued, in the case of a redeemable
preferred interest, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends; and

(h) 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 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.

“Information” has the meaning specified in Section 9.08.

“Intangible Assets” means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, computer software, copyrights,
trade names, trademarks, patents, franchises, licenses, unamortized deferred
charges, unamortized debt discount and capitalized research and development
costs.

“Interest Charges” means for any period the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses 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, (b) the portion of rent expense with respect
to such period under capital leases that is treated as interest in accordance
with GAAP, and (c) the net increase (or decrease as negative number) in the Swap
Termination Value during such period.

“Interest Payment Date” means (a) as to any Eurodollar Fixed Rate Loan, the last
day of each Interest Period applicable to such Loan 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 Eurodollar Floating Rate Loan, the last Business Day of each month
and the Maturity Date.

“Interest Period” means as to each Eurodollar Fixed Rate Loan, the period
commencing on the date such Eurodollar Fixed Rate Loan is disbursed or converted
to or continued as a Eurodollar Fixed

 

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Rate Loan and ending on the date one, two, three or six months thereafter, as
selected by 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 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 and any arrangement pursuant to which the investor
Guarantees Indebtedness of 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 5.16.

“IRS” means the United States Internal Revenue Service.

“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice, Inc. (or such later version thereof as may be in effect at the time of
issuance).

“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 Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Borrowing.

“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
face amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing
the amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section 1.06. For all
purposes of this Agreement, if on any date of determination a Letter of Credit
has expired by its terms but any amount may still be drawn thereunder by reason
of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed
to be “outstanding” in the amount so remaining available to be drawn.

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

 

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“Lender-Related Persons” means Lender, together with its Affiliates, and the
officers, directors, employees, Lenders and attorneys-in-fact of such Persons
and Affiliates.

“Lending Office” means the office of Lender described as such in
Section 9.02(a), or such other office as Lender may from time to time notify
Borrower.

“Letter of Credit” means any letter of credit issued hereunder. A Letter of
Credit may be a commercial letter of credit or a standby letter of credit.

“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 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
preceding Business Day).

“Letter of Credit Sublimit” means an amount equal to $3,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Commitment Amount.

“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, collectively, this Agreement, the Note, each Letter of
Credit Application, each Collateral Document, the Guaranty and the Contribution
Agreement.

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

“Loan Parties” means, collectively, Borrower and each Person (other than Lender)
executing a Loan Document including, without limitation, each Guarantor and each
Person executing a Collateral Document.

“Manifest Error” means an error, the existence and amount of which is beyond
dispute by reasonable persons.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
and contingent), condition (financial or otherwise) of Borrower or Borrower and
its Subsidiaries or the Collateral 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.

“Maturity Date” means December 1, 2010.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which 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.

“Net Worth” means, as of any date of determination, for Borrower and its
Subsidiaries on a consolidated basis, shareholder’s equity of Borrower and its
Subsidiaries determined exclusive of accumulated other comprehensive income or
loss.

 

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“Note” means a promissory note made by Borrower in favor of Lender evidencing
Loans made by Lender, substantially in the form of Exhibit B, as it may be
amended, restated, supplemented or otherwise modified from time to time.

“Obligations” means (a) 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 or Letter of Credit, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and (b) all debts,
liabilities, obligations, covenants and duties of Borrower owing to Lender or
any Affiliate of Lender and arising under any Swap Contract permitted by
Section 7.03(d), including liabilities and obligations arising in connection
with or as a result of early termination of any such Swap Contract, whether
absolute or contingent, due or to become due, now existing or hereafter arising,
and, in each case, 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.

“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 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 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.

“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, as the case may be, 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(c).

“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 Borrower or any
ERISA Affiliate or to which 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 Acquisitions” means Investments consisting of an acquisition approved
by Lender in writing and any other Investments consisting of an acquisition by a
Loan Party (including the acquisition of a majority or minority interest in a
corporation, partnership, limited liability company or joint venture), provided
that:

(a) the Person or the property acquired (or the property of the Person acquired)
in such acquisition is used or useful in the same or a similar line of business
as Borrower and its Subsidiaries were engaged in on the Closing Date;

(b) in the case of an acquisition of the Capital Stock of another Person, the
board of directors (or other comparable governing body) of such other Person
shall have duly approved such acquisition;

 

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(c) Borrower shall have delivered to Lender a Pro Forma Compliance Certificate
demonstrating that, upon giving effect to such acquisition on a Pro Forma Basis,
the Loan Parties would be in compliance with the financial covenants set forth
in Section 6.12 as of the most recent fiscal quarter for which Borrower was
required to deliver financial statements pursuant to Section 6.01(a) or (c);

(d) the representations and warranties made by the Loan Parties in each Loan
Document shall be true and correct in all material respects at and as if made as
of the date of such acquisition (after giving effect thereto) except to the
extent such representations and warranties expressly relate to an earlier date;

(e) if such transaction involves the purchase of an interest in a partnership
between Borrower (or a Subsidiary) as a general partner and entities
unaffiliated with Borrower or such Subsidiary as the other partners, such
transaction shall be effected by having such equity interest acquired by a
corporate holding company directly or indirectly wholly-owned by Borrower newly
formed for the sole purpose of effecting such transaction; and

(f) immediately after giving effect to such acquisition, the sum of
(x) Unrestricted Cash and Cash Equivalents and (y) the excess of the Commitment
Amount over the sum of the Outstanding Amount of the Loans plus the Outstanding
Amount of L/C Obligations exceeds $10,000,000.

“Person” means any individual, trustee, corporation, general partnership,
limited partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association, firm, joint venture or
Governmental Authority.

“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by 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 Amended and Restated Pledge Agreement in favor of
Lender dated as of December 1, 2009 made by Borrower in substantially the form
of Exhibit E, as it may be amended, restated, supplemented or otherwise modified
from time to time.

“Pro Forma Basis” means, for purposes of calculating the financial covenants set
forth in Section 6.12 (including for purposes of determining the Applicable
Rate), that any sale of all or a portion of an ongoing business, the financial
results of which have been included in Borrower’s financial statement, or
Permitted Acquisition, the financial results of which will be included with
Borrower’s under the equity method of accounting in accordance with GAAP, shall
be deemed to have occurred as of the first day of the most recent four fiscal
quarter period preceding the date of such transaction for which Borrower was
required to deliver financial statements pursuant to Section 6.01(a) or (c). In
connection with the foregoing, (a) with respect to any such sale, (i) income
statement and cash flow statement items (whether positive or negative)
attributable to the property sold shall be excluded to the extent relating to
any period occurring prior to the date of such transaction and (ii) Indebtedness
which is retired shall be excluded and deemed to have been retired as of the
first day of the applicable period and (b) with respect to any such Permitted
Acquisition, (i) income statement items attributable to the Person or property
acquired shall be included to the extent relating to any period applicable in
such calculations to the extent (A) such items are not otherwise included in
such income statement items for Borrower and its Subsidiaries in accordance with
GAAP or in accordance with any defined terms set forth in Section 1.01 and
(B) such items are supported by financial statements or other information
reasonably satisfactory to Lender and (ii) any Indebtedness incurred or assumed
by Borrower or any Subsidiary (including the Person or Property acquired) in
connection with such transaction and any Indebtedness of the Person or property
acquired which is not retired in connection with such transaction (A) shall be
deemed to have been incurred as of the first day of the applicable period and
(B) if such Indebtedness has a floating or formula rate, shall have an implied
rate of interest for the applicable period for purposes of this definition
determined by utilizing the rate which is or would be in effect with respect to
such Indebtedness as at the relevant date of determination.

 

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“Pro Forma Compliance Certificate” means a certificate of a Responsible Officer
of Borrower containing reasonably detailed calculations of the financial
covenants set forth in Section 6.12 as of the most recent fiscal quarter end for
which Borrower was required to deliver financial statements pursuant to
Section 6.01(a) or (c) after giving effect to the applicable transaction on a
Pro Forma Basis.

“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 Loans, 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 or treasurer of a Loan Party. Any document delivered hereunder
that is signed 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 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 equity interest or of any option,
warrant or other right to acquire any such Capital Stock or other equity
interest.

“Security Agreement” means the Second Amended and Restated Security Agreement in
favor of Lender dated as of December 1, 2009 made by Borrower and Guarantors in
substantially the form of Exhibit D, and to be entered into by additional
Domestic Subsidiaries from time to time thereafter in accordance with this
Agreement, as it may be amended, restated, supplemented or otherwise modified
from time to time.

“Shareholders’ Equity” means, as of any date of determination, consolidated
shareholders’ equity of Borrower and its Subsidiaries as of that date determined
in accordance with GAAP.

“Subordinated Indebtedness” means Indebtedness which has been subordinated to
the Obligations by a subordination agreement satisfactory to Lender.

“Subordinated Lien” means a Lien which has been subordinated to the security
interests of Lender in the Collateral by a subordination agreement satisfactory
to 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
Borrower.

“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

 

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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 Lender or any Affiliate of
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). Normal operating leases not
treated as a loan for federal income tax purposes shall not be considered
synthetic leases.

“Tangible Net Worth” means, as of any date of determination, for Borrower and
its Subsidiaries on a consolidated basis, Shareholders’ Equity of Borrower and
its Subsidiaries on that date minus the Intangible Assets of Borrower and its
Subsidiaries on that date.

“Taxes” has the meaning specified in Section 3.01(a).

“Total Liabilities” means, for Borrower and its Subsidiaries on a consolidated
basis, the sum of current liabilities plus long term liabilities.

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

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

“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.

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

“Unreimbursed Amount” has the meaning set forth in Section 2.03(c)(i).

“Unrestricted Cash and Cash Equivalents” means the following assets of Borrower
and its Subsidiaries, in each case, not subject to any Lien or other restriction
(other than with respect to costs of liquidation prior to maturity) on, access
thereto, or use thereof by Borrower or any Subsidiary: (a) cash in deposit
accounts, (b) certificates of deposit, overnight bank deposits and bankers’
acceptances, and (c) shares of any money market fund that has at least 95% of
its assets invested continuously in (i) cash, (ii) securities issued or fully
guaranteed or insured by the United States government or any agency thereof,
(iii) certificates of deposit, overnight bank deposits and bankers’ acceptances
of any commercial bank organized under the laws of the United States, any state
thereof, or the District of Columbia which, at the time of acquisition, are
rated at least “A-1” by Standard & Poor’s Rating Services (“S&P”) or “P-1” by
Moody’s Investors Services, Inc. (“Moody’s”), (iv) commercial paper of an issuer
rated at least “A-1” by S&P or “P-1” by Moody’s; provided, however, that the
maturities of all obligations of the type specified in clauses (ii) through
(iv) above shall not exceed 180 days.

 

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“Value” means for an Account (as defined in Article 9 of the UCC), its face
amount, net of any returns, rebates, discounts (calculated on the shortest
terms), credits, allowances or Taxes (including sales, excise or other taxes)
that have been or could be claimed by the account debtor or any other Person.

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.

(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; and
(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
Borrower or Lender shall so request, Lender and 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; 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) Borrower shall provide to 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.

1.04 Rounding. Any financial ratios required to be maintained by 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 Letter of Credit Amounts. Unless otherwise specified herein the amount of a
Letter of Credit at any time shall be deemed to be the stated amount of such
Letter of Credit in effect at such time;

 

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provided, however, that with respect to any Letter of Credit that, by its terms
or the terms of any Letter of Credit Application or other document related
thereto, provides for one or more automatic increases in the stated amount
thereof, the amount of such Letter of Credit shall be deemed to be the maximum
stated amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum stated amount is in effect at such time.

 

ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS.

2.01 Loans. Subject to the terms and conditions set forth herein, Lender agrees
to make loans (each such loan, a “Loan”) to Borrower from time to time, on any
Business Day during the Availability Period; provided, however, that Lender
shall not be obligated to make any Loan, if after giving effect to such
Borrowing the Total Outstandings would exceed the lesser of (a) the Commitment
Amount and (b) the Borrowing Base Amount. Within the foregoing limits, and
subject to the other terms and conditions hereof, Borrower may borrow under this
Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01.
Loans may be Eurodollar Floating Rate Loans or Eurodollar Fixed Rate Loans, as
further provided herein.

2.02 Borrowings, Conversions and Continuations of Loans.

(a) Each Borrowing, each conversion of Loans from one Type to the other, and
each continuation of Eurodollar Fixed Rate Loans shall be made upon Borrower’s
irrevocable notice to Lender, which may be given by telephone. Each such notice
must be received by Lender not later than 11:00 a.m., Seattle time, (i) two
Business Days prior to the requested date of any Borrowing of, conversion to or
continuation of Eurodollar Fixed Rate Loans or of any conversion of Eurodollar
Fixed Rate Loans to Eurodollar Floating Rate Loans, and (ii) on the requested
date of any Borrowing of Eurodollar Floating Rate Loans. Each telephonic notice
by Borrower pursuant to this Section 2.02(a) must be confirmed promptly by
delivery to Lender of a written Loan Notice, appropriately completed and signed
by a Responsible Officer of Borrower. Except as provided in Sections 2.03(c),
each Borrowing of, conversion to or continuation of Eurodollar Fixed Rate Loans
shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in
excess thereof. Except as provided in Sections 2.03(c), each Borrowing of or
conversion to Eurodollar Floating Rate Loans shall be in a principal amount of
$100,000 or a whole multiple of $10,000 in excess thereof. Each Loan Notice
(whether telephonic or written) shall specify (i) whether Borrower is requesting
a Borrowing, a conversion of Loans from one Type to the other, or a continuation
of Eurodollar Fixed Rate Loans, (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 Loans to be borrowed, converted or continued,
(iv) the Type of Loans to be borrowed or to which existing Loans are to be
converted, and (v) if applicable, the duration of the Interest Period with
respect thereto. If Borrower fails to specify a Type of Loan in a Loan Notice or
if Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Loans shall be made, or converted to,
Eurodollar Floating Rate Loans. Any such automatic conversion to Eurodollar
Floating Rate Loans shall be effective as of the last day of the Interest Period
then in effect with respect to the applicable Eurodollar Fixed Rate Loans. If
Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar
Fixed Rate Loans 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 such Borrowing is the initial Credit Extension, Section 4.01), Lender
shall make the proceeds of the requested Borrowing available to Borrower by
(i) crediting the account of Borrower on the books of Lender with funds the
amount of such Borrowing or (ii) wire transfer of such funds, in each case in
accordance with instructions provided to (and reasonably acceptable to) Lender
by Borrower; provided, however, that if, on the date of the Loan Notice with
respect to such Borrowing is given by Borrower there are L/C Borrowings
outstanding, then the proceeds of such Borrowing shall be applied, first, to the
payment in full of any such L/C Borrowings, and second, to Borrower as provided
above.

(c) Unless Lender otherwise agrees, (i) during the existence of a Default, no
Loans may be requested as, converted to or continued as Eurodollar Fixed Rate
Loans and (ii) during any period of time

 

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during which a notice delivered to Borrower in accordance with Section 3.03
shall remain in force and effect, no Loans may be requested as, converted to or
continued as Eurodollar Fixed Rate Loans and all requests for a Borrowing of,
conversion to or continuation of Eurodollar Fixed Rate Loans will be deemed to
be a request for a Borrowing of, conversion to or continuation of Eurodollar
Floating Rate Loans in the amount specified in such request.

(d) Lender shall promptly notify Borrower of the interest rate applicable to any
Interest Period for Eurodollar Fixed Rate Loans upon determination of such
interest rate. The determination of the Eurodollar Rate by Lender shall be
conclusive in the absence of Manifest Error.

(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 three Interest Periods in effect with respect to Loans.

2.03 Letters of Credit.

(a) The Letter of Credit Commitment.

(i) Subject to the terms and conditions set forth herein, 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 Borrower, and to amend or extend 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 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, (1) the Total Outstandings would exceed the lesser
of (x) the Commitment Amount and (y) the Borrowing Base Amount, or (2) 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, Borrower’s ability to obtain Letters of Credit shall be fully revolving,
and accordingly 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) 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 Lender from issuing such Letter
of Credit, or any Law applicable to Lender or any request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over Lender shall prohibit, or request that Lender refrain from,
the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon Lender with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which Lender is not otherwise
compensated hereunder) not in effect on the Closing Date, or shall impose upon
Lender any unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which Lender in good faith deems material to it;

(B) subject to Section 2.03(b)(iv), 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
Lender;

(E) such Letter of Credit is to be denominated in a currency other than Dollars;
or

 

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(F) such Letter of Credit contains any provisions for automatic reinstatement of
the stated amount after any drawing thereunder.

(iii) Lender shall be under no obligation to amend any Letter of Credit if
(A) 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.

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

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of Borrower delivered to Lender in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer of
Borrower. Such Letter of Credit Application must be received by Lender not later
than 11:00 a.m., Seattle time, at least two Business Days (or such later date
and time as 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.

(ii) Promptly after receipt of any Letter of Credit Application by Lender at the
address set forth in Section 9.02(a) for requests for Credit Extensions, if the
requested issuance or amendment is permitted in accordance with the terms
hereof, then, subject to the terms and conditions hereof, Lender shall, on the
requested date, issue a Letter of Credit for the account of Borrower or enter
into the applicable amendment, as the case may be, in each case in accordance
with Lender’s usual and customary business practices.

(iii) 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, Lender will also deliver to Borrower a true and complete copy of such
Letter of Credit or amendment.

(iv) If Borrower so requests in any applicable Letter of Credit Application,
Lender may, in it sole and absolute discretion, agree to issue a Letter of
Credit that has automatic extension provisions (each, an “Auto-Extension Letter
of Credit”); provided that any such Auto-Extension Letter of Credit must permit
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 (the “Nonrenewal Notice
Date”) in each such twelve-month period to be agreed upon at the time such
Letter of Credit is issued. Unless otherwise directed by Lender, Borrower shall
not be required to make a specific request to Lender for any such renewal.
Notwithstanding anything to the contrary contained herein, Lender shall have no
obligation to permit the renewal of any Auto-Extension Letter of Credit at any
time.

(c) Drawings and Reimbursements; Funding of Participations.

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of
drawing under such Letter of Credit, Lender shall notify Borrower thereof. Not
later than 11:00 a.m., Seattle time, on the date of any payment by Lender under
a Letter of Credit (each such date, an “Honor Date”), Borrower shall reimburse
Lender in an amount equal to the amount of such drawing. If Borrower fails to so
reimburse Lender by such time, Borrower shall be deemed to have requested a
Borrowing of Eurodollar Floating Rate Loans to be disbursed on the Honor Date in
the amount of the unreimbursed drawing (the “Unreimbursed Amount”), without
regard to the minimum and multiples specified in Section 2.02 for the principal
amount of Eurodollar Floating Rate Loans, but subject to the amount of the
unutilized portion of the lesser of (x) the Commitment Amount and (y) the
Borrowing Base Amount, and the conditions set forth in Section 4.02 (other than
the delivery of a Loan Notice).

 

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(ii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Borrowing of Eurodollar Floating Rate Loans because the conditions set forth in
Section 4.02 cannot be satisfied or for any other reason, Borrower shall be
deemed to have incurred from Lender an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate.

(d) Obligations Absolute. The obligation of Borrower to reimburse Lender for
each drawing under each Letter of Credit, and to repay each L/C Borrowing, 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 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), 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 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 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

(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, Borrower.

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 Borrower’s instructions or other irregularity, Borrower will
immediately notify Lender. Borrower shall be conclusively deemed to have waived
any such claim against Lender and its correspondents unless such notice is given
as aforesaid.

(e) Role of Lender. Borrower agrees that, in paying any drawing under a Letter
of Credit, 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. 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 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 Lender,
any Lender-Related Person, nor any of the respective correspondents,
participants or assignees of 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, Borrower
may have a claim against Lender, and Lender may be liable to Borrower, to the
extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by Borrower which Borrower proves were caused by
Lender’s willful

 

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misconduct or gross negligence or 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
such Letter of Credit. In furtherance and not in limitation of the foregoing,
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 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 Lender, (i) if Lender has honored any
full or partial drawing request under any Letter of Credit and such drawing has
resulted in an L/C Borrowing, 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, 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 date of such L/C Borrowing 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 Lender as
collateral for the L/C Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to Lender. Derivatives of such
term have corresponding meanings. Borrower hereby grants to 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,
interest bearing deposit accounts at Lender.

(g) Applicability of ISP and UCP. Unless otherwise expressly agreed by Lender
and Borrower when a Letter of Credit is issued, (i) the rules of the ISP 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 shall
apply to each commercial Letter of Credit.

(h) Letter of Credit Fees. Borrower shall pay to Lender (i) a Letter of Credit
fee for each commercial Letter of Credit equal to  1/8th of 1% per annum times
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), and (ii) a letter of credit fee for each standby Letter of Credit equal
to the Applicable Rate times 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). Such letter of credit fees shall be
computed on a quarterly basis in arrears. Such letter of credit fees 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 standby 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) Processing Charges Payable to Lender. Borrower shall pay to Lender the
customary issuance, presentation, amendment and other processing fees, and other
standard costs and charges, of 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.

(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) Borrower may, upon notice to Lender, at any time or from time to time
voluntarily prepay Loans in whole or in part without premium or penalty;
provided that (i) such notice must be received by Lender not later than 11:00
a.m., Seattle time, (A) three Business Days prior to any date of prepayment of
Eurodollar Fixed Rate Loans, and (B) on the date of prepayment of Eurodollar
Floating Rate Loans; (ii) any prepayment of Eurodollar Fixed Rate Loans 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 Eurodollar Floating Rate Loans

 

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shall be in a principal amount of $100,000 or a whole multiple of $10,000 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 Loans to be prepaid. If such notice is given by
Borrower, 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 Fixed 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 lesser of
(i) the Commitment Amount and (ii) the Borrowing Base Amount then in effect,
Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C
Obligations in an aggregate amount equal to such excess.

2.05 Reduction or Termination of Commitment. Borrower may, upon notice to
Lender, terminate the Commitment, or from time to time permanently reduce the
Commitment Amount; provided that (a) any such notice shall be received by Lender
not later than 11:00 a.m., five Business Days prior to the date of termination
or reduction, (b) any such partial reduction shall be in an aggregate amount of
$3,000,000 or any whole multiple of $1,000,000 in excess thereof, (c) Borrower
shall not terminate or reduce the Commitment Amount if, after giving effect
thereto and to any concurrent prepayments hereunder, the Total Outstandings
would exceed the Commitment Amount and (d) if, after giving effect to any
reduction of the Commitment Amount, the Letter of Credit Sublimit exceeds the
amount of the Commitment Amount, such Sublimit shall be automatically reduced by
the amount of such excess. Once reduced in accordance with this Section, the
Commitment Amount may not be increased. All commitment fees accrued until the
effective date of any termination of the Commitment shall be paid on the
effective date of such termination.

2.06 Repayment of Loans. Borrower shall repay to 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 Fixed
Rate Loan shall bear interest on the outstanding principal amount thereof for
each Interest Period at a rate per annum equal to the Eurodollar Fixed Rate for
such Interest Period plus the Applicable Rate; and (ii) each Eurodollar Floating
Rate Loan shall bear interest on the outstanding principal amount thereof from
the applicable borrowing date at a rate per annum equal to the Eurodollar
Floating Rate plus the Applicable Rate.

(b) If any amount payable by 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 (or after acceleration), Borrower shall pay interest on the
principal amount of all outstanding Obligations 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. In addition to certain fees described in subsections (h) and (i) of
Section 2.03:

(a) Commitment Fee. Borrower shall pay to a commitment fee equal to the
Applicable Rate times the actual daily amount by which the Commitment Amount
exceeds the sum of (i) the Outstanding

 

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Amount of Loans and (ii) the Outstanding Amount of L/C Obligations. The
commitment fee shall accrue at all times during the Availability Period,
including at any time during which one or more 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) Lenders’ Upfront Fee. On the Closing Date, Borrower shall pay to Lender at
Closing Date an upfront fee in the amount of $12,000. Such upfront fee is for
the credit facility committed by Lender under this Agreement and is fully earned
on the date paid. It is nonrefundable.

2.09 Computation of Interest and Fees. All computations of interest and all fees
shall be made on the basis of a year of 360 days and the actual number of 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. Each determination by Lender of
an interest rate or fee hereunder shall be conclusive and binding for all
purposes, absent Manifest Error.

2.10 Evidence of Debt. The Credit Extensions made by Lender shall be evidenced
by one or more accounts or records maintained by Lender in the ordinary course
of business. The accounts or records maintained by Lender shall be conclusive
absent Manifest Error of the amount of the Credit Extensions made by Lender to
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 Borrower hereunder to pay any amount owing with respect to the Obligations.
Upon the request of Lender, Borrower shall execute and deliver to Lender a Note,
which shall evidence, the Loans, in addition to such accounts or records. Lender
may attach schedules to the Note and endorse thereon the date, Type (if
applicable), amount and maturity of the applicable Loans and payments with
respect thereto.

2.11 Payments Generally.

(a) (i) All payments to be made by Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by Borrower hereunder shall be
made at Lender’s Office in Dollars and in immediately available funds not later
than 12:00 noon, Seattle time, on the date specified herein. All payments
received by Lender after 12:00 noon, Seattle time, shall be deemed received on
the next succeeding Business Day and any applicable interest or fee shall
continue to accrue.

(ii) On each date when the payment of any principal, interest or fees are due
hereunder or under any Note, Borrower agrees to maintain on deposit in an
ordinary checking account maintained by Borrower with Lender (as such account
shall be designated by Borrower in a written notice to Lender from time to time,
the “Borrower Account”) an amount sufficient to pay such principal, interest or
fees in full on such date. Borrower hereby authorizes Lender (A) to deduct
automatically all principal, interest or fees when due hereunder or under any
Note from Borrower Account, and (B) if and to the extent any payment of
principal, interest or fees under this Agreement or any Note is not made prior
to the expiration of the grace period provided in Section 8.02(a) to deduct any
such amount from any or all of the accounts of Borrower maintained at Lender.
Lender agrees to provide written notice to Borrower of any automatic deduction
made pursuant to this Section 2.11(a)(ii) showing in reasonable detail the
amounts of such deduction.

 

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(b) If any payment to be made by 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 Lender to obtain the funds for
any Loan in any particular place or manner or to constitute a representation by
Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.

2.12 Security. The Obligations and the Guaranty shall be secured pursuant to the
Collateral Documents.

 

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) Any and all payments by Borrower to or for the account of 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 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 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 Borrower shall be
required by any Laws to deduct any Taxes from or in respect of any sum payable
under any Loan Document to 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), Lender receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) Borrower shall make such deductions, (iii) 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, Borrower shall furnish to Lender the original or a certified copy of a
receipt evidencing payment thereof.

(b) In addition, 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 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 Lender, Borrower
shall also pay to Lender, at the time interest is paid, such additional amount
that 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 Lender would have received if such Taxes or Other Taxes had not been
imposed.

(d) Borrower agrees to indemnify 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) paid by 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 Lender
makes a demand therefor.

3.02 Illegality. If Lender determines that any Law has made it unlawful, or that
any Governmental Authority has asserted that it is unlawful, for 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, or any Governmental
Authority has imposed material restrictions on the authority of Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by Lender to

 

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Borrower, any obligation of Lender to make or continue Eurodollar Rate Loans or
to convert Eurodollar Floating Rate Loans to Eurodollar Rate Loans shall be
suspended until Lender notifies Borrower that the circumstances giving rise to
such determination no longer exist. Upon receipt of such notice, Borrower shall,
upon demand from Lender, prepay or, if applicable, convert all Eurodollar Rate
Loans to Eurodollar Floating Rate Loans, either on the last day of the Interest
Period therefor, if Lender may lawfully continue to maintain such Eurodollar
Rate Loans to such day, or immediately, if Lender may not lawfully continue to
maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion,
Borrower shall also pay accrued interest on the amount so prepaid or converted
and all amounts due under Section 3.05 in accordance with the terms thereof due
to such prepayment or conversion.

3.03 Inability to Determine Rates. If Lender determines in connection with any
request for a Eurodollar Fixed Rate Loan or a conversion to or continuation
thereof for any reason that (a) Dollar deposits are not being offered to banks
in the London interbank eurodollar market for the applicable amount and Interest
Period of such Eurodollar Fixed Rate Loan, (b) adequate and reasonable means do
not exist for determining the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Fixed Rate Loan, or (c) the Eurodollar
Rate for any requested Interest Period with respect to a proposed Eurodollar
Fixed Rate Loan does not adequately and fairly reflect the cost to Lender of
funding such Eurodollar Fixed Rate Loan, Lender will promptly so notify
Borrower. Thereafter, the obligation of Lender to make or maintain Eurodollar
Fixed Rate Loans shall be suspended until Lender revokes such notice. Upon
receipt of such notice, Borrower may revoke any pending request for a Borrowing
of, conversion to or continuation of Eurodollar Fixed Rate Loans or, failing
that, will be deemed to have converted such request into a request for a
Borrowing of Eurodollar Floating Rate Loans in the amount specified therein.

3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar
Rate Loans.

(a) If Lender determines that as a result of the introduction of or any change
in or in the interpretation of any Law, or Lender’s compliance therewith, there
shall be any increase in the cost to Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing
Letters of Credit, or a reduction in the amount received or receivable by 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 Lender is organized or has its Lending Office,
and (iii) reserve requirements utilized, as to Eurodollar Rate Loans, in the
determination of the Eurodollar Rate), then from time to time upon demand of
Lender, Borrower shall pay to Lender such additional amounts as will compensate
Lender for such increased cost or reduction.

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

3.05 Funding Losses. Upon demand of Lender from time to time, Borrower shall
promptly compensate Lender for and hold 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
Eurodollar Floating 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

 

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(b) any failure by Borrower (for a reason other than the failure of Lender to
make a Loan) to prepay, borrow, continue or convert any Loan other than a
Eurodollar Floating Rate Loan on the date or in the amount notified by 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.
Borrower shall also pay any customary administrative fees charged by Lender in
connection with the foregoing.

For purposes of calculating amounts payable by Borrower to Lender under this
Section 3.05, Lender shall be deemed to have funded each Eurodollar Rate Loan
made by it 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 Matters Applicable to all Requests for Compensation. A certificate of
Lender claiming compensation under this Article III and setting forth the
calculation of the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of Manifest Error. In determining such amount,
Lender may use any reasonable averaging and attribution methods.

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

 

ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

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

(a) 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 Lender and its legal counsel:

(i) executed counterparts of this Agreement, all Collateral Documents, the
Guaranty and the Contribution Agreement, sufficient in number for distribution
to Lender and Borrower;

(ii) if requested by Lender, a Note executed by Borrower in favor of Lender;

(iii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party as 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;

(iv) such documents and certificates as Lender may reasonably require to
evidence that each Loan Party is duly organized or formed and that 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 would not reasonably be expected to have a Material
Adverse Effect;

(v) favorable opinions of counsel to the Loan Parties acceptable to Lender,
addressed to Lender, as to such matters concerning the Loan Parties and the Loan
Documents in form and substance satisfactory to Lender;

 

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(vi) 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;

(vii) a certificate signed by a Responsible Officer of Borrower certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been
satisfied, and (B) that there has been no event or circumstance since June 26,
2009 that has had or would reasonably be expected to have a Material Adverse
Effect, and (C) a calculation of the financial covenants set forth in
Section 6.12 as of the last day of the fiscal quarter of Borrower most recently
ended prior to the Closing Date;

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

(ix) such other assurances, certificates, documents, consents, evidence of
perfection of all Liens securing the Obligations or opinions as Lender
reasonably may require.

(b) Any fees required to be paid on or before the Closing Date shall have been
paid.

(c) Unless waived by Lender, Borrower shall have paid all Attorney Costs of
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 Borrower and Lender).

(d) The Closing Date shall have occurred on or before December 1, 2009.

4.02 Conditions to all Credit Extensions and Conversions and Continuations. The
obligation of Lender to honor any Request for Credit Extension is subject to the
following conditions precedent:

(a) The representations and warranties of Borrower and each other Loan Party
contained in Article V or any other Loan Document, or which are contained in any
document furnished at any time under or in connection herewith, shall be true
and correct on and as of the date of such Credit Extension, conversion or
continuation, 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 (c), respectively, of
Section 6.01.

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

(c) Lender shall have received a Request for Credit Extension in accordance with
the requirements hereof.

(d) Lender shall have received, in form and substance satisfactory to it, such
other assurances, certificates, documents or consents related to the foregoing
as Lender reasonably may require.

Each Request for Credit Extension submitted by Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable Credit
Extension.

 

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ARTICLE V. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that:

5.01 Existence, Qualification and Power; Compliance with Laws. Each Loan Party
(a) is 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 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, and (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, except in each case referred to in clause (b)(i) or
(c), to the extent that failure to do so would not reasonably be expected to
have a Material Adverse Effect.

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, or require any payment to
be made under, (i) any Contractual Obligation to which such Person is a party or
affecting such Person or the properties of such Person or any of its
Subsidiaries 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.

5.03 Governmental Authorization. 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 reports which Borrower is
required to file with the Securities and Exchange Commission under the
Securities Exchange Act of 1934.

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 such enforceability may be
limited by Debtor Relief Laws, by general principals of equity or principals of
good faith and fair dealing.

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 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 material indebtedness and
other liabilities, direct or contingent, of Borrower and its Subsidiaries as of
the date thereof, including liabilities for taxes, material commitments and
Indebtedness.

(b) The unaudited consolidated financial statements of Borrower and its
Subsidiaries dated June 26, 2009, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for the fiscal quarter
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 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.

 

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(c) Since the date of the Audited Financial Statements, there has been no event
or circumstance, either individually or in the aggregate, that has had or would
reasonably be expected to have a Material Adverse Effect.

5.06 Litigation. Except as specifically disclosed in Schedule 5.06 hereto, there
are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of Borrower, threatened in writing or contemplated, at law, in equity,
in arbitration or before any Governmental Authority, by or against 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 transactions contemplated hereby, or (b) either individually or in
the aggregate, if determined adversely, would reasonably be expected to exceed
$2,500,000 in excess of applicable insurance, and there has been no adverse
change in the status, or financial effect on any Loan Party or any Subsidiary
thereof, of the matters disclosed in Schedule 5.06.

5.07 No Default. Neither Borrower nor any Subsidiary is in default under or with
respect to any Contractual Obligation that would 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 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 would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The property of
Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted
by Section 7.01.

5.09 Environmental Compliance. Borrower and its Subsidiaries from time to time
evaluate 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
Borrower has reasonably concluded that, except as specifically disclosed in
Schedule 5.09 hereto, such Environmental Laws and claims would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.10 Insurance. The properties of Borrower and its Subsidiaries are insured with
insurance companies not Affiliates of Borrower that the Borrower believes (in
the good faith judgment of its management) were financially sound and reputable
at the time the relevant coverage was placed or renewed, in such amounts, after
giving effect to any self-insurance compatible with the following standards,
with such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where Borrower or the applicable Subsidiary operates.

5.11 Taxes. Borrower and its Subsidiaries have filed all Federal, state and
other material tax returns and reports required to be filed, and have paid all
Federal, state and other 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 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 Borrower, nothing has occurred which would prevent, or cause the
loss of, such qualification. Borrower and each ERISA Affiliate have made all
required contributions to each Plan subject to Section 412 of the

 

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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 knowledge of Borrower, threatened in
writing, claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that would 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
would 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 Unfunded Pension Liability; (iii) neither Borrower nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any 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 Borrower nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (v) neither Borrower nor any ERISA
Affiliate has engaged in a transaction that would be subject to Sections 4069 or
4212(c) of ERISA.

5.13 Subsidiaries. As of the Closing Date, 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 Disclosure. Borrower has disclosed to 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, would reasonably be expected to result in a Material Adverse Effect.
No report, financial statement, certificate or other information furnished
(whether in writing or orally) by or on behalf of any Loan Party in connection
with any Loan Document to 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 required to be
stated therein or 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, Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.

5.15 Compliance with Laws. Borrower, each Subsidiary and each other Loan Party
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, would not reasonably be
expected to have a Material Adverse Effect.

5.16 Intellectual Property; Licenses, Etc. 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 as specifically disclosed in Schedule 5.06 hereto,
to the knowledge of Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by Borrower or any Subsidiary infringes upon any
rights held by any other Person.

5.17 Margin Regulations; Investment Company Act.

(a) 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.

 

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(b) None of Borrower, any Person Controlling Borrower, or any Subsidiary is or
is required to be registered as an “investment company” under the Investment
Company Act of 1940.

5.18 Rights in Collateral; Priority of Liens. Borrower and each other Loan Party
own the property granted by it as Collateral under the Collateral Documents,
free and clear of any and all Liens in favor of third parties except as
disclosed in Schedule 7.01 and except as permitted herein. Upon the proper
filing of UCC financing statements, and the taking of the other actions required
by Lender, the Liens granted pursuant to the Collateral Documents will
constitute valid and enforceable first, prior and perfected Liens on the
Collateral in favor of Lender.

 

ARTICLE VI. AFFIRMATIVE COVENANTS

So long as the Commitment shall be in effect hereunder, any Loan or other
Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, 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 Lender the following, in form and detail
satisfactory to Lender:

(a) as soon as available, but in any event within 120 days after the end of each
fiscal year of Borrower, a consolidated balance sheet of 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 reasonably
acceptable to 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;

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

(c) as soon as available, but in any event by November 30 of each year, a budget
prepared by management of Borrower, in form satisfactory to Lender, of
consolidated balance sheets and statements of income or operations and cash
flows of Borrower and its Subsidiaries for the then current fiscal year
(including the fiscal year in which the Maturity Date occurs).

6.02 Certificates; Other Information. Deliver to Lender the following, in form
and detail satisfactory to Lender:

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

(b) as soon as available, but in any event within 30 days after the end of each
month, a Borrowing Base Certificate prepared as of the end of such month, duly
certified by a Responsible Officer of Borrower, together with an aging of the
Accounts (as defined in Article 9 of the UCC) of Borrower and Guarantors as of
the end of such month;

 

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

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

6.03 Notices. Promptly notify Lender:

(a) of the occurrence of any Default;

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

(c) the occurrence of any ERISA Event;

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

(e) of any dispute, liability out of the ordinary course of business,
litigation, investigation or proceeding, or judgment affecting any Loan Party in
each case in which the amount involved exceeds $2,500,000 in excess of
applicable insurance coverage.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of Borrower setting forth details of the occurrence referred
to therein and stating what action 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. Pay and discharge as the same shall become due and
payable, all its material obligations and liabilities, including (a) all 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 Borrower or such Subsidiary; (b) all claims
which, if unpaid, would by law become a Lien upon its property unless such
claims are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by
Borrower or such subsidiary; and (c) all 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 would
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 would reasonably be expected to have a
Material Adverse Effect.

 

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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, ordinary wear and tear, casualty and
condemnation excepted; (b) make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so would 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.

6.07 Maintenance of Insurance. In addition to insurance requirements set forth
in the Collateral Documents, maintain with financially sound and reputable
insurance companies not Affiliates of Borrower, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types and in
such amounts (after giving effect to any self-insurance compatible with the
following standards) as are customarily carried under similar circumstances by
such other Persons and providing for not less than 30 days’ prior notice to
Lender of termination, lapse or cancellation of such insurance. Upon request of
Lender, furnish Lender, at reasonable intervals (but not more than once per
calendar year) a certificate of a Responsible Officer of Borrower (and, if
requested by Lender, any insurance broker of Borrower) setting forth the nature
and extent of all insurance maintained by Borrower and its Subsidiaries in
accordance with this Section 6.07 or any Collateral Documents (and which, in the
case of a certificate of a broker, were placed through such broker).

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, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (b) the failure
to comply therewith would 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 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 Borrower or such Subsidiary, as the case may be. Borrower
shall maintain at all times books and records pertaining to the Collateral in
such detail, form and scope as Lender shall reasonably require.

6.10 Inspection Rights. Permit representatives and independent contractors of
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 Borrower and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to Borrower, and when accompanied by a
representative of Borrower; provided, however, that when a Default exists Lender
(or any of its representatives or independent contractors) may do any of the
foregoing at the expense of Borrower at any time during normal business hours
and without advance notice.

6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for general
corporate purposes not in contravention of any Law or of any Loan Document.

6.12 Financial Covenants.

(a) Tangible Net Worth. Maintain Tangible Net Worth as of the end of each fiscal
quarter equal to $50,000,000, adjusted by adding 50% of net income (without
subtracting net losses) earned in each quarterly accounting period commencing
after September, [    ] 2009.

(b) Fixed Charge Coverage Ratio. Maintain on a consolidated basis a Fixed Charge
Coverage Ratio of at least 1.25:1.0 as of the end of each fiscal quarter that
Borrower fails to maintain an Average Monthly Balance of Unrestricted Cash and
Cash Equivalents equal to or greater than

 

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$12,000,000 during that fiscal quarter. This ratio will be calculated at the end
of each fiscal quarter using the results of that fiscal quarter.

6.13 Additional Guarantors; Pledge of Capital Stock.

(a) Additional Guarantors. Notify Lender at the time that any Person becomes a
Domestic Subsidiary, and promptly thereafter (and in any event within 30 days),
cause such Person to (i) become a Guarantor by executing and delivering to
Lender (A) a supplement to the Guaranty in the form attached thereto or such
other document as Lender shall deem appropriate for such purpose, (B) a
supplement to the Contribution Agreement in the form attached thereto or such
other document as Lender shall deem appropriate for such purpose and (C) a
supplement to the Security Agreement in the form attached thereto or such other
document as Lender shall deem appropriate for such purpose, and (ii) deliver to
Lender documents of the types referred to in clauses (iii) and (iv) 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)), all in form,
content and scope reasonably satisfactory to Lender.

(b) Pledge of Capital Stock. Notify Lender at the time that any Person becomes a
Subsidiary, and promptly thereafter (i) grant a Lien in favor of Lender on
(A) 100% of the Capital Stock of each first tier Subsidiary that is a Domestic
Subsidiary, or (B) 65% of the voting Capital Stock and 100% of the non-voting
Capital Stock of each first tier Subsidiary that is a Foreign Subsidiary, in
each case to the extent Lender does not already have a Lien on such Capital
Stock pursuant to the Pledge Agreement, to secure the Obligations by executing
and delivering to Lender a supplement to the Pledge Agreement or such other
document as Lender shall deem appropriate for such purpose and (ii) deliver to
Lender all certificates and instruments representing the Capital Stock described
in clause (i) together with stock transfer powers executed in blank (and if
reasonably requested by Lender, with signatures guaranteed) as Lender may
specify and, if relevant, a completed Federal Reserve Form U-1 for Lender and
(iii) take such action as may be necessary or otherwise reasonably requested by
Lender to ensure that the Lien described in clause (i) is a perfected Lien of
first priority.

6.14 Collateral Records. Borrower agrees to execute and deliver promptly, and to
cause each other Loan Party to execute and deliver promptly, to Lender, from
time to time, solely for Lender’s convenience in maintaining a record of the
Collateral, such written statements and schedules as Lender may reasonably
require designating, identifying or describing the Collateral. The failure by
Borrower or any other Loan Party, however, to promptly give Lender such
statements or schedules shall not affect, diminish, modify or otherwise limit
the Liens on the Collateral granted pursuant to the Collateral Documents.

6.15 Security Interests. Borrower shall, and shall cause each other Loan Party
to, defend the Collateral against all claims and demands of all Persons at any
time claiming the same or any interest therein. Borrower shall, and shall cause
each other Loan Party to, comply with the requirements of all state and federal
laws in order to grant to Lender and Lenders valid and perfected first priority
security interests in the Collateral, with perfection, in the case of any
investment property or deposit account, being effected by giving Lender control
of such investment property or deposit account, rather than by the filing of a
UCC financing statement with respect to such investment property. Lender is
hereby authorized by Borrower to file any UCC financing statements covering the
Collateral whether or not Borrower’s signatures appear thereon. Borrower shall,
and shall cause each other Loan Party, to do whatever Lender may reasonably
request, from time to time, to effect the purposes of this Agreement and the
other Loan Documents, including filing notices of liens, UCC financing
statements, fixture filings (when requested by Lender) and amendments, renewals
and continuations thereof; cooperating with Lender’s representatives; keeping
stock records; obtaining waivers from landlords specified by Lender, and paying
claims which might, if unpaid, become a Lien on the Collateral.

6.16 Banking Relationships. Borrower shall maintain Lender as its principal
depository bank including business, cash management, operating and
administrative deposit accounts.

 

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ARTICLE VII. NEGATIVE COVENANTS

So long as the Commitment shall be in effect hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, 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:

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the date hereof and listed on Schedule 7.01 hereto and any
renewals or extensions thereof, provided that (i) the property covered thereby
is not changed, (ii) the amount secured or benefited thereby is not increased
except as contemplated by Section 7.03(b), (iii) the direct or any contingent
obligor with respect thereto is not changed, and (iv) 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 (i) adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP, and (ii) in the case of a Lien against any of the
Collateral, such contest proceedings operate to stay the sale of any portion of
the Collateral to satisfy such taxes;

(d) 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 (i) adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP and (ii) in the case of a Lien against any of the
Collateral, such contest proceedings operate to stay the sale of any portion of
the Collateral to satisfy such Liens;

(e) pledges or deposits in the ordinary course of business (I) in connection
with workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA and (II) securing liability
for reimbursement or indemnification obligations of insurance carriers providing
property, casualty or liability insurance to any Loan Party;

(f) deposits to secure the performance of bids, trade contracts, government
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) leases or subleases and non-exclusive licenses or non-exclusive sublicenses
granted to others in the ordinary course of business which do not (i) interfere
in any material respect with the business of Borrower or any of its Subsidiaries
and (ii) secure any Indebtedness;

(i) any interest or title of a lessor under, and Liens arising from UCC
financing statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, leases permitted by this Agreement;

(j) Liens arising as a matter of law or created in the ordinary course of
business in the nature of (i) normal and customary rights of setoff and banker’s
liens upon deposits of cash in favor of

 

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banks or other depository institutions and (ii) Liens securing reasonable and
customary fees for services in favor of banks, securities intermediaries or
other depository institutions;

(k) Liens of a collection bank arising under section 4-210 of the Uniform
Commercial Code on items in the course of collection;

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

(m) Liens securing Indebtedness permitted under Section 7.03(f); 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.

7.02 Investments. Make any Investments, except:

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

(b) advances to officers, directors and employees of Borrower and Subsidiaries
in an aggregate amount not to exceed $250,000 at any time outstanding, for
travel, entertainment, relocation and analogous ordinary business purposes;

(c) Investments of Borrower in any wholly-owned Subsidiary of Borrower that,
prior to making such Investment, was a Guarantor and Investments of any
Guarantor in Borrower or in another Guarantor;

(d) loans to Borrower in an aggregate principal amount not to exceed $2,500,000
at any time outstanding;

(e) 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;

(f) Guarantees permitted by Section 7.03;

(g) Permitted Acquisitions; and

(h) Existing Investments disclosed on Schedule7.02.

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
hereto and any refinancings, refundings, renewals or extensions thereof;
provided that (i) 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 and (ii) the terms relating to
principal amount, amortization, maturity, collateral (if any) and subordination
(if any), and other material terms taken as a whole, of any such refinancing,
refunding, renewing or extending Indebtedness, and of any agreement entered into
and of any instrument issued in connection therewith, are no less favorable in
any material respect to the Loan Parties or Lender than the terms of any
agreement or instrument governing the Indebtedness being

 

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refinanced, refunded, renewed or extended and the interest rate applicable to
any such refinancing, refunding, renewing or extending Indebtedness does not
exceed the then applicable market interest rate;

(c) Guarantees of Borrower or any Subsidiary in respect of Indebtedness
otherwise permitted hereunder of Borrower or any Subsidiary;

(d) obligations (contingent or otherwise) of 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;

(e) Indebtedness of Borrower owing to one or more Subsidiaries of Borrower in an
aggregate principal amount not to exceed the limitation set forth in
Section 7.02(d); and

(f) secured Indebtedness in respect of capital leases, Synthetic Lease
Obligations and purchase money obligations for fixed assets within the
limitations set forth in Section 7.01(m); provided that the aggregate amount of
all such Indebtedness created, incurred or assumed in each fiscal year shall not
exceed $500,000; and

7.04 Fundamental Changes. 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:

(a) any Subsidiary may merge with (i) Borrower, provided that Borrower shall be
the continuing or surviving Person, or (ii) any one or more other Subsidiaries,
provided that when any wholly-owned Subsidiary is merging with another
Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving
Person, and, provided further that if a Guarantor is merging with another
Subsidiary, the Guarantor shall be the surviving Person;

(b) any Subsidiary may dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise), to Borrower or to another Subsidiary;
provided that if the transferor in such a transaction is a wholly-owned
Subsidiary, then the transferee must also be a wholly-owned Subsidiary, and,
provided further that if the transferor of such assets is a Guarantor, the
transferee must either be Borrower or a Guarantor.

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

(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;

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

(c) 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;

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

(e) Dispositions permitted by Section 7.04; and

 

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(f) non-exclusive licenses of IP Rights in the ordinary course of business and
substantially consistent with past practice for terms not exceeding five years;

provided, however, that any Disposition pursuant to clauses (a) through
(f) 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 Borrower and to wholly-owned
Subsidiaries (and, in the case of a Restricted Payment by a non-wholly-owned
Subsidiary, to 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); and

(b) 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.

7.07 Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by Borrower and
its Subsidiaries on the date hereof.

7.08 Transactions with Affiliates. Enter into any transaction of any kind with
any Affiliate of Borrower, whether or not in the ordinary course of business,
other than on fair and reasonable terms substantially as favorable to Borrower
or such Subsidiary as would be obtainable by Borrower or such Subsidiary at the
time in a comparable arm’s length transaction with a Person other than an
Affiliate, provided that the foregoing restriction shall not apply to
transactions between or among Borrower and any Guarantor or between and among
Guarantors.

7.09 Burdensome Agreements. Enter into any Contractual Obligation (other than
this Agreement or any other Loan Document) that (a) limits the ability (i) of
any Subsidiary to make Restricted Payments to Borrower or any Guarantor or to
otherwise transfer property to Borrower or any Guarantor, (ii) of any Subsidiary
to Guarantee the Indebtedness of Borrower or (iii) of Borrower or any Subsidiary
to create, incur, assume or suffer to exist Liens on property of such Person;
provided, however, that this clause (iii) shall not prohibit the granting or
existence of any Lien permitted by Section 7.01 or any negative pledge incurred
or provided in favor of any holder of Indebtedness permitted under
Section 7.03(f) solely to the extent any such negative pledge relates to the
property financed by or the subject of such Indebtedness; or (b) 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.

7.10 Margin Regulations. 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 Board
of Governors of the Federal Reserve System of the United States) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose.

7.11 Capital Expenditures. Make or become or become legally obligated to make
Capital Expenditure that, in each fiscal year exceeds, in the aggregate, the sum
of (a) $6,000,000 less (b) the aggregate principal amount of all secured
Indebtedness in respect of capital leases, Synthetic Lease Obligations and
purchase money obligations for fixed assets created, incurred or assumed
Borrower or any Subsidiary during such period for the purpose of financing such
Capital Expenditures within the limitations set forth in Sections 7.01(m) and
7.03(f).

 

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. 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

 

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fee due hereunder, or (iii) within five days after the same becomes due, any
other amount payable hereunder or under any other Loan Document; provided,
however, that if Lender has the right hereunder to cause such payment to be made
by deducting the amount thereof from the Borrower Account specified in
Section 2.11(a) and such account on the date payment is due contains collected
funds at least equal to the amount of such payment and Lender has not deducted
such payment from such account, such non payment shall not be an Event of
Default if such payment is made not later than the second Business Day after the
earlier of the date a Responsible Officer has knowledge of such non payment or
the date Lender notifies Borrower of such non payment; or

(b) Certain Specific Covenants. Borrower fails to perform any term, covenant or
agreement contained in any of Sections 6.01, and 6.02; provided that unless
Borrower has previously failed to perform either of such covenants by the
required date on two prior occasions within the preceding 12 months, such
failure shall be considered a Event of Default only if Borrower fails to comply
therewith within five Business Days of the earlier of (i) the date a Responsible
Officer has knowledge of the failure to so comply or (ii) the date Lender
notifies Borrower of such failure; or

(c) Specific Covenants. Borrower fails to perform or observe any term, covenant
or agreement contained in any of Section 6.03, 6.05, 6.07, 6.10, 6.12 or Article
VII; or

(d) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a), (b) or (c) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days after the earlier of the date upon which a
Responsible Officer knew or reasonably should have known of such event or
failure or the date upon which Lender gives notice to Borrower of such failure
to perform or observe such other covenant or agreement; or

(e) Representations and Warranties. Any material representation, warranty,
certification or statement of fact made or deemed made by or on behalf of
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith shall be incorrect or
misleading in any material respect when made or deemed; or

(f) Cross-Default. (i) after any applicable cure period, 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
$1,000,000, or (B) fails to 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 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 Borrower or any
Subsidiary is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by Borrower or such Subsidiary as a result thereof is
greater than $1,000,000; or

(g) 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

 

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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

(h) Inability to Pay Debts; Attachment. (i) 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

(i) Judgments. There is entered against Borrower or any Subsidiary (i) a final
judgment or order for the payment of money in an aggregate amount exceeding
$5,000,000 (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 would 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 10 consecutive days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, is not
in effect; or

(j) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or would reasonably be expected to result
in liability of Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $5,000,000,
or (ii) Borrower or any ERISA 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 $5,000,000; or

(k) Invalidity of Loan Documents. Any Loan Document or any material provision
thereof (as determined by Lender in its reasonable opinion), 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 contests in any manner the validity or
enforceability of any Loan Document; any Person seeks to avoid any Loan Document
as a fraudulent transfer or conveyance; 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, or any Lien with respect to any
material portion of the Collateral intended to be secured thereby ceases to be,
or, subject to Section 7.01, is not, valid, perfected and prior to all other
Liens or is terminated, revoked or declared void; or

(l) Change of Control. There occurs any Change of Control with respect to
Borrower or any Guarantor; or

(m) Material Adverse Effect. There occurs any event or circumstance that has a
Material Adverse Effect; or

(n) Collateral. Lender fails to have an enforceable first priority lien and
security interest on a material part of the Collateral.

8.02 Remedies Upon Event of Default. If any Event of Default occurs, 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

 

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be immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by Borrower;

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

(d) exercise all rights and remedies available to Lender under the Loan
Documents or applicable law;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to 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
Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of Lender.

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 Lender to payment of
the Obligations in such order as Lender 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 Borrower or any
other Loan Party therefrom, shall be effective unless in writing signed by
Lender and 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 applicable address, facsimile number or (subject to subsection
(c) below) electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, specified for such Person below or to such other
address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the other parties.

 

Borrower:    Planar Systems, Inc.    1195 NW Compton Drive    Beaverton, OR
97006    Attention:   Ryan Gray      Controller    Telecopier:   (503) 748-1541
Lender:    Bank of America, N.A.

(Requests for

Credit

Extensions)

   Commercial Banking    Mail Code:   OR1-129-17-15   

121 SW Morrison St., Suite 1700

Portland, OR 97204

   Attention:   Melissa Hudson    Telecopier:   (503) 275-1391 Lender:    Bank
of America, N.A.

 

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(Other    Commercial Banking Correspondence)    Mail Code:   OR1-129-17-15   
121 SW Morrison St., Suite 1700    Portland, OR 97204    Attention:   Michael W.
Snook      Senior Vice President    Telecopier:   (503) 795-6404

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, upon delivery; (B) if delivered by
mail, four Business Days after deposit in the mails, postage prepaid; (C) if
delivered by facsimile, when sent and the sender has received electronic
confirmation of error free receipt; 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
Lender pursuant to Article II shall not be effective until actually received by
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
Lender. 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.

(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 to distribute Loan Documents for execution by the
parties thereto, and may not be used for any other purpose.

(d) Reliance by Lender. Lender shall be entitled to rely and act upon any
notices (including telephonic Loan Notices) purportedly given by or on behalf of
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. Borrower shall indemnify each
Lender-Related Person from all losses, costs, expenses and liabilities resulting
from the reliance by such Person on each notice purportedly given by or on
behalf of Borrower; provided that such indemnity shall not be available to the
extent losses, costs, expenses and liabilities are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of Lender. All telephonic notices to
and other communications with Lender may be recorded by Lender, and Borrower
hereby consents to such recording.

9.03 No Waiver; Cumulative Remedies. No failure by Lender to exercise, and no
delay by 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. Borrower agrees (a) to pay or reimburse
Lender for all costs and expenses incurred in connection with the development,
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 costs and expenses in connection with the use of IntraLinks, Inc. or other
similar information transmission systems in connection with this Agreement, and
(b) to pay or reimburse 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

 

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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
taxes related thereto, and other out-of-pocket expenses incurred by Lender and
the cost of independent public accountants and other outside experts retained by
Lender. All amounts due under this Section 9.04 shall be payable within ten
Business Days after demand therefor. The agreements in this Section shall
survive the termination of the Commitment and repayment of all other
Obligations.

9.05 Indemnification by Borrower. Whether or not the transactions contemplated
hereby are consummated, Borrower shall indemnify and hold harmless each
Lender-Related Person and their respective Affiliates, 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 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 Borrower, any Subsidiary or any other Loan Party, or any
Environmental Liability related in any way to 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 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, demand, 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 be liable for any damages
arising from the use by others of any information or other materials obtained
through IntraLinks or other similar information transmission systems in
connection with this Agreement, nor shall any Indemnitee 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). The agreements in this
Section shall survive the termination of the Commitment and the repayment,
satisfaction or discharge of all the other Obligations. All amounts due under
this Section 9.05 shall be payable within ten Business Days after demand
therefor.

9.06 Payments Set Aside. To the extent that any payment by or on behalf of
Borrower is made to Lender, or 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 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.

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 Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent

 

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of Lender and Lender may not assign or otherwise transfer any of its rights or
obligations hereunder except (i) in accordance with the provisions of subsection
(b) of this Section, (ii) by way of participation in accordance with the
provisions of subsection (d) of this Section, or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of subsection
(f) of this Section (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 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) Lender may assign all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans and L/C
Obligations at the time owing to it) to any Person; provided that so long as no
Event of Default has occurred and is continuing, Borrower consents (each such
consent not to be unreasonably withheld or delayed). Upon request, Borrower (at
its expense) shall execute and deliver a Note to the assignee of Lender.

(c) Lender may, without the consent of, or notice to Borrower, sell
participations to any Person (other than a natural person or Borrower or any of
Borrower’s Affiliates or Subsidiaries (each a “Participant”) in all or a portion
of Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and the Loans and L/C Obligations at the time owing to
it); provided that (i) Lender’s obligations under this Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible to Borrower for the
performance of such obligations and (iii) Borrower shall continue to deal solely
and directly with Lender in connection with Lender’s rights and obligations
under this Agreement. Subject to subsection (e) of this Section, 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 a Lender and had acquired its interest
by assignment pursuant to subsection (b) of this Section.

(d) A Participant shall not be entitled to receive any greater payment under
Sections 3.01 or 3.04 than the applicable 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 Borrower’s prior
written consent.

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

(f) If the consent of Borrower to an assignment is required hereunder, Borrower
shall be deemed to have given its consent five Business Days after the date
notice thereof has been delivered to Borrower by Lender unless such consent is
expressly refused by Borrower prior to such fifth Business Day.

9.08 Confidentiality. Lender agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and its Affiliates’ respective partners, directors, officers,
employees, trustees 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
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or under any other Loan Document or any suit, action or proceeding relating to
this Agreement or any other Loan Document or the enforcement of rights hereunder
or under any other Loan Document; (f) subject to an agreement containing
provisions substantially the same as those of this Section, 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 direct or indirect
contractual counterparty or prospective counterparty (or such contractual
counterparty’s or prospective counterparty’s professional advisor) to any credit
derivative transaction relating to obligations

 

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of a Loan Party; (g) with the consent of Borrower; or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to Lender on a nonconfidential basis from
a source other than Borrower. In addition, Lender may disclose the existence of
this Agreement and information about this Agreement to market data collectors,
similar service providers to the lending industry, and service providers to
Lender in connection with the administration and management of this Agreement,
the other Loan Documents, the Commitments, and the Credit Extensions. For the
purposes of this Section, “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 Lender on a nonconfidential
basis prior to disclosure by any Loan Party; provided that, in the case of
information received from any Loan Party after the date hereof, such information
is clearly identified in writing at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section 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 Lender provided by law,
upon the occurrence and during the continuance of any Event of Default, Lender
is authorized at any time and from time to time, without prior notice to
Borrower or any other Loan Party, any such notice being waived by 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, Lender to or for the credit or the account of the respective Loan
Parties against any and all Obligations owing to Lender hereunder or under any
other Loan Document, now or hereafter existing, irrespective of whether or not
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. Lender
agrees promptly to notify Borrower after any such set-off and application made
by Lender; 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 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 Borrower. In determining whether the interest contracted
for, charged, or received by Lender exceeds the Maximum Rate, 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 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 survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by Lender,
regardless of any investigation made by Lender or on its behalf and
notwithstanding that Lender may have had notice or

 

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

9.16 Arbitration and Waiver of Right to Trial by Jury.

(a) This Section concerns the resolution of any controversies or claims between
the parties, whether arising in contract, tort or by statute, including but not
limited to controversies or claims that arise out of or relate to: (i) this
Agreement (including any renewals, extensions or modifications); or (ii) any
document related to this Agreement (collectively a “Claim”). For the purposes of
this arbitration provision only, the term “parties” shall include any parent
corporation, subsidiary or affiliate of Lender involved in the servicing,
management or administration of any obligation described or evidenced by this
Agreement. Nothing contained in this Section shall override any contrary
provision contained in any Swap Contract.

(b) At the request of any party to this Agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9,
U.S. Code) (the “Arbitration Act”). The Arbitration Act will apply even though
this Agreement provides that it is governed by the law of Oregon. The
arbitration will take place on an individual basis without resort to any form of
class action.

(c) Arbitration proceedings will be determined in accordance with the
Arbitration Act, the then-current rules and procedures for the arbitration of
financial services disputes of the American Arbitration Association or any
successor thereof (“AAA”), and the terms of this Section. In the event of any
inconsistency, the terms of this Section shall control. If AAA is unwilling or
unable to (i) serve as the provider of arbitration or (ii) enforce any provision
of this Section, any party to this Agreement may substitute another arbitration
organization with similar procedures to serve as the provider of arbitration.

(d) The arbitration shall be administered by AAA and conducted, unless otherwise
required by law, in any U.S. state where the Collateral is located or if there
is no such Collateral, in the state of Oregon. All Claims shall be determined by
one arbitrator; however, if Claims exceed $5,000,000, upon the request of any
party, the Claims shall be decided by three arbitrators. All arbitration
hearings shall commence within 90 days of the demand for arbitration and close
within 90 days of commencement and the award of the arbitrator(s) shall be
issued within 30 days of the close of the hearing. However, the arbitrator(s),
upon a showing of good cause, may extend the commencement of the hearing for up
to an additional 60 days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may be submitted to
any court having jurisdiction to be confirmed, judgment entered and enforced.

(e) The arbitrator(s) will give effect to statutes of limitation in determining
any Claim and may dismiss the arbitration on the basis that the Claim is barred.
For purposes of the application of the statute of limitations, the service on
AAA under applicable AAA rules of a notice of Claim is the equivalent of the
filing of a lawsuit. Any dispute concerning this arbitration provision or
whether a Claim is arbitrable shall be determined by the arbitrator(s). The
arbitrator(s) shall have the power to award legal fees pursuant to the terms of
this Agreement.

 

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(f) This Section does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial
or non-judicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights; or (iv) act in a court of
law to obtain an interim remedy, such as but not limited to, injunctive relief,
writ of possession or appointment of a receiver, or additional or supplementary
remedies.

(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal
of the Claim to arbitration.

(h) BY AGREEING TO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY
WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM.
FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THIS AGREEMENT TO ARBITRATE,
TO THE EXTENT ANY CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND
VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH
CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
THIS AGREEMENT.

9.17 Time of the Essence. Time is of the essence of the Loan Documents.

9.18 Certain Agreements Not Enforceable. UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES AND COMMITMENTS MADE BY THE LENDERS AFTER OCTOBER 3, 1989, CONCERNING
LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR
HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION, AND BE SIGNED BY LENDERS TO BE ENFORCEABLE.

9.19 Amendment and Restatement. This Agreement shall become effective on the
Closing Date and shall supersede all provisions of the Existing Credit Agreement
as of such date. From and after the Closing Date all references made to the
Existing Credit Agreement in any Loan Document or in any other instrument or
document shall, without more, be deemed to refer to this Agreement.

9.20 USA PATRIOT Act Notice. Lender hereby notifies 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 “Patriot Act”), it is required to obtain,
verify and record information that identifies Borrower, which information
includes the name and address of Borrower and other information that will allow
Lender to identify Borrower in accordance with the Patriot Act. Borrower shall,
promptly following a request by Lender, provide all documentation and other
information that Lender requests in order to comply with its ongoing obligations
under applicable “know your customer” and anti-money laundering rules and
regulations, including the Patriot Act.

[Remainder of page intentionally left blank]

 

47

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

IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement by its duly
authorized officer as of the day and year first above written.

 

PLANAR SYSTEMS, INC., an Oregon corporation By:  

 

Name:  

 

Title:  

 

BANK OF AMERICA, N.A., a national banking association By:  

 

Name:  

 

Title:  

 

 

48

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

SCHEDULE 5.09

ENVIRONMENTAL MATTERS

None.

 

Schedule 5.09

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

SCHEDULE 5.13

SUBSIDIARIES

AND OTHER EQUITY INVESTMENTS

 

(a) Subsidiaries.

 

•  

Planar Taiwan LLC

c/o Planar Systems, Inc.

1195 NW Compton Drive

Beaverton, OR 97006

 

•  

Planar China LLC

c/o Planar Systems, Inc.

1195 NW Compton Drive

Beaverton, OR 97006

 

•  

Planar Systems Oy

Olarinluoma 9

02200 Espoo

Finland

 

•  

Planar Systems GmbH

Poccistrasse 11

80336 Munich

Germany

 

•  

Planar Systems Limited

Lexham House

Forest Road

Binfield Bracknell

Berkshire RG42 4HP

United Kingdom

 

•  

Planar Systems S.A.R.L.

REGUS Centre d’affairs

68 rue du Faubourg Saint Honore

75008 Paris

France

 

•  

Runco International, LLC

c/o Planar Systems, Inc.

1195 NW Compton Drive

Beaverton, OR 97006

 

•  

Clarity, A Division of Planar Systems, Inc.

c/o Planar Systems, Inc.

1195 NW Compton Drive

Beaverton, OR 97006

 

•  

Clarity Visual Systems BV

Kingsfordweg 151

1043 GR Amsterdam

The Netherlands

 

•  

Planar SAS

24 Rue Evariste, Galois

 

Schedule 5.13 – 1

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

8100 Albi

France

 

•  

Planar EMEA SpA

Via degli Olmetti, 461a

00060 - Formello (Roma)

Italy

 

•  

Planar Systems Hong Kong Ltd. (Dormant)

c/o Planar Systems, Inc.

1195 NW Compton Drive

Beaverton, OR 97006

 

(b) Other Equity Investments.

None.

 

Schedule 5.13 – 2

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

SCHEDULE 7.01

EXISTING LIENS

OREGON SECRETARY OF STATE FILINGS

 

Debtor

  

Filing Number/Date

  

Secured Party

Planar Systems, Inc.    7630903 5/24/07    The Fifth Third Leasing Company
Planar Systems, Inc.    7865295 1/30/08    De Lage Landen Financial Services,
Inc. Planar Systems, Inc.    8225975 3/26/09    Hewlett-Packard Financial
Services Company Planar Systems, Inc.    8236077 4/7/09    Union Leasing Corp.

WASHINGTON COUNTY FIXTURE FILINGS

 

Debtor

  

Filing Number/Date

  

Secured Party

Planar Systems, Inc.    99000683 01/05/99    General Electric Capital Business
Asset Funding Corporation Planar Systems, Inc.    2002-060451 05/24/02    U.S.
Bank National Association, as Administrative Lender

 

Schedule 7.01

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

SCHEDULE 7.02

EXISTING INVESTMENTS

See Schedule 5.13(b).

 

Schedule 7.02

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

SCHEDULE 7.03

EXISTING INDEBTEDNESS

 

     Total Outstanding
Obligation    Total Required
Future Payments

GE Capital Lease Contracts #001-0002495-002

   $ 2,582,281    $ 2,990,161

Fifth Third Bank Lease Contract #093-0010591-018

   $ 1,192,408    $ 1,395,535

Bank of America Lease Contract (HP Servers) #572CC170

   $ 31,536    $ 31,536

NetApp Capital Lease Agreement #71857M

   $ 64,715    $ 64,715

 

Schedule 7.03

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

EXHIBIT A

FORM OF COMMITTED LOAN NOTICE

Date:                     ,         

 

To: Bank of America, N.A.

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of December 1, 2009 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Credit Agreement;” the
terms defined therein being used herein as therein defined), between Planar
Systems, Inc., an Oregon corporation (“Borrower”), and Bank of America, N.A., a
national banking association (“Lender”).

The undersigned hereby requests (select one):

¨  A Borrowing of Loans            ¨  A conversion or continuation of Loans

 

  1. On                                          
                                        (a Business Day).

 

  2. In the amount of $                                         
                   .

 

  3. Comprised of                                          
                          .

[Type of Loan requested]

 

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

[The Borrowing requested herein complies with the provision to the first
sentence of Section 2.01 of the Credit Agreement.]

 

PLANAR SYSTEMS, INC., an Oregon corporation By:  

 

Name:  

 

Title:  

 

 

Exhibit A – 1

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

EXHIBIT B

FORM OF NOTE

 

$12,000,000.00   December 1, 2009

FOR VALUE RECEIVED, the undersigned (“Borrower”), hereby promises to pay to the
order of BANK OF AMERICA, N.A., a national banking association, or assigns
(“Lender”), in accordance with the provisions of the Agreement (as hereinafter
defined) the principal amount of each Loan from time to time made by Lender to
Borrower under that certain Amended and Restated Credit Agreement, dated as of
December 1, 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), among Borrower and Lender.

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 provided in the Agreement. All payments of
principal and interest shall be made to Lender in Dollars in immediately
available funds at Lender’s 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 may be prepaid in whole or in part subject to the terms and
conditions 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
Lender shall be evidenced by one or more loan accounts or records maintained by
Lender in the ordinary course of business. Lender may also attach schedules to
this Note and endorse thereon the date, amount and maturity of its Loans and
payments with respect thereto.

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.

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF OREGON APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE.

 

PLANAR SYSTEMS, INC., an Oregon corporation By:  

 

Name:  

 

Title:  

 

 

Exhibit B – 1

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

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit B – 2

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

EXHIBIT C

FORM OF AMENDED AND RESTATED CONTINUING GUARANTY

 

Exhibit C – 1

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

Exhibit D

FORM OF SECOND AMENDED AND RESTATED SECURITY AGREEMENT

This SECOND AMENDED AND RESTATED SECURITY AGREEMENT (“Agreement”), entered into
as of December 1, 2009, among PLANAR SYSTEMS, INC., an Oregon corporation (the
“Borrower”), PLANAR CHINA, LLC, an Oregon limited liability company (“Planar
China”), CLARITY, A DIVISION OF PLANAR SYSTEMS, INC., an Oregon corporation
(“Clarity”), RUNCO INTERNATIONAL, LLC, an Oregon limited liability company,
formerly known as Runco International Inc. (“Runco”), PLANAR TAIWAN, LLC, an
Oregon limited liability company (“Planar Taiwan and together with Borrower,
Planar China, Clarity, Runco and any additional guarantors becoming a party
hereto as provided in Section 20 hereof and their respective successors,
collectively, the “Debtors” and individually, a “Debtor”), in favor of BANK OF
AMERICA, N.A., a national banking association (the “Secured Party”).

RECITALS

A. Borrower, Secured Party and Bank of America, N.A., a national banking
association, as administrative agent for Secured Party (in such capacity, the
“Agent”), are parties to that certain Credit Agreement dated as of December 16,
2003 (as amended, restated, supplemented or otherwise modified, together with
all exhibits and schedules attached thereto from time to time, the “Existing
Credit Agreement”), pursuant to which Secured Party has made, or committed to
make, revolving loans to Borrower and Agent has issued, or committed to issue,
letters of credit for the account of Borrower.

B. In connection with the Existing Credit Agreement, Borrower entered into that
certain Security Agreement dated as of December 16, 2003 (as amended, restated,
supplemented or otherwise modified, the “Borrower Security Agreement”), pursuant
to which Borrower granted to Agent for the benefit of Secured Party and Agent a
security interest in the property described therein to secure, among other
things, the indebtedness, liabilities and obligations of Borrower owing to
Secured Party and Agent arising under the Existing Credit Agreement.

C. In connection with the Existing Credit Agreement, Planar China entered into
(1) that certain Continuing Guaranty dated as of December 16, 2003 (as amended,
restated, supplemented or otherwise modified, the “Planar China Guaranty”),
pursuant to which Planar China guaranteed, among other things, the indebtedness,
liabilities and obligations of Borrower owing to Secured Party and Agent arising
under the Existing Credit Agreement and (2) that certain Security Agreement
dated as of December 16, 2003 (as amended, restated, supplemented or otherwise
modified, the “Planar China Security Agreement”), pursuant to which Planar China
granted to Agent for the benefit of Secured Party and Agent a security interest
in the property described therein to secure, among other things, the
indebtedness, liabilities and obligations of Planar China owing to owing to
Secured Party and Agent arising under the Planar China Guaranty.

D. In connection with the Existing Credit Agreement, Clarity entered into
(1) that certain Continuing Guaranty dated as of May 23, 2007 (as amended,
restated, supplemented or otherwise modified, the “Clarity Guaranty”), pursuant
to which Clarity guaranteed, among other things, the indebtedness, liabilities
and obligations of Borrower owing to Secured Party and Agent arising under the
Existing Credit Agreement and (2) that certain Security Agreement dated as of
May 23, 2007 (as amended, restated, supplemented or otherwise modified, the
“Clarity Security Agreement”), pursuant to which Clarity granted to Agent for
the benefit of Secured Party and Agent a security interest in the property
described therein to secure, among other things, the indebtedness, liabilities
and obligations of Clarity owing to Secured Party and Agent arising under the
Clarity Guaranty.

E. In connection with the Existing Credit Agreement, Runco entered into (1) that
certain Continuing Guaranty dated as of June 1, 2007 (as amended, restated,
supplemented or otherwise modified, the “Runco Guaranty”), pursuant to which
Runco guaranteed, among other things, the indebtedness, liabilities and
obligations of Borrower owing to Secured Party and Agent arising under the
Existing Credit Agreement and (2) that certain Security Agreement dated as of
June 1, 2007 (as amended, restated, supplemented or otherwise modified, the
“Runco Security Agreement”), pursuant to which Runco granted to Agent for the
benefit of Secured Party and Agent a security interest in the

 

1

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

property described therein to secure, among other things, the indebtedness,
liabilities and obligations of Runco owing to Secured Party and Agent arising
under the Runco Guaranty.

F. In connection with the Existing Credit Agreement, Planar Taiwan entered into
(1) that certain Continuing Guaranty dated as of December 16, 2003 (as amended,
restated, supplemented or otherwise modified, the “Planar Taiwan Guaranty”),
pursuant to which Planar Taiwan guaranteed, among other things, the
indebtedness, liabilities and obligations of Borrower owing to Secured Party and
Agent arising under the Existing Credit Agreement and (2) that certain Security
Agreement dated as of December 16, 2003 (as amended, restated, supplemented or
otherwise modified, the “Planar Taiwan Security Agreement”), pursuant to which
Planar Taiwan granted to Agent for the benefit of Secured Party and Agent a
security interest in the property described therein to secure, among other
things, the indebtedness, liabilities and obligations of Planar Taiwan owing to
owing to Secured Party and Agent arising under the Planar Taiwan Guaranty.

G. Agent and Secured Party are parties to that certain Assignment Agreement
dated as of December 1, 2009 (the “Assignment Agreement”) pursuant to which,
among other things, Agent assigned to Secured Party all of its right, title and
interest under (1) the Planar China Guaranty, the Clarity Guaranty, the Runco
Guaranty and the Planar Taiwan Guaranty (collectively, the “Existing
Guaranties”) and (2) the Borrower Security Agreement, the Planar China Security
Agreement, the Clarity Security Agreement, the Runco Security Agreement and the
Planar Taiwan Security Agreement (collectively, the “Existing Security
Agreements”).

H. Borrower and Secured Party are parties to that certain Amended and Restated
Credit Agreement dated as of December 1, 2009 (the “Credit Agreement”), which
Credit Agreement amended, restated and replaced the Existing Credit Agreement in
its entirety and pursuant to which, among other things, Secured Party agreed to
continue loans made to Borrower under the Existing Credit Agreement and to make
additional loans to Borrower.

I. Guarantors and Secured Party are parties to that certain Amended and Restated
Continuing Guaranty dated as of December 1, 2009 (the “Guaranty Agreement”),
which Guaranty Agreement amended, restated and replaced the Existing Guaranties
in their entirety and pursuant to which Guarantors guaranteed, among other
things, the indebtedness, liabilities and obligations of Borrower owing to
Secured Party arising under the Credit Agreement.

J. It is a condition precedent to Secured Party’s obligation to make its initial
Credit Extension under the Credit Agreement that each Debtor enter into this
Agreement.

NOW, THEREFORE, in consideration of the foregoing and in order to induce Secured
Party to make Credit Extensions under the Credit Agreement, the parties hereto
hereby agree to amend and restate each of the Existing Security Agreements as
follows:

AGREEMENT

1. Continuance of Security Interests. This Agreement is intended to amend and
restate the Existing Security Agreements in their entirety and to continue the
security interests granted thereunder and continued hereby.

2. Definitions; Interpretation.

(a) Terms Defined in Credit Agreement. All capitalized terms used in this
Agreement and not otherwise defined herein have the meanings specified in the
Credit Agreement.

(b) Certain Defined Terms. As used in this Agreement, the following terms have
the following meanings:

“Account Debtor” means any Person who is or who may become obligated to any
Debtor under, with respect to or on account of an Account or other Right to
Payment.

 

2

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

“Capital Stock” means (i) in the case of a corporation, capital stock, (ii) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (iii) in the case of a partnership, partnership interests (whether
general or limited), (iv) in the case of a limited liability company, membership
interests and (v) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

“Collateral” shall have the meaning assigned to such term in Section 3(a).

“Copyright License” shall mean any written agreement, now or hereafter in
effect, granting any right to any third party under any Copyright now or
hereafter owned by the Debtor or which the Debtor otherwise has the right to
license, or granting to the Debtor the right to use any Copyright now or
hereafter owned by any third party, and all rights of the Debtor under any such
agreement.

“Copyrights” shall mean all of the following now owned or hereafter acquired by
any Debtor: (i) all copyright rights in any work subject to the copyright laws
of the United States, any state thereof or any other country or any political
subdivision thereof, whether registered or unregistered and whether published or
unpublished, whether as author, assignee, transferee or otherwise, and (ii) all
registrations and applications for registration of any such copyright in the
United States or any other country, including registrations, recordings,
supplemental registrations and pending applications for registration in the
United States Copyright Office or in any similar offices in any other country.

“Credit Agreement” has the meaning set forth in the preamble hereto.

“Debtor” has the meaning set forth in the introductory paragraph hereto.

“Domestic Subsidiary” means any Subsidiary that is organized and existing under
the laws of the United States or any state or commonwealth thereof or under the
laws of the District of Columbia.

“Excluded Collateral” means, collectively (i) any Debtor’s rights under
contracts and agreements which by their terms prohibit the granting of a
security interest therein or assignment thereof (except for (a) Accounts,
Payment Intangibles and other General Intangibles for money due or to become due
thereunder and (b) any such contract as to which consent for the Lien created
hereby has been obtained); provided, however, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by the Debtor of a
security interest pursuant to this Agreement in any such Collateral to the
extent that an otherwise applicable prohibition on such grant is rendered
ineffective by the UCC or other applicable Laws, (ii) Equipment subject to a
capitalized lease or purchase money Liens permitted under the Credit Agreement
that prohibits the granting of any other Lien on such Equipment; provided that
such Equipment shall become Collateral upon release of such capitalized lease or
purchase money Lien and (iii) real property other than fixtures.

“Guaranty Agreement” has the meaning set forth in the preamble hereto.

“Secured Party” has the meaning set forth in the preamble hereto.

“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense agreement to which any Debtor is a party.

“Patent License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Debtor or which any Debtor
otherwise has the right to license, is in existence, or granting to any Debtor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Debtor under
any such agreement.

“Patents” shall mean all of the following now owned or hereafter acquired by any
Debtor: (i) all letters patent of the United States or any other country or any
political subdivision thereof, all registrations and recordings thereof,
(ii) all applications for letters patent of the United States or the equivalent
thereof

 

3

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

in any similar offices in any other country, including registrations, recordings
and pending applications in the United States Patent and Trademark Office or the
equivalent thereof in any similar offices in any other country, and (iii) all
reissues, continuations, divisions, continuations in part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.

“Pledge Agreement” means the Amended and Restated Pledge Agreement dated as of
the date of this Agreement, made between Borrower and Secured Party.

“Permitted Liens” means each of the Liens expressly permitted to be prior to the
Security Interest pursuant to Section 7.01 of the Credit Agreement.

“Rights to Payment” means all Accounts, and any and all rights and claims to the
payment or receipt of money or other forms of consideration of any kind in, to
and under all Chattel Paper, Documents, General Intangibles, Payment
Intangibles, Instruments and Proceeds.

“Security Interest” shall have the meaning assigned to such term in
Section 3(a).

“Secured Obligations” means collectively:

(a) in the case of Borrower, collectively (i) all advances to, and debts,
liabilities, obligations, covenants and duties of, Borrower owing to Secured
Party arising under the Credit Agreement, the Collateral Documents and each
other Loan Document to which Borrower is a party or otherwise with respect to
any Loan or Letter of Credit; (ii) all debts, liabilities, obligations,
covenants and duties of, Borrower or any of its Subsidiaries owing to Secured
Party or any Affiliate of Secured Party and arising under any Specified Swap
Contract, including liabilities and obligations arising in connection with or as
a result of early termination of any such Specified Swap Contract; (iii) all
debts, liabilities, obligations, covenants and duties of, Borrower or any of its
Subsidiaries owing to Secured Party or any Affiliate of Secured Party and
arising out of Secured Party or Affiliate of Secured Party providing treasury
management services to, for the benefit of or otherwise in respect of Borrower
or any of its Subsidiaries, including, without limitation, intraday credit,
Automated Clearing House (ACH) services, foreign exchange services, overdrafts
and zero balance arrangements, and any instruments, agreements or other
documents executed in connection therewith;

(b) in the case of each Guarantor, all debts, liabilities, obligations,
covenants and duties of, such Guarantor owing to Secured Party and each
Affiliate of Secured Party arising under the Guaranty Agreement, the Collateral
Documents and each other Loan Document to which such Guarantor is a party; and

(c) all debts, liabilities, obligations, covenants and duties of each Debtor (or
any of them) arising under this Agreement, 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.

“Specified Swap Contract” shall mean any Swap Contract that (i) is made or
entered into at any time, or in effect at any time, whether directly or
indirectly, and whether as a result of assignment or transfer or otherwise,
between Lender or any Affiliate of Lender and Borrower or any Subsidiary of
Borrower and (ii) is permitted by Section 7.03(d) of the Credit Agreement.

“Trademark License” shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Debtor or which any Debtor otherwise has the right to
license, or granting to any Debtor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Debtor under any such
agreement.

 

4

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

“Trademarks” shall mean all of the following now owned or hereafter acquired by
any Debtor: (i) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations and pending
applications in the United States Patent and Trademark Office, any State of the
United States or any similar offices in any other country or any political
subdivision thereof, and all extensions or renewals thereof, except for “Intent
to Use” applications for trademark or service mark registrations filed pursuant
to Section 1(b) of the Lanham Act, unless and until an Amendment to Allege Use
or a Statement of Use under Section 1(c) and 1(d) of said Act has been filed,
(ii) all goodwill associated therewith or symbolized thereby and (iii) all other
assets, rights and interests that uniquely reflect or embody such goodwill.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of Oregon; provided, however, in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
Oregon, the term “UCC” shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.

(c) Terms Defined in UCC. Terms used in this Agreement that are defined in the
UCC and not otherwise defined herein have the meanings given to them in the UCC,
including the following which are capitalized herein: Accession, Account,
As-Extracted Collateral, Chattel Paper, Commercial Tort Claim, Commodity
Account, Commodity Contract, Commodities Intermediary, Consumer Goods, Deposit
Account, Document, Electronic Chattel Paper, Equipment, Farm Products, Financial
Assets, Fixture, General Intangible, Instrument, Inventory, Investment Property,
Letter-of-Credit Right, Manufactured Home, Payment Intangible, Proceeds,
Products, Securities Account, Securities Intermediary, Security, Supporting
Obligation and Tangible Chattel Paper.

(d) Interpretation. The rules of construction and interpretation specified in
Sections 1.02 and 1.05 of the Credit Agreement also apply to this Agreement and
are incorporated herein by this reference.

3. Security Interest.

(a) Grant of Security Interest. As security for the payment or performance, as
the case may be, in full of the Secured Obligations, each Debtor hereby assigns
and pledges to Secured Party, its successors and assigns, and hereby grants to
Secured Party, its successors and assigns, a security interest (the “Security
Interest”), in all right, title or interest of such Debtor in or to any and all
of the following assets and properties now owned or at any time hereafter
acquired by such Debtor or in which such Debtor now has or at any time in the
future may acquire any right, title or interest (collectively, the
“Collateral”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all Deposit Accounts;

(iv) all Documents;

(v) all Equipment;

(vi) all Fixtures;

(vii) all General Intangibles;

(viii) all Instruments;

 

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(ix) all Inventory;

(x) all Investment Property;

(xi) all Letter-of-Credit Rights;

(xii) specified Commercial Tort Claims, if any;

(xiii) all books and records pertaining to the assets and properties described
in this Section 3(a);

(xiv) all other goods and personal property of the Debtor whether tangible or
intangible wherever located;

(xv) to the extent not otherwise included, all Proceeds and Products of any and
all of the foregoing; and

(xvi) Proceeds of Excluded Collateral, but not Excluded Collateral itself;

provided, however, that the Collateral shall not include the Excluded
Collateral.

(b) Debtor Remains Liable. Anything herein to the contrary notwithstanding,
(i) each Debtor shall remain liable under any contracts, agreements and other
documents included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by Secured Party of any
of the rights hereunder shall not release any Debtor from any of its duties or
obligations under such contracts, agreements and other documents included in the
Collateral, and (iii) Secured Party shall have no obligation or liability under
any contracts, agreements and other documents included in the Collateral by
reason of this Agreement, nor shall Secured Party be obligated to perform any of
the obligations or duties of any Debtor thereunder or to take any action to
collect or enforce any such contract, agreement or other document included in
the Collateral hereunder.

(c) Continuing Security Interest. Each Debtor acknowledges and agrees that the
Security Interest in the Collateral constitutes continuing collateral security
for all of the Secured Obligations which shall remain in effect until terminated
in accordance with Section 28.

4. Financing Statements, Etc. Each Debtor hereby irrevocably authorizes Secured
Party at any time and from time to time to file in any relevant jurisdiction any
initial financing statements and amendments thereto against the Collateral and
that contain any other information required by Article 9 of the UCC of each
applicable jurisdiction for the filing of any financing statement or amendment,
including whether such Debtor is an organization, the type of organization and
any organizational identification number issued to such Debtor. At the time of
execution hereof, Secured Party does not intend to make any fixture filings.
However, Secured Party may make fixture filings if it chooses to do so in the
future and each Debtor agrees to cooperate with Secured Party with respect to
fixture filings including providing a sufficient description of the real
property to which any fixture relates. Each Debtor agrees to provide such
information to Secured Party promptly upon request. Each Debtor also ratifies
its authorization for Secured Party to file in any relevant jurisdiction any
initial financing statements or amendments thereto if filed prior to the date
hereof.

5. Representations and Warranties. In addition to the representations and
warranties of each Debtor set forth in the Loan Documents to which it is a
party, which are incorporated herein by this reference, each Debtor represents
and warrants to Secured Party that:

(a) Chief Executive Office; Legal Name; State of Organization. Each Debtor’s
chief executive office and chief place of business are (and for the prior four
months has been) located at the locations set forth in Part (a) of Schedule 1
hereto (as updated from time to time), and such Debtor keeps its books and
records at such location. Each Debtor’s exact corporate or organizational name,
the jurisdiction of its incorporation or organization (and for the prior four
months has been its location) and the

 

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identification number given by its jurisdiction of incorporation or organization
is set forth in Part (b) of Schedule 1 hereto. No Debtor has in the past four
months changed its name, been party to a merger, consolidation or other change
in structure or used any trade name not disclosed in Part (c) of Schedule 1
hereto (as updated from time to time).

(b) Location of Tangible Collateral. The location of all tangible Collateral
owned by each Debtor is currently as shown in Schedule 2 hereto, which schedule
will be updated from time to time whenever Collateral worth more than $500,000
is moved to a location not currently listed.

(c) Ownership and Authority. Each Debtor is the sole legal and beneficial owner
of the Collateral (or, in the case of after-acquired Collateral, at the time
such Debtor acquires rights in such Collateral, will be the sole legal and
beneficial owner thereof) and has the right, power and authority to grant to
Secured Party the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement.

(d) Validity of Security Interest. The Security Interest constitutes (i) a legal
and valid security interest which is enforceable against the Collateral in which
any Debtor now has rights and will create a security interest which is
enforceable against the Collateral in which such Debtor hereafter acquires
rights at the time such Debtor acquires any such rights; and (ii) when properly
perfected by filing or otherwise, the Security Interest shall constitute a valid
perfected security interest in the Collateral, in which any Debtor now has
rights, and will have a perfected security interest in the Collateral in which
any Debtor hereafter acquires rights at the time such Debtor acquires any such
rights, to the extent that a security interest may be perfected by filing or
otherwise under the UCC, in each case securing the payment and performance of
the Secured Obligations. The Security Interest is and shall be prior to any
other Lien on any of the Collateral, other than Permitted Liens.

(e) Absence of Other Liens. No Debtor has filed or consented to the filing of
(i) any financing statement or analogous document under the UCC or any other
applicable Laws covering any Collateral, or (ii) any assignment in which such
Debtor assigns any Collateral or any security agreement or similar instrument
covering any Collateral with any Governmental Authority, which financing
statement or analogous document, assignment, security agreement or similar
instrument is still in effect, other than, in each case, with respect to a
Permitted Lien.

(f) Types of Collateral. None of the Collateral consists of, or is the Proceeds
of, As Extracted Collateral, timber to be cut, Consumer Goods, Farm Products or
Manufactured Homes.

(g) Rights to Payment.

(i) The Rights to Payment represent valid, binding and enforceable obligations
of the Account Debtors or other Persons obligated thereon, representing
undisputed, bona fide transactions completed in accordance with the terms and
provisions contained in any documents related thereto, and are and will be
genuine, free from Liens, and not subject to any adverse claims, counterclaims,
setoffs, defaults, disputes, defenses, discounts, retainages, holdbacks or
conditions precedent of any kind of character, except to the extent reflected by
the applicable Debtor’s reserves for uncollectible Rights to Payment or to the
extent, if any, that such Account Debtors or other Persons may be entitled to
normal and ordinary course trade discounts, returns, adjustments and allowances
in accordance with Section 6(k), or as otherwise disclosed to Secured Party in
writing;

(ii) To each Debtor’s knowledge, all Account Debtors are solvent and generally
paying their debts as they come due except to the extent that the applicable
Debtor has established adequate reserves therefor in accordance with GAAP;

(iii) To each Debtor’s knowledge, all Rights to Payment comply in all material
respects with all applicable Laws concerning form, content and manner of
preparation and execution, including where applicable any Federal or state
consumer credit laws;

 

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(iv) No Debtor has assigned any of its rights under the Rights to Payment except
as provided in this Agreement or as set forth in the other Loan Documents;

(v) All statements made, all unpaid balances and all other information in the
books and records and other documentation pertaining to the Rights to Payment
are true and correct and in all material respects what they purport to be; and

(vi) No Debtor has knowledge of any fact or circumstance which would impair the
validity or collectibility of the Rights to Payment which in the aggregate would
constitute a material amount.

(h) Inventory. No Inventory of any Debtor is held by such Debtor pursuant to a
sale or return, sale on approval or similar arrangement.

(i) Documents, Instruments and Chattel Paper. To each Debtor’s knowledge, all
Documents, Instruments and Chattel Paper describing, evidencing or constituting
Collateral are complete, valid, and genuine.

(j) Equipment. None of the Equipment is affixed to real property so as to
constitute a fixture. None of the Equipment is leased from or to any Person,
except for non material items, or except as permitted by Section 7.03(e) of the
Credit Agreement.

(k) Deposit Accounts. The names and addresses of all financial institutions at
which any Debtor maintains its Deposit Accounts, and the account numbers and
account names of such Deposit Accounts, are set forth in Schedule 3 hereto.

(l) Consents. Except for (i) the filing or recording of UCC financing
statements, (ii) the obtaining control to perfect the Security Interest granted
by each Debtor pursuant hereto, or (iii) claims against the United States not
exceeding $1,000,000 in the aggregate, no consent or authorization of, filing
with, or other act by or in respect of, any arbitrator or Governmental Authority
and no consent of any other Person (including any stockholder, member or
creditor of any Debtor), is required (A) for the grant by each Debtor of the
Security Interest in the Collateral pursuant hereto or for the execution,
delivery or performance of this Agreement by each Debtor or (B) for the
perfection of the Security Interest or the exercise by Secured Party of the
rights and remedies provided for in this Agreement. Each Debtor shall comply
with the Assignment of Claims Act of 1940, as amended, whenever claims exceed
$1,000,000 in the aggregate.

(m) Patents, Trademarks and Copyrights. Schedule 4 hereto includes all
registered Patents and Trademarks, and all applications for Patents and
Trademarks, owned by or licensed by or to any Debtor as of the date hereof. No
Debtor owns any Copyrights that have been registered in the United States or any
other country.

6. Covenants. In addition to the covenants of each Debtor set forth in the Loan
Documents to which it is a party, which are incorporated herein by this
reference, so long as the Commitment shall be in effect under the Credit
Agreement, any Specified Swap Contract shall be in effect or any of the Secured
Obligations shall remain unpaid or unsatisfied, each Debtor shall:

(a) Defense of Collateral. At its own cost and expense, take any and all actions
necessary to defend title to the Collateral against all Persons and to defend
the Security Interest of Secured Party in the Collateral and the priority
thereof against any Lien, other than Permitted Liens.

(b) Preservation of Collateral. Maintain, preserve and protect the tangible
Collateral in good working order and condition, ordinary wear and tear, casualty
and condemnation excepted; not use the Collateral in violation of the provisions
of this Agreement or any other agreement relating to the Collateral or any
policy insuring the Collateral or any applicable requirement of Law; and not
permit any Collateral to be or become a Fixture to real property or an Accession
to other personal property unless Secured Party has a valid, perfected and first
priority security interest in such real or personal property.

 

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(c) Change of Name, Identity or Structure. Promptly notify Secured Party in
writing of any change (i) in its corporate or organization name, (ii) in the
location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to the Collateral owned
by it, (iii) in its identity, type of organization, corporate structure or
jurisdiction of incorporation or organization or (iv) in its Federal Taxpayer
Identification Number or other identification number given by its jurisdiction
of incorporation or organization, and not to effect or permit any change
referred to in clauses (i) through (iv) unless all filings have been made under
the UCC or otherwise that are required in order for Secured Party to continue at
all times following such change to have a valid, legal and perfected first
priority security interest in all the Collateral.

(d) Location of Collateral. Promptly notify Secured Party in writing of any
change in the location of any office or facility at which Collateral owned by it
(including the establishment of any such new office or facility) with a book
value in excess of $ 500,000 is located.

(e) Maintenance of Records. Maintain, at its own cost and expense, such complete
and accurate records with respect to the Collateral owned by it as is consistent
with its current practices and in accordance with such prudent and standard
practices used in industries that are the same as or similar to those in which
the applicable Debtor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, mark its books and records to reflect the Security
Interest, and, at such time or times as Secured Party may reasonably request,
promptly provide Secured Party with a duly certified listing in form and detail
satisfactory to Secured Party showing the identity, amount and location of any
and all Collateral.

(f) Disposition of Collateral. Not make or permit to be made any sale, transfer
or other disposition of any of the Collateral or any right or interest therein
and shall remain at all times in possession of the Collateral, except to the
extent permitted by the Credit Agreement.

(g) No Liens. Not make or permit to be made an assignment, pledge or
hypothecation of any of the Collateral or create or permit to exist any Lien
upon or with respect to any of the Collateral, other than Permitted Liens.

(h) Insurance. Continuously maintain, or cause to be continuously maintained,
insurance consistent with the requirements set forth in of the Credit Agreement,
but in any event and notwithstanding the foregoing, on all tangible Collateral
against loss or damage by fire, theft and such other risks as are customarily
insured against by persons and businesses similarly situated to the applicable
Debtor, excepting property damage insurance on collateral located at customer
facilities, in such amounts, with such insurers and under policies in such form,
as shall be reasonably satisfactory to Secured Party. Secured Party shall be
named as a loss payee on all such policies, and all such policies shall provide
that they are not cancelable without thirty (30) days’ prior written notice to
Secured Party. At least thirty (30) days prior to the expiration of the term of
any insurance policy, the applicable Debtor shall furnish Secured Party with
written evidence of renewal or issuance of a satisfactory replacement policy.
The applicable Debtor shall, if requested by Secured Party, obtain and deliver
to Secured Party, from time to time, satisfactory original or duplicate policies
or certificates of insurance, including any endorsements, to evidence the
applicable Debtor’s satisfaction of the insurance requirements hereunder. In the
event of loss or damage with respect to any or all of the tangible Collateral
for which the insurance proceeds equal $2,500,000 or more, Secured Party shall
have the right to collect any and all insurance upon the tangible Collateral and
to apply the same at its option to any of the Secured Obligations, whether or
not matured, or to the restoration or repair of any or all of the tangible
Collateral. Each Debtor acknowledges receipt from Secured Party of this WARNING:

“UNLESS YOU PROVIDE US WITH EVIDENCE OF THE INSURANCE COVERAGE AS REQUIRED BY
OUR CREDIT AGREEMENT AND THIS AGREEMENT, WE MAY PURCHASE INSURANCE AT YOUR
EXPENSE TO PROTECT OUR INTEREST. THIS INSURANCE MAY, BUT NEED NOT, ALSO PROTECT
YOUR INTEREST. IF THE COLLATERAL BECOMES DAMAGED, THE COVERAGE WE PURCHASE MAY
NOT PAY ANY CLAIM YOU MAKE OR ANY CLAIM MADE AGAINST

 

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YOU. YOU MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT YOU HAVE
OBTAINED PROPER COVERAGE ELSEWHERE.

YOU ARE RESPONSIBLE FOR THE COST OF ANY INSURANCE PURCHASED BY US. THE COST OF
THIS INSURANCE MAY BE ADDED TO YOUR LOAN BALANCE. IF THE COST IS ADDED TO THE
LOAN BALANCE, THE INTEREST RATE ON THE UNDERLYING LOAN WILL APPLY TO THIS ADDED
AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE DATE YOUR PRIOR COVERAGE
LAPSED OR THE DATE YOU FAILED TO PROVIDE PROOF OF COVERAGE.

THE COVERAGE WE PURCHASE MAY BE CONSIDERABLY MORE EXPENSIVE THAN INSURANCE YOU
CAN OBTAIN ON YOUR OWN.”

(i) Taxes. Pay promptly when due all taxes and other governmental charges, all
Liens and all other charges now or hereafter imposed upon, relating to or
affecting any of the Collateral, except those which are being contested in good
faith by appropriate proceedings diligently conducted if (i) the aggregate
amount of all such taxes and other governmental charges does not exceed $100,000
at any one time outstanding, (ii) adequate reserves with respect thereto are
maintained on the books of the applicable Debtor in accordance with GAAP, and
(iii) in the case where a Lien or other charge has been imposed upon any of the
Collateral, such contest proceedings operate to stay the sale of any portion of
the Collateral to satisfy such taxes or other governmental charges;

(j) Leased Premises. Upon the request of Secured Party, obtain from each Person
from whom any Debtor leases any office or facility at which Collateral (other
than real property and improvements and fixtures thereto) with a book value in
excess of $500,000 is at any time present such subordination, waiver, consent
and estoppel agreements as Secured Party may require, in form and substance
reasonably satisfactory to Secured Party.

(k) Rights to Payment.

(i) Upon the request of Secured Party, promptly provide Secured Party with:
(A) master customer listings, including all names and addresses, together with
copies or originals (as requested by Secured Party) of documents, customer
statements, repayment histories and present status reports relating to the
Accounts; (B) accurate records and summaries of Accounts, including detailed
agings specifying the name, face value and date of each invoice, and listings of
Accounts that are disputed or have been cancelled; and (C) such other matters
and information relating to the Accounts as Secured Party shall from time to
time reasonably request;

(ii) Give only normal discounts, allowances and credits as to Accounts and other
Rights to Payment, in the ordinary course of business, according to normal trade
practices utilized by the applicable Debtor in the past, and enforce all
Accounts and other Rights to Payment strictly in accordance with their terms,
and take all such action to such end as may from time to time be reasonably
requested by Secured Party, except that any Debtor may grant any extension of
the time for payment;

(iii) If any discount, allowance, credit, extension of time for payment,
agreement to make a rebate or otherwise to reduce the amount owing on, or
compromise or settle, an Account or other Right to Payment exists or occurs, or
if, to the knowledge of any Debtor, any dispute, setoff, claim, counter-claim or
defense exists or has been asserted or threatened with respect to an Account or
other Right to Payment, disclose such fact fully to Secured Party in the books
and records relating to such Account or other Right to Payment and in connection
with any invoice or report furnished by the applicable Debtor to Secured Party
relating to such Account or other Right to Payment;

(iv) Upon request by Secured Party, if any Account in excess of $1,000,000 arise
from contracts with the United States or any department, agency or
instrumentality thereof, immediately notify Secured Party thereof and execute
any documents and instruments and take

 

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any other steps requested by Secured Party in order that all monies due and to
become due thereunder shall be assigned to Secured Party and notice thereof
given to the Federal authorities under the Federal Assignment of Claims Act of
1940 (Title 31 United States Code § 3727 and Title 41 United States Code § 15);

(v) Upon request by Secured Party, if at any time any Debtor shall take a
security interest in any property of an Account Debtor or any other Person to
secure payment and performance of an Account or other Right to Payment, such
Debtor shall promptly assign such security interest to Secured Party, which
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other Person granting the security interest;

(vi) In accordance with its sound business judgment perform and comply in all
material respects with its obligations in respect of the Accounts and other
Rights to Payment;

(vii) Upon the request of Secured Party, mark the Accounts and other Rights to
Payment and all of each Debtor’s books and records pertaining thereto with such
legends as Secured Party shall reasonably specify to reference to the fact that
Secured Party has a security interest therein;

(viii) Upon the request of Secured Party (A) at any time, notify all or any
designated portion of the Account Debtors of the Security Interest and (B) upon
the occurrence of an Event of Default, notify the Account Debtors or any
designated portion thereof that payment shall be made directly to Secured Party
or to such other Person or location as Secured Party shall specify; and

(ix) Upon the occurrence of any Event of Default, establish such lockbox or
similar arrangements for the payment of the Accounts and other Rights to Payment
as Secured Party shall require.

(l) Collateral Held by Bailee, Etc. If any Collateral is at any time in the
possession or control of a warehouseman, bailee or any agent or processor of a
Debtor, (i) notify Secured Party of such possession, (ii) notify such Person of
the Security Interest and (iii) obtain a written acknowledgment from such Person
that it is holding such Collateral subject to the Security Interest and the
instructions of Secured Party.

(m) Inventory. Upon the request of Secured Party: (i) promptly provide Secured
Party with a report of all Collateral consisting of Inventory, in form and
substance satisfactory to Secured Party (ii) take a physical listing of such
Inventory and promptly deliver a copy of such physical listing to Secured Party;
and (iii) if any Collateral consisting of Inventory is at any time evidenced by
a document of title, immediately deliver such document of title to Secured
Party.

(n) Equipment. Upon the request of Secured Party, deliver to Secured Party a
report of each item of Equipment constituting Collateral, in form and substance
satisfactory to Secured Party.

(o) Fixtures. Except for Collateral with respect to which the applicable Debtor
has supplied Secured Party with all information and documentation necessary to
make all fixture filings required to perfect and protect the priority of Secured
Party’s security interest in such Collateral, maintain all of the Collateral as
personal property and not affix any of the Collateral to any real property in a
manner which would change its nature from personal property to real property or
a Fixture.

(p) Notices, Reports and Information. (i) Promptly notify Secured Party of any
material claim made or asserted against the Collateral by any Person and of any
change in the composition of the Collateral or other event which could
materially adversely affect the value of the Collateral or the Security Interest
of Secured Party therein; (ii) promptly notify Secured Party of any and all
Commercial Tort Claims held or acquired by any Debtor or any of its
Subsidiaries; (iii) upon the request of Secured Party promptly provide to
Secured Party such statements, listings and schedules further identifying and
describing the Collateral and such other reports and other information in
connection with the Collateral as Secured Party

 

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may reasonably request, all in reasonable detail; and (iv) upon request of
Secured Party make such demands and requests for information and reports as the
Debtor is entitled to make in respect of the Collateral.

7. Other Actions. In order to further insure the attachment, perfection and
priority of, and the ability of Secured Party to enforce, Secured Party’s
security interest in the Collateral, each Debtor agrees, in each case at its own
expense, to take the following actions with respect to the following Collateral:

(a) Instruments. Upon the request of Secured Party, immediately deliver any
Instruments held by such Debtor appropriately endorsed or accompanied by such
instruments of transfer or assignment duly executed in blank as Secured Party
reasonably may from time to time specify.

(b) Deposit Accounts. Upon the request of Secured Party, for each Deposit
Account that such Debtor at any time opens or maintains, either: (i) cause the
depositary bank to agree to comply at any time with instructions from Secured
Party to such depositary bank directing the disposition of funds from time to
time credited to such Deposit Account, without further consent of such Debtor,
pursuant to an agreement in a form satisfactory to Secured Party, or
(ii) arrange for Secured Party to become the customer of the depositary bank
with respect to such Deposit Account, with such Debtor being permitted, only
with the consent of Secured Party, to exercise rights to withdraw funds from
such Deposit Account; provided, however, that the provisions of this subsection
(b) shall not apply to (A) Deposit Accounts for which Secured Party is the
depositary bank or (B) any Deposit Account which contain assets with an
aggregate value of less than $5,000.

(c) Investment Property. Except to the extent otherwise provided under the
Pledge Agreement, upon the request of Secured Party: (i) if such Debtor or its
nominee holds any certificated Capital Stock, immediately deliver such Capital
Stock to Secured Party, or an agent designated by it appropriately endorsed or
accompanied by such instruments of transfer or assignment duly executed in blank
as Secured Party may from time to time specify; (ii) if such Debtor or its
nominee holds any Capital Stock that are uncertificated and are issued to such
Debtor or its nominee directed by the issuer thereof, at the option of Secured
Party and pursuant to an agreement in form and substance satisfactory to it,
either (A) cause the issuer to agree to comply with instructions from Secured
Party as to such Capital Stock, without further consent of such Debtor or such
nominee, or (B) arrange for Secured Party to become the registered owner of the
Capital Stock; (iii) if such Debtor or its nominee holds any Capital Stock,
whether certificated or uncertificated, or other Investment Property through a
Securities Intermediary or Commodity Intermediary, at the option of Secured
Party and pursuant to an agreement in form and substance satisfactory to it,
either (A) cause such Securities Intermediary or (as the case may be) Commodity
Intermediary to agree to comply with entitlement orders or other instructions
from Secured Party to such Securities Intermediary as to such Capital Stock or
other Investment Property, or, as the case may be, to apply any value
distributed on account of any Commodity Contract as directed by Secured Party to
such Commodity Intermediary, in each case without further consent of such Debtor
or such nominee, or (B) in the case of Financial Assets or other Investment
Property held through a Securities Intermediary, arrange for Secured Party to
become the Entitlement Holder with respect to such Investment Property, with
such Debtor being permitted, only with the consent of Secured Party, to exercise
rights to withdraw or otherwise deal with such Investment Property; provided,
however, that the provisions of this subsection (c) shall not apply to any
Financial Assets credited to a Securities Account for which Secured Party is the
Securities Intermediary, and provided, further that this subsection (c) shall
apply only to 65% of the Capital Stock of any Subsidiary of such Debtor that is
not a Domestic Subsidiary.

(d) Electronic Chattel Paper and Transferable Records. Upon the request of
Secured Party, take such action as Secured Party may reasonably request to vest
in Secured Party (i) control of any Electronic Chattel Paper of such Debtor
under Section 9-105 the UCC; and (ii) control of any “transferable record” of
such Debtor under and as defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act, or, as the case may be,
Section 16 of the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction, as so in effect in the relevant jurisdiction.

 

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(e) Letter of Credit Rights. Upon the request of Secured Party, for any letter
of credit issued in favor of such Debtor, at the option of Secured Party and
pursuant to an agreement in form and substance satisfactory to it, either
(i) arrange for the issuer of such letter of credit to consent to an assignment
to Secured Party of the proceeds of any drawing under the letter of credit or
(ii) arrange for Secured Party to become the transferee beneficiary of the
letter of credit, with Secured Party agreeing, in each case, that the proceeds
of any drawing under the letter of credit are to be paid to such Debtor unless
an Event of Default has occurred and is continuing.

(f) Commercial Tort Claims. Upon the request of Secured Party, promptly provide
Secured Party with a summary description of each Commercial Tort Claim held by
such Debtor and, if requested by Secured Party, promptly execute and deliver
such statements, documents and notices and do and cause to be done all such
things as may be required by Secured Party, the UCC or any other applicable
requirement of Law, to grant to Secured Party a security interest in such
Commercial Tort Claim and in the Proceeds thereof.

(g) New Patents, Trademarks and Copyrights. The Debtor agrees to promptly
provide Secured Party with a list of any new applications for new Patents,
Trademarks or Copyrights and a list of new Patents, Trademarks or Copyrights
issued to such Debtor or acquired by such Debtor and to execute a notice of
grant of security interest in each thereof in form satisfactory to Secured
Party.

8. Further Assurances. Each Debtor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as Secured Party may from time to time
request to better assure, preserve, protect and perfect the Security Interest
and the rights and remedies of Secured Party hereunder, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement, the granting of the Security Interest and the filing of any
financing statements or other documents in connection herewith or therewith. If
any amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Document, Instrument or Chattel Paper, such Document,
Instrument or Chattel Paper shall be promptly delivered to Secured Party,
appropriately endorsed or accompanied by such instruments of transfer or
assignment duly executed in blank as Secured Party reasonably may from time to
time specify. Each Debtor further agrees that it will not take any action or
permit any action to be taken that would cause any membership interest in a
limited liability company or partnership interest pledged hereunder to become a
“security” as defined in Article 8 of the UCC, unless such membership interest
or partnership interest has been certificated and pledged to Secured Party
pursuant to the Pledge Agreement.

9. Inspection and Verification. Secured Party and such Persons as Secured Party
may reasonably designate shall have the right, at Debtors’ own cost and expense,
to inspect the Collateral, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of the Collateral is
located, to discuss the affairs of each Debtor with the officers of such Debtor
and, upon the occurrence of an Event of Default, with their independent
accountants and to verify under reasonable procedures the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the case of Accounts and other Rights to
Payment or Collateral in the possession of any third person, by contacting
Account Debtors or the third person possessing such Collateral for the purpose
of making such a verification. Secured Party shall have the absolute right to
share any information it gains from such inspection or verification with any
Secured Party (it being understood that any such information shall be deemed to
be “Information” subject to the provisions of Section 9.08 of the Credit
Agreement).

10. Collection of Rights to Payment. Until Secured Party exercises its rights
hereunder to collect Rights to Payment, each Debtor shall endeavor in the first
instance diligently to collect all amounts due or to become due on or with
respect to the Rights to Payment. At the request of Secured Party, upon the
occurrence and during the continuation of any Event of Default, all remittances
received by any Debtor shall be held in trust for Secured Party and, in
accordance with Secured Party’s instructions, remitted to Secured Party or
deposited to an account with Secured Party in the form received (appropriately
endorsed or accompanied by necessary instruments of transfer).

 

13

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11. Rights of Secured Party.

(a) Power of Attorney. Each Debtor hereby appoints Secured Party the
attorney-in-fact of such Debtor, effective upon the occurrence and during the
continuance of an Event of Default, for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument
that Secured Party may deem necessary or advisable to accomplish the purposes
hereof. Without limiting the generality of the foregoing, Secured Party shall
have the right, upon the occurrence and during the continuance of an Event of
Default, with full power of substitution either in Secured Party’s name or in
the name of any Debtor, to:

(i) take possession of and endorse any notes, acceptances, checks, drafts, money
orders or other forms of payment or security and collect any Proceeds of any
Collateral;

(ii) sign and endorse any invoice or bill of lading relating to any of the
Collateral, warehouse or storage receipts, drafts against customers or other
obligors, assignments, notices of assignment, verifications and notices to
customers or other obligors;

(iii) notify the United States Postal Service authorities to change the address
for delivery of mail addressed to any Debtor to such address as Secured Party
may designate and, without limiting the generality of the foregoing, establish
with any Person lockbox or similar arrangements for the payment of the Rights to
Payment;

(iv) receive, open and dispose of all mail addressed to any Debtor;

(v) send requests for verification of Rights to Payment to any Account Debtor;

(vi) notify, or to require any Debtor to notify, Account Debtors to make all
payments directly to Secured Party;

(vii) assert, adjust, sue for, compromise or release any claims under any
policies of insurance;

(viii) exercise dominion and control over, and refuse to permit further
withdrawals from any Deposit Account, Securities Account or Commodities Account
constituting part of the Collateral;

(ix) notify each Person maintaining lockbox or similar arrangements for the
payment of the Rights to Payment to remit all amounts representing collections
on the Rights to Payment directly to Secured Party;

(x) ask for, demand, collect, receive and give acquittances and receipts for any
and all Rights to Payment, enforce payment or any other rights in respect of the
Rights to Payment and other Collateral, grant consents, agree to any amendments,
modifications or waivers of the agreements and documents governing the Rights to
Payment and other Collateral, and otherwise file any claims, take any action or
institute, defend, settle or adjust any actions, suits or proceedings with
respect to the Collateral, as Secured Party may deem necessary or desirable to
maintain, preserve and protect the Collateral, to collect the Collateral or to
enforce the rights of Secured Party with respect to the Collateral;

(xi) execute any and all endorsements, assignments or other documents and
instruments necessary to sell, lease, assign, convey or otherwise transfer title
in or dispose of the Collateral; and

(xii) execute any and all such other documents and instruments, and do any and
all acts and things for and on behalf of any Debtor, which Secured Party may
deem necessary or advisable to maintain, protect, realize upon and preserve the
Collateral and Secured Party’s security interest therein and to accomplish the
purposes of this Agreement.

 

14

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The foregoing power of attorney is coupled with an interest and irrevocable so
long as Secured Party shall have any Commitment under the Credit Agreement, any
Specified Swap Contract shall be in effect or any of the Secured Obligations
shall remain unpaid or unsatisfied. Each Debtor hereby ratifies, to the fullest
extent permitted by applicable Laws, all that Secured Party shall lawfully and
in good faith do or cause to be done by virtue of and in compliance with this
subsection (a).

(b) Performance of Debtor Obligations. Secured Party may perform or pay any
obligation which any Debtor has agreed to perform or pay under or in connection
with this Agreement, and Debtors shall reimburse Secured Party on demand for any
amounts paid by Secured Party pursuant to this subsection (b).

(c) Secured Party’s Duties. Notwithstanding any provision contained in this
Agreement, Secured Party shall have no duty to exercise any of the rights,
privileges or powers afforded to it and shall not be responsible to any Debtor
or any other Person for any failure to do so or delay in doing so.

12. Events of Default. The occurrence of an event which under the Credit
Agreement would constitute an Event of Default shall be an event of default
hereunder (an “Event of Default”).

13. Remedies.

(a) General Remedies. Upon the occurrence and during the continuation of any
Event of Default, Secured Party shall have, in addition to all other rights and
remedies granted to it in this Agreement, the Credit Agreement or any other Loan
Document, all rights and remedies of a secured party under the UCC and other
applicable Laws. Without limiting the generality of the foregoing, each Debtor
agrees that Secured Party may:

(i) require such Debtor to assemble all or any part of the Collateral and make
it available to Secured Party at any place and time designated by Secured Party;

(ii) peaceably and without notice enter any premises of such Debtor, take
possession of any of the Collateral, remove or dispose of all or part of the
Collateral on any premises or elsewhere, and otherwise collect, receive,
appropriate and realize upon all or any part of the Collateral, and demand, give
receipt for, settle, renew, extend, exchange, compromise, adjust, or sue for all
or any part of the Collateral, as Secured Party may determine;

(iii) secure the appointment of a receiver of the Collateral or any part thereof
to the extent and in the manner provided by applicable Laws;

(iv) exercise dominion and control over, and refuse to permit further
withdrawals (whether of money, securities, commodities, instruments, investment
property or other property) from any Deposit Account, Securities Account or
Commodities Account constituting part of the Collateral; and

(v) sell, resell, lease, use, assign, transfer or otherwise dispose of any or
all of the Collateral in its then condition or following any commercially
reasonable preparation or processing (utilizing in connection therewith any of
such Debtor’s assets, without charge or liability to Secured Party therefor) at
public or private sale or at any broker’s board or on any securities exchange,
by one or more contracts, in one or more parcels, at the same or different
times, for cash or credit, or for future delivery without assumption of any
credit risk, all as Secured Party deems advisable; provided, however, that such
Debtor shall be credited with the net proceeds of sale only when such proceeds
are finally collected by Secured Party.

(b) Sale of Collateral. Each purchaser at any sale pursuant to this Agreement
shall hold the property sold absolutely, free from any claim or right on the
part of any Debtor, and each Debtor hereby waives, to the fullest extent
permitted by applicable Laws, all rights of redemption, stay and appraisal which
such Debtor now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted. Neither Secured Party’s compliance
with the UCC or any other applicable

 

15

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requirement of Law, in the conduct of any sale made pursuant to this Agreement,
nor its disclaimer of any warranties relating to the Collateral, shall be
considered to adversely affect the commercial reasonableness of such sale.
Secured Party shall give Debtors 10 days’ written notice (which each Debtor
agrees is reasonable notice within the meaning of Section 9-612 of the UCC) of
Secured Party’s intention to make any sale of Collateral. Secured Party shall
not be obligated to make any sale of any Collateral if it shall determine not to
do so, regardless of the fact that notice of sale of such Collateral shall have
been given. Secured Party may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. To the fullest extent permitted by applicable Laws, Secured Party or
any other Secured Party may bid for or purchase the Collateral or any part
thereof offered for sale and may make payment on account thereof by using any
claim then due and payable to Secured Party or such Secured Party from any
Debtor as a credit against the purchase price and Secured Party or such Secured
Party may, upon compliance with the terms of sale, hold, retain and dispose of
such property without further accountability to any Debtor therefor. For
purposes hereof, a written agreement to purchase the Collateral or any portion
thereof shall be treated as a sale thereof; Secured Party shall be free to carry
out such sale pursuant to such agreement and no Debtor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after Secured Party shall have entered into such an agreement all
Events of Default shall have been remedied and the Secured Obligations paid in
full. To the fullest extent permitted by applicable Laws, any sale pursuant to
the provisions of this subsection (b) shall be deemed to conform to the
commercially reasonable standards as provided in the UCC.

(c) License. For the purpose of enabling Secured Party to exercise its rights
and remedies under this Section or otherwise in connection with this Agreement,
each Debtor hereby grants to Secured Party an irrevocable, non exclusive license
(exercisable without payment of royalty or other compensation to any Debtor) to
use, license or sub-license any of the Collateral now owned or hereafter
acquired by any Debtor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by Secured Party shall
be exercised, at the option of Secured Party, solely upon the occurrence and
during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by Secured Party in accordance
herewith shall be binding upon such Debtor notwithstanding any subsequent cure
of such Event of Default.

(d) Proceeds Account. To the extent that any of the Secured Obligations may be
contingent, unmatured or unliquidated (including with respect to undrawn amounts
under any Letter of Credit or contingent amounts due under any Specified Swap
Contract) upon the occurrence and during the continuance of an Event of Default,
Secured Party may, at its option, (i) retain the proceeds of any sale,
collection, disposition or other realization upon the Collateral (or any portion
thereof) in a special purpose non interest-bearing restricted deposit account
(the “Proceeds Account”) created and maintained by Secured Party for such
purpose (which shall constitute a Deposit Account included within the Collateral
hereunder) until such time as Secured Party may elect to apply such proceeds to
the Secured Obligations, and each Debtor agrees that such retention of such
proceeds by Secured Party shall not be deemed strict foreclosure with respect
thereto; (ii) in any manner elected by Secured Party, estimate the liquidated
amount of any such contingent, unmatured or unliquidated claims and apply the
proceeds of the Collateral against such amount; or (iii) otherwise proceed in
any manner permitted by applicable Laws. Each Debtor agrees that the Proceeds
Account shall be a blocked account and that upon the irrevocable deposit of
funds into the Proceeds Account, no Debtor shall have any right of withdrawal
with respect to such funds. Accordingly, each Debtor irrevocably waives until
the termination of this Agreement and the Security Interest in accordance with
Section 28 the right to make any withdrawal from the Proceeds Account and the
right to instruct Secured Party to honor drafts against the Proceeds Account.

(e) Retention of Collateral. Secured Party may, after providing the notices
required by Section 9-620(a) of the UCC or otherwise complying with any
requirement of applicable Laws, accept or retain the Collateral or any part
thereof in full or partial satisfaction of the Secured Obligations. Unless

 

16

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and until Secured Party shall have provided such notices, however, Secured Party
shall not be deemed to have retained any Collateral in satisfaction of any
Secured Obligations for any reason.

(f) Duty of Care. Except for the exercise of reasonable care in the custody of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, Secured Party shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property. Neither Secured Party nor any
of its Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact shall be liable for failure to demand, collect or realize upon
all or any part of the Collateral or for any delay in doing so or shall be under
any obligation to sell or otherwise dispose of any Collateral upon the request
of the Debtor or otherwise.

(g) Application of Proceeds. Subject to subsection (d) above, the cash proceeds
actually received from the sale or other disposition or collection of the
Collateral, and any other amounts received in respect of the Collateral the
application of which is not otherwise provided for herein, shall be applied as
provided in the Credit Agreement.

Secured Party shall have absolute discretion as to the time of application of
any such proceeds, moneys or balances in accordance with this Agreement. Debtors
shall remain liable to Secured Party for any deficiency which exists after any
sale or other disposition or collection of the Collateral.

14. Certain Waivers. Each Debtor waives, to the fullest extent permitted by
applicable Laws, (a) all rights, if any, of marshalling of the Collateral or
other collateral or security for the Secured Obligations; (b) any right to
require Secured Party (i) to proceed against any Person, (ii) to exhaust any
other collateral or security for any of the Secured Obligations, (iii) to pursue
any remedy in Secured Party’s power, or (iv) to make or give any presentments,
demands for performance, notices of nonperformance, protests, notices of
protests or notices of dishonor in connection with any of the Collateral; and
(c) all claims, damages, and demands against Secured Party arising out of the
repossession, retention, sale or application of the proceeds of any sale of the
Collateral.

15. No Waiver; Cumulative Remedies. No failure by Secured Party to exercise, and
no delay 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.
No waiver of any single breach or default under this Agreement shall be deemed a
waiver of any other breach or default. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges that may otherwise be available to Secured
Party. Any single or partial exercise of any right or remedy shall not preclude
the further exercise thereof or the exercise of any other right or remedy.

16. Costs and Expenses; Indemnification; Other Charges.

(a) Costs and Expenses. Debtors agree to pay upon demand to Secured Party the
amount of any and all fees, costs or out-of-pocket expenses (including Attorney
Costs) incurred by Secured Party in connection with (i) the administration of
this Agreement (including the customary fees and charges of Secured Party or any
of its Affiliates for any audits conducted by it or on its behalf with respect
to the Collateral), (ii) the custody or preservation of, or the sale of,
collection from or other realization upon any of the Collateral (including all
expenses of taking, collecting, holding, sorting, handling, preparing for sale,
selling, or the like, and other such expenses of sales and collections of
Collateral), (iii) the exercise, enforcement or protection of any of the rights
of Secured Party under this Agreement (including all such costs and expenses
incurred during any “workout” or restructuring in respect of the Secured
Obligations and during any legal proceeding, including any proceeding under any
Debtor Relief Law) or (iv) the failure of any Debtor to perform or observe any
its obligations under this Agreement.

 

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(b) Indemnification. Debtors shall indemnify and hold harmless Secured Party and
its Affiliates, 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 this Agreement or the transactions contemplated hereby
or any action taken or omitted to be taken by it hereunder (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. The agreements in
this subsection (b) shall survive the termination of the Commitment of Lender
and the repayment, satisfaction or discharge of all the Secured Obligations.

(c) Additional Secured Obligations. All amounts due under this Section shall be
payable within 10 days of written demand therefor. If any amount payable by any
Debtor under this Agreement is not paid when due, such amount shall
(i) 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 and (ii) be additional Secured Obligations secured hereby and by the other
Collateral Documents.

17. Successor and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns in accord with the provisions of the Credit
Agreement.

18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF OREGON, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR PERFECTION OF THE SECURITY
INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN RESPECT OF ANY COLLATERAL ARE
GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN OREGON; PROVIDED THAT SECURED
PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

19. Amendments, Etc. No amendment or waiver of any provision of this Agreement,
and no consent to any departure by any Debtor therefrom, shall be effective
unless in writing signed by Secured Party and each Debtor, and each such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan or issuance of a Letter of Credit under the Credit Agreement
shall not be construed as a waiver of any Default under the Credit Agreement.

20. Additional Debtors. Pursuant to Section 6.13(a) of the Credit Agreement,
each Person that becomes a Domestic Subsidiary of Borrower is required to enter
into this Agreement as a Debtor. Upon the execution and delivery by such
Subsidiary of an instrument in the form of Annex 1 hereto and acceptance thereof
by Secured Party, such Subsidiary shall become a Debtor hereunder with the same
force and effect as if originally named as a Debtor herein. The execution and
delivery of any such instrument shall not require the consent of any other
Debtor hereunder. The rights and obligations each Debtor hereunder shall remain
in full force and effect notwithstanding the addition of any new Debtor as a
party to this Agreement.

21. Joint and Several Liability. All obligations of Debtors hereunder are the
joint and several obligation of each Debtor and each Debtor expressly disclaims
any intent to execute this Agreement merely as an accommodation party or as a
guarantor of any the other Debtor’s obligations hereunder. Notwithstanding
anything in this Agreement to the contrary, the obligations of each Debtor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the Bankruptcy Code (Title 11, United States Code) or any
comparable provisions of any applicable state law.

 

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22. Notices. 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 applicable address, facsimile number, and all notices and
other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number (a) in the case of Secured
Party and Borrower, specified for such Person in Section 9.02 of the Credit
Agreement and (b) in the case of any Guarantor, specified in Section 20 of the
Guaranty (or, in the case of any Guarantor becoming a party thereto pursuant to
Section 19 thereof, the address set forth in the Supplement thereto executed and
delivered by such Guarantor). 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, upon
delivery; (B) if delivered by mail, four Business Days after deposit in the
mails, postage prepaid; and (C) if delivered by facsimile, when sent and the
sender has received electronic confirmation of error free receipt. Subject to
applicable laws, any notice given to any Debtor shall be deemed to be notice
given to each Debtor. In no event shall a voicemail message be effective as a
notice, communication or confirmation hereunder.

23. 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.

24. Integration. This Agreement, together with the other Loan Documents,
comprises the complete, final 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.

25. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions thereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

26. No Inconsistent Requirements. Each Debtor acknowledges that this Agreement
and the other Loan Documents may contain covenants and other terms and
provisions variously stated regarding the same or similar matters, and agrees
that all such covenants, terms and provisions are cumulative and all shall be
performed and satisfied in accordance with their respective terms.

27. Amendment and Restatement. This Agreement shall become effective on the
Closing Date (as defined in the Credit Agreement) and shall supersede all
provisions of each of the Existing Security Agreements as of such date. From and
after the Closing Date all references made to any of the Existing Security
Agreements in any Loan Document or in any other instrument or document shall,
without more, be deemed to refer to this Agreement.

28. Termination. This Agreement and the Security Interest shall terminate when
all of the Secured Obligations shall have been finally and indefeasibly paid in
full (other than contingent indemnification obligations), the Commitment of the
Secured Party has been terminated, all Letters of Credit issued or deemed issued
pursuant to the Credit Agreement have expired or been terminated and all
Specified Swap Contracts have been terminated; provided, however, that the
obligations of Debtors under Section 16 shall survive such termination.

[Remainder of page intentionally left blank]

 

19

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IN WITNESS WHEREOF, Borrower and each Guarantor have executed this Agreement by
its duly authorized officer as of the day and year first above written.

 

PLANAR SYSTEMS, INC., an Oregon corporation By:  

 

Name:  

 

Title:  

 

PLANAR CHINA, LLC, an Oregon limited liability company By:  

 

Name:  

 

Title:  

 

CLARITY, A DIVISION OF PLANAR SYSTEMS, INC., an Oregon corporation By:  

 

Name:  

 

Title:  

 

RUNCO INTERNATIONAL, LLC, an Oregon limited liability company, formerly known as
Runco International Inc. By:  

 

Name:  

 

Title:  

 

PLANAR TAIWAN, LLC, an Oregon limited liability company By:  

 

Name:  

 

Title:  

 

 

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Acknowledged and Agreed:

 

BANK OF AMERICA, N.A., a national banking association By:  

 

Name:  

 

Title:  

 

 

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SCHEDULE 1

LOCATION OF CHIEF EXECUTIVE OFFICE,

LEGAL NAME AND TRADE NAMES

 

Part (a). Location of chief executive office.

Planar Systems, Inc.

1195 NW Compton Drive Beaverton, OR 97006-1992

Planar China LLC

1195 NW Compton Drive, Beaverton, OR 97006-1992

Clarity, A Division Of Planar Systems, Inc.

1195 NW Compton Drive, Beaverton, OR 97006-1992

Runco International, LLC

1195 NW Compton Drive, Beaverton, OR 97006-1992

Planar Taiwan LLC

1195 NW Compton Drive, Beaverton, OR 97006-1992

 

Part (b). Legal name, state of formation and organization number.

Planar Systems, Inc.

Planar Systems, Inc; Oregon; 136932-88

Planar China LLC

Planar China LLC.; Oregon; 183769-96

Clarity, A Division Of Planar Systems, Inc.

Clarity, a Division of Planar Systems, Inc.; Oregon; 369613-99

Runco International, LLC

Runco International, LLC; Oregon; 433460-97

Planar Taiwan LLC

Planar Taiwan LLC.; Oregon; 183768-97

 

Part (c). Trade names.

Planar Systems, Inc.

Planar Systems, Inc. sometimes uses the name DOME for some digital imaging
product lines it sells.

Planar China LLC

None.

Clarity, A Division Of Planar Systems, Inc.

None.

Runco International, LLC

 

1

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Runco; Vidikron

Planar Taiwan LLC

None.

 

2

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SCHEDULE 2

LOCATION OF COLLATERAL

Planar Facilities:

 

1195 NW Compton Drive

Beaverton, OR 97006-1992

  

Via G. Pacchioni, 21

00163 Roma

Italia

1050 NW Compton Drive

Beaverton, OR 97006-1992

  

Olarinluoma 9

02200 Espoo

Finland

7210 NW Evergreen Parkway

Hillsboro, OR 97124

  

460 Xin Yi Road, Section 4, 13th Floor

Taipei 110

Taiwan

Synelec, Zone Industrielle

St Sernin sur Rance

France

  

Eton Plaza, 20/F, East Tower

555 Pudong Ave.

Shanghai, 200120 PRC

ZI St Antonine

4 rue Jean Le Rond d’Alembert

81000 Albi

France

  

Inventory in Other Locations:

 

CEI

2 Ang Mo Kio Avenue 12

Singapore 569707

  

Mondial Logistics

Vredeweg 46

1505 HH Zaandam

The Netherlands

Flextronics Tech Malaysia SDN

NO 8688 Lot 19 and 20

Kawasan MIEL

Batu Beredan FTZ Phase 3

Melaka MY 75350

  

LG Electronics

642 Jingpyoung-dong

Gumi-City, Gyung Buk, 730-727

South Korea

Expeditors International

2508 North Marine Drive

Portland, OR 97217

  

S&H Engineering, Inc.

248 Mill Road

Chelmsford, MA 01824

Expeditors International

906 Commerce Circle

Hanahan, SC 29406

USA

  

All of the inventory listed above is insured.

 

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ANNEX 1

SUPPLEMENT

SUPPLEMENT NO.          dated as of                     , to the Amended and
Restated Security Agreement dated as of dated as of December 1, 2009 (the
“Security Agreement”) made among Planar Systems, Inc., an Oregon corporation
(the “Borrower”), Planar China, LLC, an Oregon limited liability company
(“Planar China”), Clarity, A Division Of Planar Systems, Inc., an Oregon
corporation (“Clarity”), Runco International, LLC, an Oregon limited liability
company, formerly known as Runco International Inc. (“Runco”), Planar Taiwan,
LLC, an Oregon limited liability company (“Planar Taiwan and together with
Borrower, Planar China, Clarity, Runco and any additional debtors becoming a
party hereto as provided in Section 20 thereof and their respective successors,
collectively, the “Debtors” and individually, a “Debtor”), in favor of Bank of
America, N.A., a national banking association (the “Secured Party”).

RECITALS

A. Borrower is a party to that certain Amended and Restated Credit Agreement
dated as of December 1, 2009 by and between Borrower and Secured Party (as
amended, restated, modified, renewed, supplemented or extended from time to
time, the “Credit Agreement”).

B. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Security Agreement.

C. Debtors have entered into the Security Agreement in order to induce Secured
Party to make Credit Extensions under the Credit Agreement, and pursuant to
Section 6.13(a) of the Credit Agreement, each Person that becomes a Domestic
Subsidiary of Borrower is required to enter into the Security Agreement as a
Debtor.

E. The undersigned Subsidiary (“New Debtor”) is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Debtor
under the Security Agreement in consideration for Secured Party to make Credit
Extensions under the Credit Agreement.

Accordingly, the New Debtor agrees as follows:

1. In accordance with Section 20 of the Security Agreement, the New Debtor by
its signature below becomes a Debtor under the Security Agreement with the same
force and effect as if originally named therein as a Debtor and the New Debtor
hereby (a) agrees to all the terms and provisions of the Security Agreement
applicable to it as a Debtor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Debtor thereunder are true and
correct on and as of the date hereof. In furtherance of the foregoing, the New
Debtor, as security for the payment and performance in full of the Secured
Obligations (as defined in the Security Agreement), does hereby create and grant
to Secured Party, its successors and assigns, a security interest in and lien on
all of New Debtor’s right, title and interest in and to the Collateral (as
defined in the Security Agreement) of New Debtor. Each reference to a “Debtor”
in the Security Agreement shall be deemed to include the New Debtor. The
Security Agreement is hereby incorporated herein by reference.

2. New Debtor represents and warrants to Secured Party that this Supplement has
been duly authorized, executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.

3. This Supplement 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. This Supplement shall become effective when Secured Party
shall have received counterparts of this Supplement that, when taken together,
bear the signatures of New Debtor and Secured Party. Delivery of an executed
signature page to this Supplement sent by telecopier shall, subject to
applicable Law, be as effective as delivery of a manually-signed original
thereof.

 

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4. New Debtor represents and warrants to Secured Party that: (a) New Debtor’s
chief executive office and chief place of business are (and for the prior four
months has been) located at the locations set forth in Part (a) of Schedule 1
hereto; (b) New Debtor’s exact corporate or organizational name, the
jurisdiction of its incorporation or organization (and for the prior four months
has been its location) and the identification number given by its jurisdiction
of incorporation or organization is set forth in Part (b) of Schedule 1 hereto;
and (c) New Debtor has not been party to a merger, consolidation or other change
in structure or used any trade name not disclosed in Part (c) of Schedule 1
hereto.

5. New Debtor represents and warrants to Secured Party that the location of all
tangible Collateral owned by New Debtor is currently as shown in Schedule 2
hereto.

6. New Debtor represents and warrants to Secured Party that the names and
addresses of all financial institutions at which New Debtor maintains its
Deposit Accounts, and the account numbers and account names of such Deposit
Accounts, are set forth in Schedule 3 hereto.

7. New Debtor represents and warrants to Secured Party that Schedule 4 hereto
includes all registered Patents and Trademarks, and all applications for Patents
and Trademarks, owned by or licensed by or to New Debtor as of the date hereof.

8. Except as expressly supplemented hereby, the Security Agreement shall remain
in full force and effect.

9. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF OREGON APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE.

10. The unenforceability or invalidity of any provision of this Supplement shall
not affect the enforceability or validity of any other provision herein.

11. All communications and notices hereunder shall be in writing and given as
provided in Section 22 of the Security Agreement. All communications and notices
hereunder to the New Debtor shall be given to it at the address set forth under
its signature below.

12. New Debtor agrees to reimburse Secured Party for its out-of-pocket expenses
(including Attorney Costs of Secured Party) incurred in connection with this
Supplement.

IN WITNESS WHEREOF, the New Debtor has executed this Supplement by its duly
authorized officer as of the day and year first above written.

 

[NEW DEBTOR] By:  

 

Name:  

 

Title:  

 

Accepted:

 

BANK OF AMERICA, N.A., a national banking association By:  

 

Name:  

 

Title:  

 

 

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SCHEDULE 1

LOCATION OF CHIEF EXECUTIVE OFFICE,

LEGAL NAME AND TRADE NAMES

 

Part (a).    Location of chief executive office.   

 

   Part (b).    Legal name, state of formation and organization number.   

 

   Part (c).    Trade names.      

 

  

 

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SCHEDULE 2

LOCATION OF COLLATERAL

 

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SCHEDULE 3

DEPOSIT ACCOUNTS

 

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SCHEDULE 4

PATENTS, TRADEMARKS AND LICENSES

PATENTS –

 

  

 

     

TRADEMARKS –

 

  

 

     

LICENSES –

 

  

 

     

 

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EXHIBIT E

FORM OF AMENDED AND RESTATED PLEDGE AGREEMENT

This AMENDED AND RESTATED PLEDGE AGREEMENT (“Agreement”), entered into as of
December 1, 2009, by PLANAR SYSTEMS, INC., an Oregon corporation (the
“Pledgor”), in favor of BANK OF AMERICA, N.A., a national banking association
(the “Pledgee”).

RECITALS

A. Pledgor, Pledgee and Bank of America, N.A., a national banking association,
as administrative agent for Pledgee (in such capacity, the “Agent”), are parties
to that certain Credit Agreement dated as of December 16, 2003 (as amended,
restated, supplemented or otherwise modified, together with all exhibits and
schedules attached thereto from time to time, the “Existing Credit Agreement”),
pursuant to which Pledgee has made, or committed to make, revolving loans to
Pledgor and Agent has issued, or committed to issue, letters of credit for the
account of Pledgor.

B. In connection with the Existing Credit Agreement, Pledgor entered into that
certain Pledge Agreement dated as of December 16, 2003 (as amended, restated,
supplemented or otherwise modified, the “Existing Pledge Agreement”), pursuant
to which Pledgor granted to Agent for the benefit of Pledgee and Agent a
security interest in the property described therein to secure, among other
things, the indebtedness, liabilities and obligations of Pledgor owing to
Pledgee and Agent arising under the Existing Credit Agreement.

C. Agent and Pledgee are parties to that certain Assignment Agreement dated as
of December 1, 2009 (the “Assignment Agreement”) pursuant to which, among other
things, Agent assigned to Pledgee all of its right, title and interest under the
Existing Pledge Agreement.

D. Pledgor and Pledgee are parties to that certain Amended and Restated Credit
Agreement dated as of December 1, 2009 (the “Credit Agreement”), which Credit
Agreement amended, restated and replaced the Existing Credit Agreement in its
entirety and pursuant to which, among other things, Pledgee agreed to continue
loans made to Pledgor under the Existing Credit Agreement and to make additional
loans to Pledgor.

E. It is a condition precedent to Pledgee’s obligation to make its initial
Credit Extension under the Credit Agreement that each Debtor enter into this
Agreement.

NOW, THEREFORE, in consideration of the foregoing and in order to induce Pledgee
to make Credit Extensions under the Credit Agreement, the parties hereto hereby
agree to amend and restate the Existing Pledge Agreement as follows:

AGREEMENT

1. Continuance of Security Interests. This Agreement is intended to amend and
restate the Existing Pledge Agreement in its entirety and to continue the
security interests granted thereunder and continued hereby.

2. Definitions; Interpretation.

(a) Terms Defined in Credit Agreement. All capitalized terms used in this
Agreement and not otherwise defined herein have the meanings specified in the
Credit Agreement.

(b) Certain Defined Terms. As used in this Agreement, the following terms have
the following meanings:

“Book-Entry Shares” means any Pledged Shares evidenced or represented by a
book-entry on the books of a Clearing Corporation.

 

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“Capital Stock” means (i) in the case of a corporation, capital stock, (ii) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of capital
stock, (iii) in the case of a partnership, partnership interests (whether
general or limited), (iv) in the case of a limited liability company, membership
interests and (v) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

“Clearing Corporation” means a “clearing corporation”, as defined in
Section 78.1020(e) of the Oregon Revised Statutes, at which Pledgee and Pledgor
each maintains a securities account.

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

“Credit Agreement” has the meaning set forth in the preamble hereto.

“Domestic Subsidiary” means any Subsidiary that is organized and existing under
the laws of the United States or any state or commonwealth thereof or under the
laws of the District of Columbia.

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

“Indemnified Liabilities” has the meaning specified in Section 15(b).

“Indemnified Person” has the meaning specified in Section 15(b).

“Pledged Collateral” has the meaning specified in Section 3.

“Pledged Capital Stock” means all of the Capital Stock referred to in
Sections 3(a) and (b).

“Pledged Domestic Subsidiary” has the meaning specified in Section 3(a).

“Pledged Foreign Subsidiary” has the meaning specified in Section 3(a).

“Pledged Subsidiary” means any Pledged Domestic Subsidiary or any Pledged
Foreign Subsidiary.

“Secured Obligations” means, collectively (a) all advances to, and debts,
liabilities, obligations, covenants and duties of, Pledgor owing to Pledgee
arising under the Credit Agreement, the Collateral Documents and each other Loan
Document to which Pledgor is a party or otherwise with respect to any Loan or
Letter of Credit; (b) all debts, liabilities, obligations, covenants and duties
of, Pledgor or any of its Subsidiaries owing to Pledgee or any Affiliate of
Pledgee and arising under any Specified Swap Contracts, including liabilities
and obligations arising in connection with or as a result of early termination
of any such Specified Swap Contract; (c) all debts, liabilities, obligations,
covenants and duties of, Pledgor or any of its Subsidiaries owing to Pledgee or
any Affiliate of Pledgee and arising out of Pledgee or Affiliate of Pledgee
providing treasury management services to, for the benefit of or otherwise in
respect of Pledgor or any of its Subsidiaries, including, without limitation,
intraday credit, Automated Clearing House (ACH) services, foreign exchange
services, overdrafts and zero balance arrangements, and any instruments,
agreements or other documents executed in connection therewith; and (d) all
debts, liabilities, obligations, covenants and duties of Pledgor arising under
this Agreement, 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.

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

“Securities Act” has the meaning specified in Section 12(d).

 

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“Specified Swap Contract” shall mean any Swap Contract that (i) is made or
entered into at any time, or in effect at any time, whether directly or
indirectly, and whether as a result of assignment or transfer or otherwise,
between Lender or any Affiliate of Lender and Pledgor or any Subsidiary of
Borrower and (ii) is permitted by Section 7.03(d) of the Credit Agreement.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of Oregon; provided, however, in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
Oregon, the term “UCC” shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.

(c) Terms Defined in UCC. Terms used in this Agreement that are defined in the
UCC and not otherwise defined herein have the meanings given to them in the UCC.

(d) Interpretation. The rules of construction and interpretation specified in
Sections 1.02 and 1.05 of the Credit Agreement also apply to this Agreement and
are incorporated herein by this reference.

3. Pledge. As security for the payment or performance, as the case may be, in
full of the Secured Obligations, Pledgor hereby pledges, assigns, transfers,
hypothecates and sets over to Pledgee, its successors and assigns, and grants to
Pledgee, its successors and assigns, a security interest in all of Pledgor’s
right, title and interest in, to and under the following, whether now existing
or owned or hereafter acquired or arising (collectively, the “Pledged
Collateral”):

(a) Pledged Capital Stock. (i) All of the Capital Stock of each Domestic
Subsidiary set forth in Part (a) of Schedule 1 hereto (each, a “Pledged Domestic
Subsidiary”) owned by Pledgor, including any such Capital Stock that are
Book-Entry Shares, and (ii) all of the Capital Stock of each Foreign Subsidiary
set forth in Part (b) of Schedule 1 hereto (each, a “Pledged Foreign
Subsidiary”) owned by Pledgor, including any such Capital Stock that are
Book-Entry Shares; provided that such Capital Stock shall not include more than
65% of all of the voting Capital Stock (within the meaning of Treas. Reg.
Section 1.956 2(c)(2)) of any Foreign Subsidiary;

(b) Additional Capital Stock. (i) All of the Capital Stock of any Pledged
Domestic Subsidiary and, subject to the percentage restrictions described in
subsection (a) above, all of the Capital Stock of any Pledged Foreign Subsidiary
hereafter acquired, received or owned by Pledgor (whether in connection with any
recapitalization, reclassification or reorganization of the capital of a Pledged
Subsidiary or otherwise); and (ii) subject to the percentage restrictions
described in subsection (a) above, all of the Capital Stock hereafter acquired,
received or owned by Pledgor of any Person who, after the date hereof, becomes,
as a result of any occurrence, a Pledged Subsidiary, including any such Capital
Stock that are Book-Entry Shares;

(c) Limited Liability Company Interests. (i) All right, title and interest of
Pledgor as a member of, and as an individually named party entitled to
specifically enumerated rights in each Pledged Domestic Subsidiary that is a
limited liability company (whether now existing or owned or hereafter acquired,
received or owned by Pledgor, each, a “Pledged Domestic LLC”), including all
right, title and interest of Pledgor in, to and under the Pledged Domestic LLC’s
Organization Documents, including the Organization Documents set forth in Part
(c) of Schedule 1 hereto, regardless of whether such right, title and interest
arises under such Organization Documents, and regardless of whether any such
rights arise from Pledgor’s status as a member, individually named right holder,
or otherwise, including: (i) all rights of Pledgor to receive distributions of
any kind, in cash or otherwise, due or to become due under or pursuant to such
Pledged Domestic LLC’s Organization Documents or otherwise in respect of such
Pledged Domestic LLC; (ii) all rights of Pledgor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to such Pledged Domestic
LLC; (iii) all claims of Pledgor for damages arising out of, or for the breach
of, or for a default under, such Pledged Domestic LLC’s Organization Documents;
and (iv) any “certificate of interest” or “certificates of interest” or other
certificates or instruments however

 

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designated or titled issued by such Pledged Domestic LLC and evidencing
Pledgor’s interest as a member in such Pledged Domestic LLC and any interest of
Pledgor in the entries on the books of any securities intermediary pertaining to
Pledgor’s interest as a member in such Pledged Domestic LLC and any
uncertificated securities issued by such Pledged Domestic LLC and any security
entitlement with respect to any of the foregoing;

(d) Additional Interests, Etc. (i) All certificates, instruments or other
writings representing or evidencing the Pledged Capital Stock (other than any
Book-Entry Shares or any other Pledged Capital Stock that constitute part of a
fungible bulk of securities in the possession of a Clearing Corporation);
(ii) all warrants, options and other rights entitling Pledgor to acquire any
interest in any Pledged Capital Stock, subject to the percentage restrictions
described in subsection (a) above; and (iii) all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed or distributable in respect of or in exchange for any or all of the
Pledged Capital Stock; and

(e) Proceeds. All cash and non-cash Proceeds of the foregoing, however and
whenever acquired and in whatever form.

4. Delivery or Transfer of Pledged Collateral.

(a) Delivery of Certificates. Pledgor shall deliver to Pledgee
(i) simultaneously with or prior to the execution and delivery of this
Agreement, all certificates, instruments or other writings representing or
evidencing Pledged Capital Stock (other than certificated securities that
constitute part of a fungible bulk of securities in the possession of a Clearing
Corporation) and (ii) promptly upon the receipt thereof by or on behalf of
Pledgor, all other certificates, instruments or other writings representing or
evidencing Pledged Capital Stock together with a duly executed instrument in the
form of Annex 1 hereto (a “Supplement”) identifying such additional Pledged
Capital Stock; provided that the failure to deliver any such Supplement shall
not affect the validity of such pledge of such Pledged Capital Stock. Prior to
delivery to Pledgee, all such certificates and instruments constituting Pledged
Collateral shall be held in trust by Pledgor for the benefit of Pledgee pursuant
hereto. All such certificates shall be delivered in suitable form for transfer
by delivery or shall be accompanied by duly executed instruments of transfer or
assignment satisfactory to Pledgee. Pledgor hereby authorizes Pledgee to attach
each Supplement to this Agreement and agrees that all Capital Stock listed
thereon shall for all purposes hereunder constitute Pledged Collateral. In the
event that any Pledged Capital Stock are Book-Entry Shares which are registered
in the name of a Clearing Corporation, immediately upon obtaining any such
Pledged Capital Stock, Pledgor shall cause such Clearing Corporation to make
appropriate entries on its books reducing the account of Pledgor and increasing
the account of Pledgee by the number of such shares pledged or purported to be
pledged hereunder. In the event that any Pledged Capital Stock are certificated
securities that constitute part of a fungible bulk of securities in the custody
of a Clearing Corporation and are registered in such Clearing Corporation’s
name, immediately upon obtaining any such Pledged Capital Stock, Pledgor shall
cause such Clearing Corporation to make appropriate entries on its books
reducing the account of Pledgor and increasing the account of Pledgee by the
number of such shares pledged or purported to be pledged hereunder.

(b) Additional Pledged Collateral. Subject to the percentage restrictions
described in Section 3(a) above, if Pledgor shall receive by virtue of its being
or having been the owner of any Pledged Collateral, any (i) certificate,
including any certificate representing a dividend or distribution in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares or membership or equity
interests, stock splits, spin-off or split-off, promissory notes or other
instrument; (ii) warrant, option or other right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral or otherwise;
(iii) dividends payable in securities; or (iv) distributions of securities or
other equity interests in connection with a partial or total liquidation,
dissolution or reduction of capital, capital surplus or paid in surplus, then
Pledgor shall forthwith deliver all of the foregoing to Pledgee to hold as
Pledged Collateral and shall, if received by Pledgor, be received in trust for
the benefit of Pledgee, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to Pledgee as Pledged Collateral in the same
form as so received, together with duly

 

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executed instruments of transfer or assignment satisfactory to Pledgee, as
further collateral security for the Secured Obligations.

(c) Financing Statements. Pledgor hereby irrevocably authorizes Pledgee at any
time and from time to time to file in any relevant jurisdiction any initial
financing statements and amendments thereto that contain the information
required by Article 9 of the UCC of each applicable jurisdiction for the filing
of any financing statement or amendment in order to perfect and protect the
security interest of Pledgee in the Pledged Collateral.

(d) Registration. Pledgee shall have the right, at any time in its discretion
and without notice to Pledgor, to transfer to or to register in its name or the
name of any of its nominees any or all of the Pledged Capital Stock, subject
only to the provisions of Section 8(a). In addition, Pledgee shall have the
right at any time to exchange certificates, instruments or other writings
representing or evidencing Pledged Capital Stock for certificates, instruments
or other writings of smaller or larger denominations. As soon as practicable
after the purchase or receipt by Pledgor of any Book-Entry Shares, Pledgor shall
cause the issuer thereof to issue stock certificates with respect to such shares
and shall, immediately upon receipt thereof, deliver such certificates to
Pledgee in accordance with this Section.

(e) Continuing Security Interest. Pledgor acknowledges and agrees that the
security interest of Pledgee in the Pledged Collateral constitutes continuing
collateral security for all of the Secured Obligations, whether now existing
hereafter arising, which shall remain in effect until terminated in accordance
with Section 25.

5. Representations and Warranties. In addition to the representations and
warranties of Pledgor set forth in the Loan Documents to which it is a party,
which are incorporated herein by this reference, Pledgor represents and warrants
to Pledgee that:

(a) Ownership and Authority. Pledgor is the sole legal and beneficial owner of
the Pledged Collateral and has the right, power and authority to pledge, assign,
transfer, hypothecate and set over to Pledgee and grant to Pledgee a security
interest in such Pledged Collateral pursuant hereto and to execute, deliver and
perform its obligations in accordance with the terms of this Agreement.

(b) Authorization of Pledged Capital Stock. All of the Pledged Capital Stock is
duly authorized and validly issued, is fully paid and nonassessable and is not
subject to the preemptive first-refusal or other similar rights of any Person.
All Capital Stock hereafter constituting Pledged Collateral will be duly
authorized and validly issued, fully paid and nonassessable and not subject to
the preemptive first-refusal or other similar rights of any Person.

(c) Validity of Security Interest. This Agreement creates a valid security
interest in favor of Pledgee, its successors and assigns, in all of the Pledged
Collateral. Upon the taking possession by Pledgee of the certificates (if any)
representing the Pledged Capital Stock and all other certificates and
instruments constituting Pledged Collateral, Pledgee will have a first priority
perfected security interest in all certificated Pledged Capital Stock and such
certificates and instruments. Upon the filing of UCC financing statements in the
appropriate filing office in the jurisdiction of the incorporation or
organization of Pledgor, Pledgee shall have a first priority perfected security
interest in all uncertificated Pledged Capital Stock consisting of partnership
or limited liability company interests that do not constitute a “security”
pursuant to Section 8-103(c) of the UCC. Except as set forth in this subsection
(c), no action is necessary to perfect or otherwise protect such security
interest.

(d) Absence of Liens and Claims. Except for the security interest of Pledgee
created hereby, the Pledged Collateral is free and clear of any Liens. There
exists no “adverse claim” within the meaning of Section 8-102 of the UCC with
respect to any of the Pledged Capital Stock.

(e) No Transfer Restrictions. Except for restrictions imposed by the Loan
Documents, the Pledged Collateral is free of contractual restrictions that might
prohibit, impair, delay or otherwise affect the pledge of any Pledged Collateral
hereunder or the sale or disposition thereof pursuant hereto.

 

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(f) No Other Capital Stock. Except as set forth in Schedule 1 hereto, Pledgor
owns no Capital Stock of any Pledged Subsidiary. The Pledged Capital Stock
represents that percentage as set forth on Schedule 1 hereto of all of the
Capital Stock of each Pledged Subsidiary and sets forth all Capital Stock
required to be pledged under this Agreement.

(g) Delivery of Capital Stock. Pledgor has delivered or otherwise caused the
transfer to Pledgee, pursuant to Sections 4(a) or (b), as applicable, of all
certificates, instruments or other writings representing, evidencing or
constituting Pledged Collateral. The Pledged Collateral is not and shall not be
represented or evidenced by any certificates, instruments or other writings
other than those delivered hereunder.

(h) Pledged Capital Stock. All Pledged Capital Stock consists of
(i) certificated securities represented or evidenced by certificates,
instruments or other writings, the originals of which are in the possession of
Pledgor (prior to delivery to Pledgee hereunder), (ii) certificated securities
that constitute part of a fungible bulk of securities in the custody of a
Clearing Corporation and registered in such Clearing Corporation’s name,
(iii) uncertificated securities that are Book-Entry Shares registered in the
name of a Clearing Corporation, or (iv) uncertificated membership interests in
limited liability companies.

(i) Margin Regulations. The pledge of the Pledged Capital Stock pursuant to this
Agreement does not violate the provisions of Regulation T, U or X of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. None of the Pledged Capital Stock constitutes “margin
stock” within the meaning of such term under Regulation U.

(j) Partnership and Limited Liability Company Interests. None of the Pledged
Capital Stock consisting of partnership or limited liability company interests
(i) is dealt in or traded on a securities exchange or in a securities market,
(ii) by its terms expressly provides that it is a security governed by Article 8
of the UCC, (iii) is an investment company security, (iv) is held in a
securities account or (v) constitutes a security or a financial asset.

(k) Consents. No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including any stockholder, member or creditor of Pledgor), is required
(i) for the pledge made by Pledgor or for the granting of the security interest
by Pledgor pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by Pledgor or (ii) or the exercise by Pledgee of
the rights and remedies provided for in this Agreement, except as may be
required by Laws affecting the offering and sale of securities.

The foregoing representations and warranties shall survive the execution and
delivery of this Agreement and shall be deemed restated automatically at each
such time as any additional Pledged Collateral is delivered hereunder to
Pledgee.

6. Covenants. In addition to the covenants of Pledgor set forth in the Loan
Documents to which it is a party, which are incorporated herein by this
reference, so long as the Commitment shall be in effect under the Credit
Agreement, any Specified Swap Contract shall be in effect or any of the Secured
Obligations shall remain unpaid or unsatisfied, Pledgor shall:

(a) Defense of Pledged Collateral. At its own cost and expense, take any and all
actions necessary to defend title to the Pledged Collateral against all Persons
and to defend the security interest of Pledgee in the Pledged Collateral and the
priority thereof against any Lien.

(b) Disposition of Pledged Collateral. Not make or permit to be made any sale,
transfer or other disposition of any of the Pledged Collateral or grant any
option, warrant or other right or interest with respect to, any of the Pledged
Collateral.

(c) Change of Name, Identity or Structure. Promptly notify Pledgee in writing of
any change: (i) in its corporate or organization name; (ii) in the location of
its chief executive office, its principal place of business, any office in which
it maintains books or records relating to the Pledged Collateral; (iii) in its

 

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identity, type of organization, corporate structure or jurisdiction of
incorporation or organization; or (iv) in its Federal Taxpayer Identification
Number or other identification number given by its jurisdiction of incorporation
or organization, and not to effect or permit any change referred to in clauses
(i) through (iv) unless all filings have been made under the UCC or otherwise
that are required in order for Pledgee to continue at all times following such
change to have a valid, legal and perfected first priority security interest in
all the Pledged Collateral.

(d) No Liens. Not make or permit to be made an assignment, pledge or
hypothecation of any of the Pledged Collateral or create or permit to exist any
Lien upon or with respect to any of the Pledged Collateral other than the
security interest of Pledgee created hereby.

(e) Shareholder Agreements. Not enter into any shareholder agreement, voting
agreement, voting trust, irrevocable proxies or any other similar agreement or
instrument with respect to any Pledged Collateral.

(f) Additional Capital Stock. Immediately upon its acquisition, receipt or
ownership, directly or indirectly, of any Pledged Capital Stock hereafter,
pledge such Capital Stock pursuant to Section 3(b) and deliver or otherwise
cause the transfer of all certificates, instruments or other writings
representing, or evidencing such Pledged Capital Stock to Pledgee pursuant to
Sections 4(a) or (b), as applicable.

(g) Compliance with Securities Laws. File all reports and other information now
or hereafter required to be filed by Pledgor with the SEC and any other state,
federal or foreign agency in connection with Pledgor’s ownership of the Pledged
Collateral.

(h) Partnership and Limited Liability Company Interests. Not take any action or
permit any action to be taken that would cause any membership interest in a
limited liability company or partnership interest constituting Pledged
Collateral to become a “security” as defined in Article 8 of the UCC, unless
such membership interest or partnership interest has been certificated and
pledged to Pledgee pursuant to this Agreement.

(i) Taxes. Pay promptly when due all taxes and other governmental charges, all
Liens and all other charges now or hereafter imposed upon, relating to or
affecting any of the Pledged Collateral.

(j) Delivery of Notices. Promptly deliver to Pledgee all reports and notices
received by Pledgor in its capacity as shareholder or member in respect of any
Pledged Collateral.

7. Further Assurances. Pledgor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as Pledgee may from time to time request to
better assure, preserve, protect and perfect the Lien of Pledgee in the Pledged
Collateral and the rights and remedies of Pledgee hereunder, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the security interest hereunder and
the filing of any financing statements or other documents in connection herewith
or therewith. Without limiting the generality of the foregoing, Pledgor further
agrees that it shall, concurrently with the execution of this Agreement and at
any time and from time to time thereafter (a) procure, execute and deliver to
Pledgee all stock powers, endorsements, financing statements, assignments and
other instruments of transfer requested by Pledgee and (b) deliver to Pledgee
immediately upon receipt the originals of all Pledged Capital Stock and all
certificates, instruments or other writings representing, evidencing or
constituting Pledged Collateral, and (c) cause the Lien of Pledgee to be
recorded or registered in the books of any Clearing Corporation requested by
Pledgee.

8. Voting Rights; Dividends.

(a) Prior to Occurrence of Default. So long as no Event of Default shall exist
or result therefrom (and, in the case of subparagraph (i) below, so long as
written notice has not been given by Pledgee to Pledgor):

 

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(i) Voting Rights. Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Capital Stock or any part
thereof for any purpose not inconsistent with the terms of this Agreement or the
Credit Agreement; provided, however, that Pledgor shall not exercise or shall
refrain from exercising any such right if, in the judgment of Pledgee, such
action would have a material adverse effect on the value of the Pledged
Collateral or any part thereof or the interest of Pledgee therein, and,
provided, further, that Pledgor shall give Pledgee at least five Business Days’
prior written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right.

(ii) Dividends. Pledgor shall be entitled to receive and retain any and all
dividends or distributions paid in respect of the Pledged Capital Stock, in
compliance with the terms of the Credit Agreement, except the following:
(A) dividends paid or payable other than in cash in respect of, and instruments
and other property received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Capital Stock; (B) dividends and other
distributions paid or payable in cash in respect of any Pledged Capital Stock in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in-surplus; and (C) cash
paid, payable or otherwise distributed in redemption of, or in exchange for, any
Pledged Capital Stock; all of which shall be forthwith delivered to Pledgee to
hold as, Pledged Collateral and shall, if received by Pledgor, be received in
trust for the benefit of Pledgee, be segregated from the other property or funds
of Pledgor, and be forthwith paid over or otherwise delivered to Pledgee as
Pledged Collateral in the same form as so received, together with duly executed
instruments of transfer or assignment satisfactory to Pledgee, as further
collateral security for the Secured Obligations.

(iii) Proxies, Etc. Pledgee shall execute and deliver (or cause to be executed
and delivered) to Pledgor all such proxies and other instruments as Pledgor may
request for the purpose of enabling Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to subparagraph (i) above and
to receive the dividends or distributions which it is authorized to receive and
retain pursuant to subparagraph (ii) above.

(b) Upon the Occurrence of a Default. Upon the occurrence and during the
continuance of an Event of Default:

(i) Voting Rights. All rights of Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 8(a)(i) above shall cease upon written notice thereof from Pledgee, and
all such rights shall thereupon become vested in Pledgee who shall thereupon
have the sole right to exercise such voting and other consensual rights.

(ii) Dividends. All rights of Pledgor to receive the dividends or distributions
which it would otherwise be authorized to receive and retain pursuant to
Section 8(a)(ii) above shall cease, and all such rights shall thereupon become
vested in Pledgee who shall thereupon have the sole right to receive and hold as
Pledged Collateral such dividends. All dividends or distributions which are
received by Pledgor contrary to the provisions of this subparagraph (ii) shall
be received in trust for the benefit of Pledgee, shall be segregated from other
funds of Pledgor and shall be forthwith paid over or otherwise delivered to
Pledgee as Pledged Collateral in the same form as so received, together with
duly executed instruments of transfer or assignment satisfactory to Pledgee, as
further collateral security for the Secured Obligations.

(iii) Proxies, Etc. In order to permit Pledgee to exercise the voting and other
rights which it may be entitled to exercise pursuant to subparagraph (i) above,
and to receive all dividends and distributions which it may be entitled to
receive under subparagraph (ii) above, Pledgor shall, if necessary, upon written
notice of Pledgee, from time to time execute and deliver to Pledgee appropriate
proxies, dividend payment orders and other instruments as Pledgee may request.

 

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9. Authorization; Agent Appointed Attorney-in-Fact. So long as the Commitment
shall be in effect under the Credit Agreement, any Specified Swap Contract shall
be in effect or any of the Secured Obligations shall remain unpaid or
unsatisfied, Pledgor does hereby designate and appoint Pledgee its true and
lawful attorney coupled with an interest and with power irrevocable, upon the
occurrence and during the continuation of any Event of Default, for the purpose
of carrying out the provisions of this Agreement and taking any action and
executing any instrument that Pledgee may deem necessary or advisable to
accomplish the purposes hereof, including all of the following: (a) receive,
endorse and collect all instruments made payable to Pledgor representing any
dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same;
(b) perfect or continue perfected, maintain the priority of or provide notice of
Pledgee’s security interest in the Pledged Collateral; (c) exercise dominion and
control over, and refuse to permit further withdrawals from any securities
account constituting part of the Pledged Collateral; (d) execute any and all
endorsements, assignments or other documents and instruments necessary to sell,
lease, assign, convey or otherwise transfer title in or dispose of the Pledged
Collateral; and (e) execute any and all such other documents and instruments,
and do any and all acts and things for and on behalf of Pledgor, which Pledgee
may deem necessary or advisable to maintain, protect, realize upon and preserve
the Pledged Collateral and Pledgee’s security interest therein and to accomplish
the purposes of this Agreement. The acceptance of this appointment by Pledgee
shall not obligate it to perform any duty, covenant or obligation required to be
performed by the Pledgor under or by virtue of the Pledged Collateral or to take
any action in connection therewith. All expenses incurred by Pledgee in
connection with exercising any of its rights under this Section shall bear
interest at the Default Rate from the date incurred until repaid by Pledgor;
provided, however, that interest shall not accrue at a rate in excess of the
maximum rate permitted by applicable Law. All amounts described in this Section
shall be repayable by Pledgor on demand and Pledgor’s obligation to make such
repayment shall constitute an additional Secured Obligation. The amount and
nature of any expense by Pledgee hereunder and the time when paid shall be fully
established by the certificate of Pledgee or any of Pledgee’s officers,
employees, counsel, agents or attorneys-in-fact.

10. Pledgee Performance of Pledgor’s Obligations. Pledgee may perform or pay any
obligation which Pledgor has agreed to perform or pay under or in connection
with this Agreement, and Pledgor shall reimburse Pledgee on demand for any
amounts paid by Pledgee pursuant to Section 15(a). Except in cases where prompt
action is required to minimize risk of loss, Pledgee will give Pledgor two
Business Days notice before performing or paying a Pledgor obligation.

11. No Responsibility for Certain Actions. Notwithstanding any provision
contained in this Agreement, and other than as set forth in Section 9-207 of the
UCC, Pledgee shall have no 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 Pledgee has or is
deemed to have knowledge of such matters, or (b) taking any necessary steps to
preserve any rights against any parties with respect to any Pledged Collateral.
Pledgee shall have no duty with respect to the custody, safekeeping and physical
preservation of the Pledged Collateral in its possession other than as set forth
in Section 9-207 of the UCC.

12. Remedies. Upon the occurrence and during the continuance of an Event of
Default:

(a) General Remedies. If an Event of Default shall occur, Pledgee shall have, in
addition to all other rights and remedies granted to it in this Agreement, the
Credit Agreement, the other Loan Documents, all rights and remedies of a secured
party under the UCC and other applicable Laws. Without limiting the generality
of the foregoing, Pledgor agrees that Pledgee may:

(i) require Pledgor to assemble all or any part of the Pledged Collateral and
make it available to Pledgee at any place and time designated by Pledgee;

(ii) exercise dominion and control over, and refuse to permit further
withdrawals (whether of money, securities, instruments, investment property or
other property) from any securities account constituting part of the Pledged
Collateral; and

 

9

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(iii) subject to the requirements of Laws affecting the offering and sale of
securities, sell, resell, assign, transfer or otherwise dispose of any or all of
the Pledged Collateral at public or private sale or at any broker’s board or on
any securities exchange, by one or more contracts, in one or more parcels, at
the same or different times, for cash or credit, or for future delivery without
assumption of any credit risk, all as Pledgee deems advisable.

(b) Sale of Pledged Collateral. Each purchaser at any sale pursuant to this
Agreement shall hold the property sold absolutely, free from any claim or right
on the part of Pledgor, and Pledgor hereby waives, to the fullest extent
permitted by applicable Laws, all rights of redemption, stay and appraisal which
Pledgor now has or may at any time in the future have under any applicable Law
now existing or hereafter enacted. Neither Pledgee’s compliance with the UCC or
any other applicable Law, in the conduct of any sale made pursuant to this
Agreement, nor its disclaimer of any warranties relating to the Pledged
Collateral, shall be considered to adversely affect the commercial
reasonableness of such sale. Pledgee shall give Pledgor 10 days’ written notice
(which Pledgor agrees is reasonable notice within the meaning of Section 9-612
of the UCC) of Pledgee’s intention to make any sale of Pledged Collateral.
Pledgee shall not be obligated to make any sale of any Pledged Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of such
Pledged Collateral shall have been given. Pledgee may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. To the fullest extent permitted by
applicable Laws, Pledgee may bid for or purchase the Pledged Collateral or any
part thereof offered for sale and may make payment on account thereof by using
any claim then due and payable to Pledgee from Pledgor as a credit against the
purchase price and Pledgee may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to Pledgor
therefor. Pledgor agrees to pay any deficiency remaining after collection or
realization by Pledgee on the Pledged Collateral.

(c) Waiver of Rights to Purchase. Pledgor, for itself and its successors and
assigns, does hereby irrevocably waive and release all preemptive, first-refusal
and other similar rights of Pledgor to purchase any or all of the Pledged
Capital Stock upon any sale thereof by Pledgee under this Agreement, whether
such right to purchase arises under any of the Pledged Subsidiary’s Organization
Documents, by agreement, by operation of law or otherwise.

(d) Exempt Sales Transactions. Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as from time to time
amended (the “Securities Act”) and applicable state securities laws, Pledgee
may, at its option, elect not to require Pledgor to register the offering or
sale of all or any part of the Pledged Capital Stock under the provisions of the
Securities Act and may be compelled, with respect to any sale of all or any part
of the Pledged Capital Stock, to limit purchasers to those who will agree, among
other things, to acquire such securities for their own account, for investment,
and not with a view to the distribution or resale thereof. Pledgor acknowledges
and agrees that any such sale may result in prices and other terms less
favorable to the seller than if such sale were a public sale without such
restrictions and notwithstanding such circumstances, agrees that any such sale
shall be deemed to have been made in a commercially reasonable manner. Pledgee
shall be under no obligation to delay the sale of any of the Pledged Capital
Stock for the period of time necessary to permit Pledgor to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if Pledgor would agree to do so. If Pledgee determines to
exercise its right to sell any or all of the Pledged Capital Stock, upon written
request, Pledgor shall and shall cause each of the Pledged Subsidiaries to, from
time to time, furnish to Pledgee all such information as Pledgee may request in
order to determine the number of shares and other instruments included in the
Pledged Capital Stock which may be sold by Pledgee as exempt transactions under
the Securities Act and rules of the SEC thereunder, as the same are from time to
time in effect.

(e) Additional Information. If Pledgee determines to exercise its right to sell
any or all of the Pledged Capital Stock, upon written request, Pledgor shall and
shall cause, each of its Subsidiaries to, from time to time, furnish to Pledgee
all such information as Pledgee may request in order to determine the number of
shares and other instruments included in the Pledged Capital Stock which may be
sold by

 

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Pledgee as exempt transactions under the Securities Act and rules of the SEC
thereunder, as the same are from time to time in effect.

(f) Investment Banking Advice. In connection with any disposition of the Pledged
Capital Stock, if Pledgee elects to obtain the advice of an investment banking
firm, such firm shall be selected by Pledgor from among three nationally known
investment banking firms which are member firms of the New York Stock Exchange,
which three firms shall be proposed by Pledgee to Pledgor. Such selection by
Pledgor shall be made within five Business Days after receipt by Pledgor of the
names of the firms proposed by Pledgee. In the absence of such selection by
Pledgor within such period, Pledgee may select any one of such firms. Pledgor
agrees that the sale or other disposition of all or any part of the Pledged
Capital Stock in reliance on the advice of the investment banking firm so
selected shall be deemed to be commercially reasonable under the UCC and
otherwise proper.

(g) Indemnification. Pledgor shall indemnify and hold harmless Pledgee and any
underwriter or financial advisor to Pledgee or the Lenders (and the officers,
directors, shareholders, employees, attorneys, and agents of each of them), from
and against any and all loss, liability, claim, damage and expense (including,
without limitation, Attorney Costs) under the Securities Act, any “Blue Sky” law
or otherwise insofar as such loss, liability, claim, damage or expense arises
out of or is based upon any untrue statement or alleged untrue statements of a
material fact contained in a registration statement or prospectus or on any
preliminary prospectus or any amendment or supplement thereto, or arises out of
or is based upon any omission or alleged omission to state therein a material
fact required to be stated or necessary to make the statements therein not
misleading, such indemnification to remain operative regardless of any
investigation made by or on behalf of Pledgee or any underwriter or financial
advisor or any other person or entity indemnified hereunder. This
indemnification does not apply to losses, claims, damages, liabilities or
expenses that are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in writing to the
issuer of such Pledged Capital Stock by Pledgee or on Pledgee’s behalf expressly
for use therein.

(h) Retention of Pledged Collateral. Pledgee may, after providing the notices
required by Section 9-620(a) of the UCC or otherwise complying with any
requirement of applicable Law, accept or retain the Pledged Collateral or any
part thereof in satisfaction of the Secured Obligations. Unless and until
Pledgee shall have provided such notices, however, Pledgee shall not be deemed
to have retained any Pledged Collateral in satisfaction of any Secured
Obligations for any reason.

(i) Duty of Care. Except for the exercise of reasonable care in the custody of
any Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, Pledgee shall have no duty as to any Pledged
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Pledged Collateral. Pledgee
shall be deemed to have exercised reasonable care in the custody and
preservation of Pledged Collateral in its possession if such Pledged Collateral
is accorded treatment substantially equal to that which Pledgee accords its own
property. Neither Pledgee nor any of its Affiliates, directors, officers,
employees, counsel, agents and attorneys-in-fact shall be liable for failure to
demand, collect or realize upon all or any part of the Pledged Collateral or for
any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Pledged Collateral upon the request of a Pledgor or otherwise.

(j) Application of Proceeds. The cash proceeds actually received from the sale
or other disposition or collection of the Pledged Collateral, and any other
amounts received in respect of the Pledged Collateral the application of which
is not otherwise provided for herein, shall be applied as provided in the Credit
Agreement.

Pledgee shall have absolute discretion as to the time of application of any such
proceeds, moneys or balances in accordance with this Agreement. Pledgor shall
remain liable to Pledgee for any deficiency which exists after any sale or other
disposition or collection of the Pledged Collateral.

13. Certain Waivers. Pledgor waives, to the fullest extent permitted by
applicable Laws, (a) any right of redemption with respect to the Pledged
Collateral, whether before or after sale hereunder,

 

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and all rights, if any, of marshalling of the Pledged Collateral or other
collateral or security for the Secured Obligations; (b) any right to require
Pledgee (i) to proceed against any Person, (ii) to exhaust any other collateral
or security for any of the Secured Obligations, (iii) to pursue any remedy in
Pledgee’s power, or (iv) to make or give any presentments, demands for
performance, notices of nonperformance, protests, notices of protests or notices
of dishonor in connection with any of the Pledged Collateral; and (c) all
claims, damages, and demands against Pledgee arising out of the repossession,
retention, sale or application of the proceeds of any sale of the Pledged
Collateral.

14. No Waiver; Cumulative Remedies. No failure by Pledgee to exercise, and no
delay in exercising, any right, power or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power, or remedy. The exercise of any right,
power, or remedy shall in no event constitute a cure or waiver of any Event of
Default or prejudice the rights of Pledgee in the exercise of any right
hereunder. The rights and remedies provided herein are cumulative and not
exclusive of any right or remedy provided by applicable Law.

15. Costs and Expenses; Indemnification; Other Charges.

(a) Costs and Expenses. Pledgor agrees to pay on demand: (ii) the out-of-pocket
costs and expenses of Pledgee and any of its Affiliates, and Pledgee’s Attorney
Costs, in connection with the negotiation, preparation, execution, delivery and
administration of this Agreement, and any amendments, modifications or waivers
of the terms thereof, and the custody of the Pledged Collateral; (ii) all
present and future stamp, transfer, documentary and other such taxes, levies,
fees, assessments and other charges made by any jurisdiction by reason of the
execution, delivery, performance and enforcement of this Agreement; (iii) any
and all expenses which may be charged to or for the account of Pledgee,
including brokers’ or underwriters’ commissions or discounts, financial advisory
fees, accounting fees, Attorney Costs, costs of printing and other expenses of
offering, sale, or transfer shall be reimbursed by or charged to Pledgor
pursuant to Section 12; and (iv) all costs and expenses of Pledgee and its
Affiliates, including Attorney Costs, in connection with the enforcement or
attempted enforcement of, and preservation of any rights or interests under,
this Agreement, including in any out-of-court workout or other refinancing or
restructuring or in any bankruptcy case, and the custody or preservation,
protection, sale or collection of, or other realization upon, any of the Pledged
Collateral, including all expenses of taking, collecting, holding, sorting,
handling, preparing for sale, selling, or the like, and other such expenses of
sales and collections of Pledged Collateral, and any and all losses, costs and
expenses sustained by Pledgee as a result of any failure by Pledgor to perform
or observe its obligations contained herein.

(b) Indemnification. In addition to the agreement to indemnify contained in
Section 12(g), Pledgor hereby agrees to indemnify Pledgee, any Affiliate of
Pledgee, and their respective directors, officers, employees, agents, counsel
and other advisors (each an “Indemnified Person”) against, and hold each of them
harmless from, any and all liabilities, obligations, losses, claims, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever, including Attorney Costs, to an Indemnified Person,
which may be imposed on, incurred by, or asserted against any Indemnified
Person, in any way relating to or arising out of this Agreement or the
transactions contemplated hereby or any action taken or omitted to be taken by
it hereunder (the “Indemnified Liabilities”); provided that Pledgor shall not be
liable to any Indemnified Person for any portion of such Indemnified Liabilities
to the extent they are found by a final decision of a court of competent
jurisdiction to have resulted from such Indemnified Person’s gross negligence or
willful misconduct. If and to the extent that the foregoing indemnification is
for any reason held unenforceable, Pledgor agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.

(c) Additional Secured Obligations. All amounts due under this Section shall be
payable within 10 days of written demand therefor. If any amount payable by
Pledgor under this Agreement is not paid when due, such amount shall
(i) thereafter bear interest at a fluctuating interest rate per annum at all

 

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times equal to the Default Rate to the fullest extent permitted by applicable
Laws and (ii) be additional Secured Obligations secured hereby and by the other
Collateral Documents.

16. Successor and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns in accord with the provisions of the Credit
Agreement.

17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF OREGON, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR PERFECTION OF THE SECURITY
INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN RESPECT OF ANY COLLATERAL ARE
GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN OREGON; PROVIDED THAT PLEDGEE
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

18. Amendments, Etc. No amendment or waiver of any provision of this Agreement,
and no consent to any departure by Pledgor therefrom, shall be effective unless
in writing signed by Pledgee and Pledgor, and each such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. Without limiting the generality of the foregoing, the making of a
Loan or issuance of a Letter of Credit under the Credit Agreement shall not be
construed as a waiver of any Default under the Credit Agreement.

19. Notices. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be given in the manner and to the
addresses as specified, and shall be effective as provided, in the Credit
Agreement.

20. 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.

21. Integration. This Agreement, together with the other Loan Documents,
comprises the complete, final 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.

22. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions thereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

23. No Inconsistent Requirements. Pledgor acknowledges that this Agreement and
the other Loan Documents may contain covenants and other terms and provisions
variously stated regarding the same or similar matters, and agrees that all such
covenants, terms and provisions are cumulative and all shall be performed and
satisfied in accordance with their respective terms.

24. Amendment and Restatement. This Agreement shall become effective on the
Closing Date (as defined in the Credit Agreement) and shall supersede all
provisions of the Existing Pledge Agreement as of such date. From and after the
Closing Date all references made to the Existing Pledge Agreement in any Loan
Document or in any other instrument or document shall, without more, be deemed
to refer to this Agreement.

25. Termination. This Agreement and the security interest in the Pledged
Collateral shall terminate and Pledgor shall be entitled to the return, upon its
request and at its expense, of such of the tangible Pledged Collateral (or so
much thereof that has not been sold or otherwise applied pursuant to the terms
hereof) when all of the Secured Obligations shall have been finally and
indefeasibly paid in full (other than contingent indemnification obligations),
the Commitment of Pledgee has been terminated, all Letters of Credit issued or
deemed issued pursuant to the Credit Agreement have expired or been terminated
and all Specified Swap Contracts have been terminated; provided, however, that
the obligations of Pledgor under Sections 12(g) and 15 shall survive such
termination.

 

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IN WITNESS WHEREOF, Pledgor has executed this Agreement by its duly authorized
officer as of the day and year first above written.

 

PLANAR SYSTEMS, INC., an Oregon corporation By:  

 

Name:  

 

Title:  

 

Acknowledged and Agreed:

 

BANK OF AMERICA, N.A., a national banking association By:  

 

Name:  

 

Title:  

 

 

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SCHEDULE 1

PLEDGED CAPITAL STOCK

Part (a). Pledged Domestic Subsidiaries.

 

Name of Pledged Subsidiary

  

Jurisdiction of
Incorporation/
Organization

  

Class of

Stock/
Interests

   Number of
Shares/
Interests
Issued    Number of
Shares/
Interests
Outstanding    Number of Shares/
Interests Owned by
Pledgor  

Clarity, a division of Planar Systems, Inc.

  

Oregon

(ID# 369613-99)

   Common    1,000    1,000    100 % 

Planar China LLC

  

Oregon

(ID# 183769-96)

   Membership    1    1    100 % 

Runco International LLC

  

Oregon

(ID# 433460-97)

   Membership    1    1    100 % 

Planar Taiwan LLC

  

Oregon

(ID# 183768-97)

   Membership    1    1    100 % 

Part (b). Pledged Foreign Subsidiaries.

 

  

Name of Pledged Subsidiary

  

Jurisdiction of
Incorporation/
Organization

  

Class of

Stock/
Interests

   Number of
Shares/
Interests
Issued    Number of
Shares/
Interests
Outstanding    Number of Shares/
Interests Owned by
Pledgor  

Planar Systems Oy

  

Finland

(ID# 0793650-6)

   Common    10,000    10,000    100 % 

Part (c). Limited Liability Company Agreements.

 

Name of Pledged Subsidiary

 

Operating Agreement

Planar China LLC   Operating Agreement of Planar China LLC dated as of
November 14, 2003, as amended, restated, supplemented or otherwise modified
Runco International LLC   Operating Agreement of Runco International LLC dated
as of December 4, 2007, as amended, restated, supplemented or otherwise modified
Planar Taiwan LLC   Operating Agreement of Planar Taiwan LLC dated as of
November 14, 2003, as amended, restated, supplemented or otherwise modified

 

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ANNEX 1

SUPPLEMENT

SUPPLEMENT NO.              dated as of                     , to the Amended and
Restated Pledge Agreement dated as of December 1, 2009 (the “Pledge Agreement”)
made by PLANAR SYSTEMS, INC., an Oregon corporation (the “Pledgor”), in favor of
BANK OF AMERICA, N.A., a national banking association (the “Pledgee”).

RECITALS

A. Pledgor is a party to that certain Amended and Restated Credit Agreement
dated as of December 1, 2009 by and between Pledgor and Pledgee (as amended,
restated, modified, renewed, supplemented or extended from time to time, the
“Credit Agreement”).

B. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Pledge Agreement.

C. Pledgor has entered into the Pledge Agreement in order to induce Pledgee to
make Credit Extensions under the Credit Agreement, and pursuant to Section 4 of
the Pledge Agreement Pledgor is required to deliver to Pledgee all certificates,
instruments or other writings representing or evidencing Pledged Capital Stock
received by Pledgor after the date of the Pledge Agreement together with a duly
executed Supplement substantially the form hereof.

D. Pledgor is executing this Supplement in accordance with the requirements of
the Pledge Agreement in consideration for Pledgee to make Credit Extensions
under the Credit Agreement.

Accordingly, Pledgor agrees as follows:

1. Pledgor agrees that this Supplement may be attached to the Pledge Agreement
and that the shares of capital stock or other equity securities listed on this
Supplement shall be and become part of the Pledged Collateral referred to in the
Pledge Agreement and shall secure all Secured Obligations.

2. Pledgor agrees that the shares of capital stock and other equity securities
listed below shall for all purposes constitute Pledged Collateral and shall be
subject to the security interest created by the Pledge Agreement.

 

Name of Pledged Subsidiary

  

Jurisdiction of
Incorporation/
Organization

  

Class of

Stock/
Interests

   Number of
Shares/
Interests
Issued    Number of
Shares/
Interests
Outstanding    Number of Shares/
Interests Owned by
Pledgor                              

3. Pledgor certifies that the representations and warranties set forth in
Section 5 of the Pledge Agreement are true and correct with respect to the
shares of capital stock or other equity securities listed on this Supplement on
and as of the date hereof.

4. Except as expressly supplemented hereby, the Pledge Agreement shall remain in
full force and effect.

5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF OREGON APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE.

6. Pledgor agrees to reimburse Pledgee for its out-of-pocket expenses (including
Attorney Costs of Pledgee) incurred in connection with this Supplement.

 

1

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IN WITNESS WHEREOF, Pledgor has executed this Supplement by its duly authorized
officer as of the day and year first above written.

 

PLANAR SYSTEMS, INC., an Oregon corporation By:  

 

Name:  

 

Title:  

 

Accepted:

 

BANK OF AMERICA, N.A., a national banking association By:  

 

Name:  

 

Title:  

 

 

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EXHIBIT F

FORM OF INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT

 

Exhibit F – 1

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EXHIBIT G

FORM OF BORROWING BASE CERTIFICATE

Certificate Date:                     ,         

 

To: Bank of America, N.A.

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of December 1, 2009 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Credit Agreement;” the
terms defined therein being used herein as therein defined), between Planar
Systems, Inc., an Oregon corporation (“Borrower”), and Bank of America, N.A., a
national banking association (“Lender”).

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

 

  1. The Borrowing Base Amount, as of the above date is as follows:

 

A.

   Value of Eligible Accounts:    $                     

B.

   80% of the Value of Eligible Accounts:    $                     

2. The Accounts included in the Eligible Accounts as set forth above,
(a) conform in all material respects, to the representations and warranties in
Section 5(g) of the Security Agreement, (b) are subject to the Lien of the
Security Agreement and subject to no other Liens (other than Permitted Liens as
defined in the Security Agreement), and (c) are, otherwise, Eligible Accounts,
as required under the Credit Agreement.

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

 

PLANAR SYSTEMS, INC., an Oregon corporation By:  

 

Name:  

 

Title:  

 

 

Exhibit G – 1

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EXHIBIT H

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:                     ,         

 

To: Bank of America, N.A.

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of December 1, 2009 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Credit Agreement;” the
terms defined therein being used herein as therein defined), between Planar
Systems, Inc., an Oregon corporation (“Borrower”), and Bank of America, N.A., a
national banking association (“Lender”).

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

[Use following 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 Credit Agreement for the fiscal year of
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 for fiscal quarter-end financial statements]

1. Attached hereto as Schedule 1 are the unaudited financial statements required
by Section 6.01(b) of the Credit Agreement for the fiscal quarter of Borrower
ended as of the above date. Such financial statements fairly present in all
material respects the financial condition, results of operations and cash flows
of 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 Credit
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
Borrower during the accounting period covered by the attached financial
statements.

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

[select one:]

[to the knowledge of the undersigned during such fiscal period, 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 or Event of Default and its nature
and status:]

4. The representations and warranties of Borrower contained in Article V of the
Credit Agreement, or which are contained in any document furnished at any time
under or in connection with the Loan Documents, are true and correct on and as
of the date hereof, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct

 

Exhibit H – 1

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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 Credit 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 Credit Agreement, including the statements in connection
with which this Compliance Certificate is delivered.

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

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

 

PLANAR SYSTEMS, INC., an Oregon corporation By:  

 

Name:  

 

Title:  

 

 

Exhibit H – 2

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

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

 

I.    Section 6.12(a) – Net Worth.    A.    Net Worth at Statement Date:      
   1.    On a consolidated basis, the shareholder’s equity of Borrower and its
Subsidiaries exclusive of accumulated other income or loss:    $
                        B.    Minimum Net Worth:          1.    The sum of 50%
of net income (without subtracting net losses) earned in each quarterly
accounting period commencing after September 25, 2009:    $                     
      2.    Minimum required Net Worth (Line I.B.1 plus $50,000,000):    $
                        C.   

Excess (deficient) for covenant compliance

        

(Line I.A.1 – I.B.2):

   $                      II.    Section 6.12 (b) – Fixed Charge Coverage Ratio.
      A.   

EBITDA for four prior fiscal quarters ending on above date (“Subject Period”):

         1.    On a consolidated basis, net income for Subject Period:    $
                           2.    On a consolidated basis, Interest Charges for
Subject Period:    $                            3.    On a consolidated basis,
federal, state, local and foreign income tax for Subject Period:    $
                           4.    On a consolidated basis, depreciation,
depletion and amortization expense for Subject Period:    $                     
      5.    On a consolidated basis, to the extent deducted in calculating net
income, foreign exchange losses for Subject Period:    $                        
   6.    On a consolidated basis, other expenses reducing net income for such
period which did not or will not require a cash settlement in such period or any
future period (including but not limited to impairment changes, costs associated
with exit or disposal activities, in-process research and development charges,
and stock based compensation) for Subject Period:    $                        
   7.    On a consolidated basis, to the extent added in calculating net income,
foreign exchange gains for Subject Period:    $                     

 

Exhibit H – 3

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      8.    On a consolidated basis, to the extent added in calculating net
income, all items increasing net income for such period which did not or will
not result in a cash settlement in such period or any future period, for Subject
Period:    $                            9.    Adjustment for certain sales and
Permitted Acquisitions (with supporting detail attached):    $
                           10.    Gain resulting from the transaction of the
sale of all or a portion of an ongoing business:    $                           
11.    Total EBITDA (Line II.A.1 + II.A.2 + II.A.3 + II.A.4 + II.A.5 + II.A.6 +
II.A.7 + II.A.8 + II.A.9 + II.A.10):    $                         B.    Fixed
Charges for Subject Period:          1.    Interest charges actually paid in
cash for Subject Period:    $                            2.    Principal
payments scheduled to have been paid during Subject Period on Funded
Indebtedness:    $                            3.    Dividends paid by Borrower
during Subject Period:    $                            4.    Cash payments
required to be made during Subject Period on any Swap Contract:    $
                           5.    Cash receipts received during Subject Period
from any Swap Contract:    $                            6.    Total Fixed
Charges (Line II.B.1 + II.B.2 + II.B.3 + II.B.4 + II.B.5):    $
                        C.    Fixed Charge Coverage Ratio (Line II.A.11 ÷
III.B.6)               to 1.0       Minimum Required: 1.25 to 1.0   

 

Exhibit H – 4