exv10w1



 





Exhibit 10.1




CREDIT AGREEMENT




Dated as of June 5, 2007




between




iRobot Corporation




and




BANK OF AMERICA, N.A.




 

 






 









 





TABLE OF CONTENTS




	 	 	 	 	 
	Section	 	Page
	ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	1.01 Defined Terms
	 	 	1	 
	1.02 Other Interpretive Provisions
	 	 	13	 
	1.03 Accounting Terms
	 	 	13	 
	1.04 Rounding
	 	 	14	 
	1.05 References to Agreements and Laws
	 	 	14	 
	1.06 Times of Day
	 	 	14	 
	1.07 Letter of Credit Amounts
	 	 	14	 
	 
	 	 	 	 
	ARTICLE II. THE COMMITMENT AND CREDIT EXTENSIONS
	 	 	14	 
	2.01 Loans
	 	 	14	 
	2.02 Borrowings, Conversions and Continuations of Loans
	 	 	15	 
	2.03 Letters of Credit
	 	 	16	 
	2.04 Prepayments
	 	 	21	 
	2.05 Termination or Reduction of Commitment
	 	 	22	 
	2.06 Repayment of Loans
	 	 	22	 
	2.07 Interest
	 	 	22	 
	2.08 Fees
	 	 	23	 
	2.09 Computation of Interest and Fees
	 	 	23	 
	2.10 Evidence of Debt
	 	 	23	 
	2.11 Payments Generally
	 	 	23	 
	 
	 	 	 	 
	ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	24	 
	3.01 Taxes
	 	 	24	 
	3.02 Illegality
	 	 	25	 
	3.03 Inability to Determine Eurodollar Rate
	 	 	25	 
	3.04 Increased Cost and Reduced Return; Capital Adequacy
	 	 	25	 
	3.05 Funding Losses
	 	 	26	 
	3.06 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
	 	 	28	 
	 
	 	 	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES
	 	 	28	 
	5.01 Existence, Qualification and Power; Compliance with Laws
	 	 	28	 
	5.02 Authorization; No Contravention
	 	 	29	 
	5.03 Governmental Authorization; Other Consents
	 	 	29	 
	5.04 Binding Effect
	 	 	29	 
	5.05 Financial Statements; No Material Adverse Effect
	 	 	29	 
	5.06 Litigation
	 	 	30	 
	5.07 No Default
	 	 	30	 
	5.08 Ownership of Property; Liens
	 	 	30	 
	5.09 Environmental Compliance
	 	 	30	 
	5.10 Insurance
	 	 	30	 
	5.11 Taxes
	 	 	30	 






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	Section	 	Page
	5.12 ERISA Compliance
	 	 	31	 
	5.13 Subsidiaries
	 	 	31	 
	5.14 Margin Regulations; Investment Company Act
	 	 	31	 
	5.15 Disclosure
	 	 	32	 
	5.16 Compliance with Laws
	 	 	32	 
	5.17
Intellectual Property; Licenses, Etc.
	 	 	32	 
	 
	 	 	 	 
	ARTICLE VI. AFFIRMATIVE COVENANTS
	 	 	32	 
	6.01 Financial Statements
	 	 	32	 
	6.02 Certificates; Other Information
	 	 	33	 
	6.03 Notices
	 	 	34	 
	6.04 Payment of Obligations
	 	 	35	 
	6.05
Preservation of Existence, Etc.
	 	 	35	 
	6.06 Maintenance of Properties
	 	 	35	 
	6.07 Maintenance of Insurance
	 	 	35	 
	6.08 Compliance with Laws
	 	 	35	 
	6.09 Books and Records
	 	 	35	 
	6.10 Inspection Rights
	 	 	36	 
	6.11 Use of Proceeds
	 	 	36	 
	 
	 	 	 	 
	ARTICLE VII. NEGATIVE COVENANTS
	 	 	36	 
	7.01 Liens
	 	 	36	 
	7.02 Investments
	 	 	37	 
	7.03 Indebtedness
	 	 	37	 
	7.04 Fundamental Changes
	 	 	38	 
	7.05 Dispositions
	 	 	38	 
	7.06 Restricted Payments
	 	 	39	 
	7.07 Change in Nature of Business
	 	 	39	 
	7.08 Transactions with Affiliates
	 	 	39	 
	7.09 Burdensome Agreements
	 	 	40	 
	7.10 Use of Proceeds
	 	 	40	 
	7.11 Financial Covenants
	 	 	40	 
	 
	 	 	 	 
	ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
	 	 	40	 
	8.01 Events of Default
	 	 	40	 
	8.02 Remedies Upon Event of Default
	 	 	42	 
	8.03 Application of Funds
	 	 	43	 
	 
	 	 	 	 
	ARTICLE IX. MISCELLANEOUS
	 	 	43	 
	9.01
Amendments; Etc.
	 	 	43	 
	9.02 Notices and Other Communications; Facsimile Copies
	 	 	43	 
	9.03 No Waiver; Cumulative Remedies
	 	 	44	 
	9.04 Attorney Costs, Expenses and Taxes
	 	 	44	 
	9.05 Indemnification by the Borrower
	 	 	44	 
	9.06 Payments Set Aside
	 	 	45	 
	9.07 Successors and Assigns
	 	 	45	 
	9.08 Confidentiality
	 	 	47	 
	9.09 Set-off
	 	 	48	 
	9.10 Interest Rate Limitation
	 	 	48	 
	9.11 Counterparts
	 	 	49	 
	9.12 Integration
	 	 	49	 
	9.13 Survival of Representations and Warranties
	 	 	49	 






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	Section	 	Page
	9.14 Severability
	 	 	49	 
	9.15 Governing Law
	 	 	49	 
	9.16 Waiver of Right to Trial by Jury
	 	 	50	 
	9.17 Dispute Resolution Provision
	 	 	50	 
	9.18 USA Patriot Act Notice
	 	 	52	 
	9.19 Time of the Essence
	 	 	52	 
	9.20 ENTIRE AGREEMENT
	 	 	52	 
	 
	 	 	 	 
	SIGNATURES
	 	 	S-1	 
	 
	 	 	 	 
	SCHEDULES
	 	 	 	 
	 
	 	 	 	 
	5.05 Supplement to Interim Financial Statements
	 	 	 	 
	5.06 Litigation
	 	 	 	 
	5.09 Environmental Matters
	 	 	 	 
	5.13 Subsidiaries and Other Equity Investments
	 	 	 	 
	5.18 Intellectual Property Matters
	 	 	 	 
	7.01 Existing Liens
	 	 	 	 
	7.03 Existing Indebtedness
	 	 	 	 
	9.02 Lending Office, Addresses for Notices
	 	 	 	 
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Form of
	 	 	 	 
	 
	 	 	 	 
	A Loan Notice
	 	 	 	 
	B Note
	 	 	 	 
	C Compliance Certificate
	 	 	 	 
	E Opinion Matters
	 	 	 	 






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CREDIT AGREEMENT




     This CREDIT AGREEMENT (“Agreement”) is entered into as of June 5, 2007 by and
between iRobot Corporation, a Delaware corporation (the “Borrower”) and BANK OF AMERICA,
N.A. (the “Lender”).



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



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



ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS




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



     “Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified. “Control” means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto. Without limiting the generality of the
foregoing, a Person shall be deemed to be Controlled by another Person if such other Person
possesses, directly or indirectly, power to vote 10% or more of the securities having ordinary
voting power for the election of directors, managing general partners or the equivalent.



     “Agreement” means this Credit Agreement.



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




	 	(a)	 	with respect to Base Rate Loans, 1.0%;
	 
	 	(b)	 	with respect to Eurodollar Rate Loans and Letters of Credit, 1.25%.





     “Attorney Costs” means and includes all reasonable documented 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.



     “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.



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     “Audited Financial Statements” means the audited consolidated balance sheet of the
Borrower and its Subsidiaries for the fiscal year ended December 31, 2006, and the related
consolidated statements of income or operations, shareholders’ equity and cash flows for such
fiscal year of the Borrower and its Subsidiaries, including the notes thereto.



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



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



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



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



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



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



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



     “Code” means the Internal Revenue Code of 1986.



     “Commitment” means the obligation of the Lender to make Loans and L/C Credit
Extensions hereunder in an aggregate principal amount at any one time not to exceed Thirty Five
Million ($35,000,000) Dollars, as such amount may be adjusted from time to time in accordance with
this Agreement.



     “Compensating Balances” has the meaning specified in Section 2.08(a).



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



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



2









 





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



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



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



     “Current Assets” means the aggregate of cash plus short term marketable securities
plus accounts receivable.



     “Current Liabilities” means the current portion of the Borrower’s obligations for
borrowed money (including Obligations hereunder).



     “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 Base Rate plus (b) the
Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum;
provided, however, that with respect to a Eurodollar 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 2% per annum, in each case to the fullest extent permitted by
applicable Laws.



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



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



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



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



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



3









 





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



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



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



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



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



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



	 	 	 	 	 
	 

	Eurodollar Rate =  	  Eurodollar Base Rate	 	 
	 
	 

	 	 
	 
	  1.00 – Eurodollar Reserve Percentage	 	 





          Where,




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





     (a) the rate per annum equal to the rate determined by the Lender to be the offered
rate that appears on the page of the Telerate screen (or any successor thereto) that
displays an average British Bankers Association Interest Settlement Rate for deposits in
Dollars (for delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or



4









 






     (b) if the rate referenced in the preceding clause (a) does not appear on such page or
service or such page or service shall not be available, the rate per annum equal to the rate
determined by the Lender to be the offered rate on such other page or other service that
displays an average British Bankers Association Interest Settlement Rate for deposits in
Dollars (for delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or




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




     “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 applicable to the Lender under regulations issued from time to time by
the FRB for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency funding
(currently referred to as “Eurocurrency liabilities”). The Eurodollar Rate for each
outstanding Eurodollar Rate Loan shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.




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




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



          “Existing Letters of Credit” means the Two Million Dollar ($2,000,000.00) letter of
credit issued on April 6, 2007 on behalf of the Borrower for the benefit of Boston Properties
Limited Partership.



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



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



5









 





     “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.



     “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.



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



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




     (a) all obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;



6









 






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




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




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




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




     (f) capital leases and Synthetic Lease Obligations; and




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



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



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



     “Indemnitees” has the meaning specified in Section 9.05.



     “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 Payment Date” means, (a) as to any Loan other than a Base 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 Base Rate Loan, the last Business Day of each
calendar month and the Maturity Date.



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



7









 






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




     (ii) 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




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



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



     “IP Rights” has the meaning specified in Section 5.18.



     “IRS” means the United States Internal Revenue Service.



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



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



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



     “Lender Lease Loan” means the lease financing to be provided by Banc of America
Leasing & Capital, LLC or is designee.



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



8









 





     “Letter of Credit” means any letter of credit issued hereunder and shall include the
Existing Letters 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 the Lender.



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



     “Letter of Credit Sublimit” means an amount equal to Five Million ($5,000,000.00)
Dollars. The Letter of Credit Sublimit is part of, and not in addition to, the Commitment.



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



     “Loan” has the meaning specified in Section 2.01.



     “Loan Documents” means this Agreement and the Note.



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



     “Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business or, condition (financial or otherwise) of the
Borrower or the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the
ability of the Borrower 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 the Borrower of the Loan Documents to which it is a party.



     “Maturity Date” means June 5, 2010.



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



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



     “Obligations” means all advances to, and debts, liabilities, obligations (including,
without limitation, for reimbursement in connection with guaranties and letters of credit or in
connection with any depository, cash management and/or treasury management services or products
provided by the Lender or any of its affiliates to the Borrower including ePayables Solution),
agreements, undertakings, covenants and duties of, the Borrower arising under any Loan



9









 







Document, Swap Contract, or otherwise with respect to any Loan or Letter of Credit, or under
the Lender’s Treasury Services Terms and Conditions, or under any other agreements or documents of
every kind relating to any depository, treasury services products or cash management services
provided by the Lender for the benefit of or otherwise in respect of the Borrower (including all
renewals, extensions, amendments), including with limitation all interest, fees, charges, and
amounts chargeable to Borrower, 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 the Borrower 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 or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.



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



     “Participant” has the meaning specified in Section 9.07(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 the Borrower or any ERISA Affiliate or to which the Borrower or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time
during the immediately preceding five plan years.



     “Permitted Acquisition” means an acquisition of the capital stock or the property of
another Person, whether or not involving a merger or consolidation with such other Person by the
Borrower (so long as the Borrower is the surviving entity) or any Subsidiary of the Borrower,
provided that (i) any Person acquired is in



10









 







substantially the same field of business as the Borrower or any Subsidiary of the Borrower (or any
reasonable extensions or expansions thereof) and any property acquired (or the property of the
Person acquired) in such acquisition is used or useful in the same business as the Borrower or its
Subsidiaries were engaged in on the Closing Date (or any reasonable extensions or expansions
thereof), (ii) no Indebtedness is assumed or incurred in connection with the acquisition other than
Indebtedness permitted under clause (iv) hereof or Section 7.03, (iii) the acquisition is
“friendly” or non-hostile in nature, (iv) the total purchase price for all such acquisitions in the
aggregate during the term of this Agreement not exceed $15,000,000.00 inclusive of any unsecured
indebtedness assumed in connection with such acquisitions; and (v) the Borrower shall have
delivered to the Lender a pro forma compliance certificate demonstrating compliance with Section
7.11, inclusive (after giving effect to such acquisition on a pro forma basis) and certifying that
no Default or Event of Default would exist after giving effect to such acquisition.



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



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



     “Quick Ratio” means the ratio of Current Assets to Current Liabilities.



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



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



     “Responsible Officer” means the chief executive officer, president, chief financial
officer, treasurer or assistant treasurer of the Borrower. Any document delivered hereunder that
is signed by a Responsible Officer of the Borrower shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the part of such Borrower
and such Responsible Officer shall be conclusively presumed to have acted on behalf of the
Borrower.



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



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



11









 





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



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



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



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



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



     “Threshold Amount” means Two Million Five Hundred Thousand Dollars ($2,500,000.00).



12









 





     “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 Base Rate Loan or a
Eurodollar 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.



     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.




     (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.



13









 






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



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



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



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



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



ARTICLE II.

THE COMMITMENT AND CREDIT EXTENSIONS




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



14









 





     2.02 Borrowings, Conversions and Continuations of Loans.




     (a) Each borrowing, each conversion of a Loan from one Type to the other, and each
continuation of a Eurodollar Rate Loan shall be made upon the Borrower’s irrevocable notice
to the Lender, which may be given by telephone. Each such notice must be received by the
Lender not later than 1:00 p.m. (i) three Business Days prior to the requested date of any
borrowing of, conversion to or continuation of a Eurodollar Rate Loan or of any conversion
of a Eurodollar Rate Loan to a Base Rate Loan, and (ii) on the requested date of any
borrowing of a Base Rate Loan. Notwithstanding anything to the contrary contained herein,
but subject to the provisions of Section 9.02(d), any such telephonic notice may be given by
an individual who has been authorized in writing to do so by a Responsible Officer of the
Borrower. Each such telephonic notice must be confirmed promptly by delivery to the Lender
of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the
Borrower. Each borrowing of, conversion to or continuation of a Eurodollar Rate Loan shall
be in a principal amount of $250,000 or a whole multiple of $50,000 in excess thereof.
Except as provided in Section 2.03(c), each borrowing of or conversion to a Base
Rate Loan shall be in a principal amount of $100,000 or a whole multiple of $50,000 in
excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether
the Borrower is requesting a borrowing, a conversion of a Loan from one Type to the other,
or a continuation of a Eurodollar Rate Loan, (ii) the requested date of the borrowing,
conversion or continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of the Loan to be borrowed, converted or continued, (iv) the Type of Loan
to be borrowed or to which an existing Loan is to be converted, and (v) if applicable, the
duration of the Interest Period with respect thereto. If the Borrower fails to specify a
Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting a
conversion or continuation, then the applicable Loan shall be made as, or converted to, a
Base Rate Loan. Any such automatic conversion to a Base Rate Loan shall be effective as of
the last day of the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loan. If the Borrower requests a borrowing of, conversion to, or continuation of a
Eurodollar Rate Loan in any such Loan Notice, but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one month.




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




     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or
converted only on the last day of an Interest Period for such Eurodollar Rate



15









 







Loan. During
the existence of an Event of Default, no Loan may be requested as, converted to or continued
as Eurodollar Rate Loans without the consent of the Lender.




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




     (e) After giving effect to all borrowings, all conversions of Loans from one Type to
the other, and all continuations of Loans as the same Type, there shall not be more than
eight (8) Interest Periods in effect.



     2.03 Letters of Credit.




     (a) The Letter of Credit Commitment.




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




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




     (A) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Lender from
issuing such Letter of Credit, or any Law applicable to the Lender or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Lender shall prohibit, or
request that the Lender refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the
Lender with respect to such Letter of Credit any restriction, reserve or
capital requirement (for which the Lender is not otherwise compensated



16









 







hereunder) not in effect on the Closing Date, or shall impose upon the
Lender any unreimbursed loss, cost or expense which was not applicable on
the Closing Date and which the Lender in good faith deems material to it;




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




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




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




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




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




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




     (i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to the Lender in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer of the
Borrower. Such L/C Application must be received by the Lender not later than 1:00
p.m., at least two Business Days (or such later date and time as the Lender may agree
in a particular instance in its sole discretion) prior to the proposed issuance date
or date of amendment, as the case may be. In the case of a request for an initial
issuance of a Letter of Credit, such Letter of Credit Application shall specify in
form and detail reasonably satisfactory to the Lender: (A) the proposed issuance date
of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in case of
any drawing thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G) such other matters as the
Lender may require. In the case of a request for an amendment of any outstanding
Letter of Credit, such Letter of Credit Application shall specify in form and detail
reasonably satisfactory to the Lender (A) the Letter of Credit to be amended; (B) the
proposed date of amendment thereof (which shall be a Business Day); (C) the nature of
the proposed amendment; and (D) such other matters as the Lender may require.



17









 






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




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




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




     (c) Drawings and Reimbursements.




     (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the Lender shall notify the Borrower thereof.
Not later than 1:00 p.m. on the date of any payment by the
Lender under a Letter of Credit (each such date, an “Honor Date”), of
which payment the Lender has provided notice to the Borrower, the Borrower shall
reimburse the Lender in an amount equal to the amount of such drawing. If the
Borrower fails to so reimburse the Lender, the Borrower shall be deemed to have
requested a borrowing of a Base Rate Loan to be disbursed on the Honor Date in an
amount equal to the amount of such unreimbursed drawing, without regard to the minimum
and multiples specified in Section 2.02 for the principal amount of Base Rate
Loans, but subject to the amount of the unutilized portion of the Commitment and the
conditions set forth in Section 4.02 (other than the delivery of a Loan
Notice).



18









 






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




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




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




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




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




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



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



19









 






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




     (f) Cash Collateral. Upon the request of the Lender, (i) if the Lender has
honored any full or partial drawing request under any Letter of Credit and such drawing has
not been reimbursed on the applicable Honor Date in accordance with Section 2.03(c), or (ii)
if, as of the Letter of Credit Expiration Date, any Letter of Credit may for any reason
remain outstanding and partially or wholly undrawn, the Borrower shall promptly Cash
Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such
Outstanding Amount determined as of the applicable Honor Date or the Letter of Credit
Expiration Date, as the case may be). For purposes hereof, “Cash Collateralize”
means to pledge and deposit with or deliver to the Lender, as collateral for
the L/C Obligations, cash or deposit account balances pursuant to documentation in form
and substance reasonably to the Lender. Derivatives of such term have corresponding
meanings. The Borrower hereby grants to the Lender a security interest in all such cash,
deposit accounts and all balances therein and all proceeds of the foregoing. Cash
collateral shall be maintained in blocked, non-interest bearing deposit accounts at the
Lender.




     (g) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the
Lender and the Borrower when a Letter of Credit is issued (i) the rules of the
“International Standby Practices 1998” published by the Institute of International



20









 







Banking
Law & Practice (or such later version thereof as may be in effect at the time of issuance)
shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and
Practice for Documentary Credits, as most recently published by the International Chamber of
Commerce (the “ICC”) at the time of issuance (including the ICC decision published
by the Commission on Banking Technique and Practice on April 6, 1998 regarding the European
single currency (euro)) shall apply to each commercial Letter of Credit.




     (h) Letter of Credit Fees. The Borrower shall pay to the Lender a Letter of
Credit fee for each 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 Letter of
Credit shall be computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect.




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




     (j) Conflict with Letter of Credit Application. In the event of any conflict
between the terms hereof and the terms of any Letter of Credit Application, the terms hereof
shall control.



     2.04 Prepayments.




     (a) The Borrower may, upon notice to the Lender, at any time or from time to time
voluntarily prepay any Loan in whole or in part without premium or penalty; provided
that (i) such notice must be received by the Lender not later than 1:00 p.m. (A) three
Business Days prior to any date of prepayment of a Eurodollar Rate Loan, and (B) on the date
of prepayment of a Base Rate Loan; (ii) any prepayment of a Eurodollar Rate
Loan shall be in a principal amount of $250,000 or a whole multiple of $50,000 in
excess thereof; and (iii) any prepayment of a Base Rate Loan shall be in a principal amount
of $100,000 or a whole multiple of $50,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify the date
and amount of such prepayment and the Type(s) of Loan(s) to be prepaid. If such notice is
given by the Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein. Any
prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon,
together with any additional amounts required pursuant to Section 3.05.



21









 






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



     2.05 Termination or Reduction of Commitment. The Borrower may, upon notice to the Lender,
terminate the Commitment, or from time to time permanently reduce the Commitment; provided
that (i) any such notice shall be received by the Lender not later than 1:00 p.m., five Business
Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $250,000 or any whole multiple of $50,000 in excess thereof, (iii) the Borrower
shall not terminate or reduce the Commitment if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Outstandings would exceed the Commitment, and (iv) if, after
giving effect to any reduction of the Commitment, the Letter of Credit Sublimit exceeds the amount
of the Commitment, such Sublimit shall be automatically reduced by the amount of such excess.



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



     2.07 Interest.




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




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




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



22









 





     2.08 Fees.



     In addition to certain fees described in subsections (h) and (i) of Section 2.03
Borrower shall maintain on deposit with the Lender collected funds equal to the greater of: (a)
forty percent (40%) of total cash or cash equivalents of the Borrower available for investment; or
(b) Ten Million ($10,000,000.00) Dollars (the “Compensating Balances”). If the Borrower fails to
maintain the Compensating Balances, the Lender reserves the right to adjust the Applicable Rate to
compensate the Lender for its loss of its required rate of return.



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



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



     2.11 Payments Generally.




     (a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise
expressly provided herein, all payments by the Borrower hereunder shall be made to the
Lender at the applicable Lending Office in Dollars and in immediately available funds not
later than 3:00 p.m. on the date specified herein. All payments received by the Lender
after 3:00 p.m. shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue.




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




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



23









 







Lender that
it has obtained or will obtain the funds for any Loan in any particular place or manner.



ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY




     3.01 Taxes.




     (a) Any and all payments by the Borrower to or for the account of the Lender under any
Loan Document shall be made free and clear of and without deduction for any and all present
or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or
similar charges, and all liabilities with respect thereto, excluding taxes imposed
on or measured by its overall net income, and franchise taxes imposed on it (in lieu of net
income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of
which the Lender is organized or maintains a lending office (all such non-excluded taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be
required by any Laws to deduct any Taxes from or in respect of any sum payable under any
Loan Document to the Lender, (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to additional sums
payable under this Section), the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable Laws, and (iv) within 30 days after the date
of such payment, the Borrower shall furnish to the Lender the original or a certified copy
of a receipt evidencing payment thereof.




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




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




     (d) The Borrower agrees to indemnify the Lender for (i) the full amount of Taxes and
Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by the Lender, (ii) amounts payable under
Section 3.01(c) and (iii) any liability (including additions to tax, penalties,
interest and expenses) arising therefrom or with respect thereto, in each case whether or
not such Taxes or Other Taxes were correctly or legally imposed or asserted by the



24









 







relevant
Governmental Authority, other than Taxes or liability resulting from the Lender’s gross
negligence or willful misconduct. Payment under this subsection (d) shall be made within 30
days after the date the Lender makes a demand therefor.



     3.02 Illegality. If the Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for the Lender or its Lending Office to
make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon
the Eurodollar Rate, then, on notice thereof by the Lender to the Borrower, any obligation of the
Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate
Loans shall be suspended until the Lender notifies the Borrower that the circumstances giving rise
to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon
demand from the Lender, prepay or, if applicable, convert all Eurodollar Rate Loans to Base Rate
Loans, either on the last day of the Interest Period therefor, if the Lender may lawfully continue
to maintain such Eurodollar Rate Loans to such day, or immediately, if the Lender may not lawfully
continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the
Borrower shall also pay accrued interest on the amount so prepaid or converted. The Lender agrees
to designate a different Lending Office if such designation will avoid the need for such notice and
will not, in the good faith judgment of the Lender, otherwise be materially disadvantageous to the
Lender.



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



     3.04 Increased Cost and Reduced Return; Capital Adequacy.




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



25









 






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



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




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




     (b) any failure by the Borrower (for a reason other than the failure of the Lender to
make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on
the date or in the amount notified by the Borrower,


including any loss of anticipated profits and any loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained. The Borrower shall also pay any customary
administrative fees charged by the Lender in connection with the foregoing.



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




     3.06 Requests for Compensation. A certificate of the Lender claiming compensation under this
Article III and setting forth in reasonable detail the additional amount or amounts to be
paid to it hereunder shall be conclusive in the absence of demonstrable error. In determining such
amount, the Lender may use any reasonable averaging and attribution methods. Any claim for
compensation under this Article III shall be made by the Lender within a reasonable time after it
becomes aware of the circumstances giving rise to such claim.



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



ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS




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



26









 






     (a) The Lender’s receipt of the following, each of which shall be originals or
facsimiles (followed promptly by originals) unless otherwise specified, each properly
executed by a Responsible Officer of the Borrower, 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 reasonably satisfactory to the Lender and its legal counsel:




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




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




     (iii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of the Borrower as the Lender may
reasonably 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 the Borrower is a party;




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




     (v) a favorable opinion of Goodwin Proctor LLP, counsel to the Borrower,
addressed to the Lender, as to the matters set forth in Exhibit E and such
other matters concerning the Borrower and the Loan Documents as the Lender may
reasonably request; 




     (vi) a certificate of a Responsible Officer of the Borrower either (A) attaching
copies of all consents, licenses and approvals required in connection with the
execution, delivery and performance by the Borrower and the validity against the
Borrower 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 the 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 the date of
the Audited Financial Statements that has had or could be reasonably expected to have,
either individually or in the aggregate, a Material Adverse Effect;;




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



27









 






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




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




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



     4.02 Conditions to all Credit Extensions. The obligation of the Lender to make any Credit
Extension is subject to the following conditions precedent:




     (a) The representations and warranties of the Borrower 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 or therewith, shall be true and correct in all material
respects on and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which case they
shall be true and correct in all material respects as of such earlier date, and except that
for purposes of this Section 4.02, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.




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




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



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



ARTICLE V.

REPRESENTATIONS AND WARRANTIES




     The Borrower represents and warrants to the Lender that:



     5.01 Existence, Qualification and Power; Compliance with Laws. Borrower (a) is a corporation
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



28









 







Documents to
which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of
each jurisdiction where its ownership, lease or operation of properties or the conduct of its
business requires such qualification or license, and (d) is in compliance with all Laws; except in
each case referred to in clause (b)(i), (c) or (d), to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.



     5.02 Authorization; No Contravention. The execution, delivery and performance by the Borrower
of each Loan Document to which such Person is party, have been duly authorized by all necessary
corporate or other organizational action, and do not and will not (a) contravene the terms of any
of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention
of, or the creation of any Lien under, (i) any Contractual Obligation to which such Person is a
party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Person or its property is subject; or (c) violate any Law; except in each case
referred
to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.



     5.03 Governmental Authorization; Other Consents. 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, the Borrower of this Agreement or any other Loan Document.



     5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by the Borrower that is party thereto. This
Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal,
valid and binding obligation of the Borrower, enforceable against the Borrower that is party
thereto in accordance with its terms.



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 the financial condition of the Borrower and its
Subsidiaries as of the date thereof and their results of operations for the period covered
thereby in accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; and (iii) show all material indebtedness and
other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and Indebtedness.




     (b) The unaudited consolidated financial statements of the Borrower and its
Subsidiaries dated March 31, 2007, 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 the Borrower and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby, subject, in the



29









 







case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments. Schedule 5.05 sets forth all material indebtedness and other
liabilities, direct or contingent, of the Borrower and its consolidated Subsidiaries as of
the date of such financial statements as required by SEC guidelines.




     (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 could reasonably be
expected to have a Material Adverse Effect.



     5.06 Litigation. Except as specifically disclosed in Schedule 5.06, there are no actions, suits, proceedings,
claims or disputes pending or, to the knowledge of the Borrower, threatened in writing, at law, in
equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of
its Subsidiaries or against any of their properties or revenues that (a) purport to prevent, hinder
or dalay 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, could reasonably be
expected to have a Material Adverse Effect.



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



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



     5.09 Environmental Compliance. The Borrower and its Subsidiaries conduct in the ordinary
course of business a review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on their respective
businesses, operations and properties, and as a result thereof the Borrower has reasonably
concluded that, except as specifically disclosed in Schedule 5.09, such Environmental Laws and
claims could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.



     5.10 Insurance. The properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the Borrower, 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 the Borrower or the applicable
Subsidiary operates.



     5.11 Taxes. The 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



30









 







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



     5.12 ERISA Compliance.




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




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




     (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the 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 the 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 the Borrower nor any
ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or
4212(c) of ERISA.



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



     5.14 Margin Regulations; Investment Company Act.




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



31









 






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



     5.15 Disclosure. The Borrower has disclosed to the Lender all agreements and instruments to
which it or any of its Subsidiaries is subject that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. No report, financial statement,
certificate or other information furnished (in writing) by or on behalf of the Borrower to the
Lender in connection with the transactions contemplated hereby and the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by or when taken together with other
information so furnished) contains any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial information,
the Borrower represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.



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



     5.17 Intellectual Property; Licenses, Etc.



     The Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks,
service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the
operation of their respective businesses, without conflict with the rights of any other Person. To
the knowledge of the Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be employed, by the Borrower
or any Subsidiary infringes upon any rights held by any other Person. Except as specifically
disclosed in Schedule 5.18, no claim or litigation regarding any of the foregoing is
pending or, to the knowledge of the Borrower, threatened in writing, which, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect.



ARTICLE VI.

AFFIRMATIVE COVENANTS




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



     6.01 Financial Statements. Deliver to the Lender, in form and detail reasonably satisfactory
to the Lender:



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     (a) as soon as available, but in any event within 120 days after the end of each fiscal
year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as
at the end of such fiscal year, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in reasonable detail
and prepared in accordance with GAAP, audited and accompanied by a report and opinion of
PriceWaterhouseCoopers or another independent certified public accountant of nationally
recognized standing reasonably acceptable to the Lender, which report and opinion shall be
prepared in accordance with generally accepted auditing standards and shall not be subject
to any “going concern” or like qualification or exception or any qualification or exception
as to the scope of such audit;




     (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 the Borrower, a consolidated balance
sheet of the 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 the 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 the Borrower as
fairly presenting in all material respects the financial condition, results of operations,
shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with
GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; and




     (c) as soon as available, but in any event within 90 days after the end of such fiscal
year of the Borrower, a budget for the then current year, in form and substance reasonably
satisfactory to the Lender.


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




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




     (a) [Reserved];




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




     (c) promptly after any request by the Lender, copies of any detailed audit reports,
management letters or recommendations submitted to the board of directors (or the audit
committee of the board of directors) of the Borrower by independent



33









 







accountants in
connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any
of them;




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




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



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



     6.03 Notices. Promptly notify the Lender:




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




     (b) of any matter that has resulted or could 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 the Borrower or any Subsidiary; (ii) any dispute, litigation,
investigation, proceeding or suspension between the Borrower or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any
applicable Environmental Laws;




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




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




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



34









 





     6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all
its obligations and liabilities, including (a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets; (b) all lawful claims which, if unpaid,
would by law become a Lien upon its property; 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; except in each case referred to in clause (a), (b) or (c), unless the
same are being contested in good faith by appropriate proceedings diligently conducted and adequate
reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary.



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



     6.06 Maintenance of Properties. 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 excepted; (b) make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation
and maintenance of its facilities.



     6.07 Maintenance of Insurance. Maintain with financially sound and reputable insurance
companies not Affiliates of the 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 as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days’ prior notice to the
Lender of termination, lapse or cancellation of such insurance.



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



     6.09 Books and Records. Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower or such Subsidiary, as
the case may be; and (b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory jurisdiction over the
Borrower or such Subsidiary, as the case may be.



35









 





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



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



ARTICLE VII.

NEGATIVE COVENANTS




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



     7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than the following:




     (a) Liens pursuant to any Loan Document;




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




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




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




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




     (f) deposits to secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety bonds (other than bonds related to



36









 







judgments or
litigation), performance bonds and other obligations of a like nature incurred in the
ordinary course of business;




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




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




     (i) Liens securing Indebtedness permitted under Section 7.03(e);
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 the Borrower or such Subsidiary in the form of cash
equivalents, short-term marketable securities or intermediate term government bonds;




     (b) advances to officers, directors and employees of the Borrower and Subsidiaries in
an aggregate amount not to exceed $1,000,000.00 at any time outstanding, for travel,
entertainment, relocation and analogous ordinary business purposes;




     (c) Investments of the Borrower in any wholly-owned Subsidiary and Investments of any
wholly-owned Subsidiary in the Borrower or in another wholly-owned Subsidiary;




     (d) 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;




     (e) Guarantees permitted by Section 7.03; and




     (f) Permitted Acquisitions.



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




     (a) Indebtedness under the Loan Documents;




     (b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and
any refinancings, refundings, renewals or extensions thereof; provided that the
amount of such Indebtedness is not increased at the time of such refinancing, refunding,



37









 







renewal or extension except by an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred, in connection with such refinancing
and by an amount equal to any existing commitments unutilized thereunder;




     (c) Guarantees of the Borrower in respect of Indebtedness otherwise permitted hereunder
of the Borrower;




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




     (e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase
money obligations for fixed or capital assets within the limitations set forth in
Section 7.01(i); provided, however, that the aggregate amount of all
such Indebtedness at
any one time outstanding shall not exceed $17,000,000.00 (inclusive of the Lender Lease
Loan); and




     (f) unsecured Indebtedness in an aggregate principal amount not to exceed $500,000.00
at any time outstanding exclusive of unsecured Indebtedness permitted to be assumed in
connection with Permitted Acquisitions.



     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) the Borrower, provided that the 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




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



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




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



38









 






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




     (e) Dispositions permitted by Section 7.04;




     (f) Licenses of IP Rights of similar assets of the Borrower in the ordinary course of
its business.



     provided, however, that any Disposition pursuant to clauses (a) through (e)
shall be for fair market value.



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




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




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




     (c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire shares
of its common stock or other common equity interests or warrants or options to acquire any
such shares with the proceeds received from the substantially concurrent issue of new shares
of its common stock or other common equity.



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



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



39









 





     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 the Borrower or any Guarantor or to otherwise transfer property to the Borrower or any
Guarantor, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the
Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such
Person; provided, however, that this clause (iii) shall not prohibit any negative
pledge incurred or provided in favor of any holder of Indebtedness permitted under Section
7.03(e) 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 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock
(within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.



     7.11 Financial Covenants.




     (a) Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth at
any time to be less than Seventy-Five Million ($75,000,000.00) Dollars.




     (b) Quick Ratio. Permit the Quick Ratio at any time to be less than 1.5: 1.0.




     (c) Minimum Profit. Permit the Borrower’s annual net income (as determined in
accordance with GAAP) before taxes and extraordinary items to be less than $1.00.



ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES




     8.01 Events of Default. Any of the following shall constitute an Event of Default:




     (a) Non-Payment. The Borrower 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 fee
due hereunder, or (iii) within five days after the same becomes due, any other amount
payable hereunder or under any other Loan Document; or




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




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



40









 






     (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the Borrower
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 made;
or




     (e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder
and Indebtedness under Swap Contracts) having an aggregate principal amount (including
undrawn committed or available amounts and including amounts owing to all creditors under
any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B)
fails to observe or perform any other agreement or condition relating to any such
Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event occurs, the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or
redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem
such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become
payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any
Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from
(A) any event of default under such Swap Contract as to which the Borrower or any Subsidiary
is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as
so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an
Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the
Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or




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




     (g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its debts as
they become due, or (ii) any writ or warrant of attachment or execution or similar process
is



41









 







issued or levied against all or any material part of the property of any such Person and
is not released, vacated or fully bonded within 30 days after its issue or levy; or




     (h) Judgments. There is entered against the Borrower or any Subsidiary (i) a
final judgment or order for the payment of money in an aggregate amount exceeding the
Threshold Amount (to the extent not covered by independent third-party insurance as to which
the insurer does not dispute coverage), or (ii) any one or more non-monetary final
judgments that have, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a period of 30
consecutive days during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or




     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result in liability
of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC
in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA
Affiliate fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or




     (j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted hereunder or
satisfaction in full of all the Obligations (other than unasserted contingent
indemnification obligations), ceases to be in full force and effect; or the Borrower in
writing contests in any manner the validity or enforceability of any Loan Document; or the
Borrower denies that it has any or further liability or obligation under any Loan Document,
or purports to revoke, terminate or rescind any Loan Document.



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




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




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




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




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



42









 




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




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



ARTICLE IX.

MISCELLANEOUS




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



     9.02 Notices and Other Communications; Facsimile Copies.




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




     (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents and
signatures shall, subject to applicable Law, have the same force and effect as



43









 







manually-signed originals and shall be binding on the Borrower and the Lender. The
Lender may also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided, however, that the failure to
request or deliver the same shall not limit the effectiveness of any facsimile document or
signature.




     (c) Reliance by Lender. The Lender shall be entitled to rely and act upon any
notices (including telephonic Loan Notices) purportedly given by or on behalf of the
Borrower even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Borrower shall indemnify the Lender, its Affiliates, and their respective
officers, directors, employees, agents and attorneys-in-fact from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower, other than any such losses, costs,
expenses and liabilities resulting from the Lender’s gross negligence or willful misconduct.
All telephonic notices to and other communications with the Lender may be recorded by the
Lender, and the Borrower hereby consents to such recording.



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



     9.04 Attorney Costs, Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the
Lender for all costs and expenses reasonably 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 (b) to pay or reimburse the Lender for all costs and expenses incurred in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement
or the other Loan Documents (including all such costs and expenses incurred during any “workout” or
restructuring in respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and
expenses shall include all search, filing, recording, title insurance and appraisal charges and
fees and taxes related thereto, and other out-of-pocket expenses reasonably incurred by the Lender
and the cost of independent public accountants and other outside experts retained by the Lender.
All amounts due under this Section 9.04 shall be payable within thirty days after demand
therefor. The agreements in this Section shall survive the termination of the Commitment and
repayment, satisfaction or discharge of all other Obligations.



     9.05 Indemnification by the Borrower. Whether or not the transactions contemplated hereby are consummated, the Borrower shall
indemnify and hold harmless the Lender, its Affiliates, and their respective directors, officers,
employees, counsel, agents and



44









 







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



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



     9.07 Successors and Assigns.




     (a) The provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby, except that
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Lender and the Lender
may not assign or otherwise transfer any of its rights or obligations hereunder except (i)
to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section,
(ii)



45









 







by way of participation in accordance with the provisions of subsection (c) of this
Section, or (iii) by way of pledge or assignment of a security interest subject to the
restrictions of subsection (e) 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, Participants to the extent
provided in subsection (c) of this Section and, to the extent expressly contemplated hereby,
the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this
Agreement.




     (b) The Lender may at any time assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a portion of
the Commitment, the Loans and L/C Obligations at the time owing to it) pursuant to
documentation acceptable to the Lender and the assignee, it being understood and agreed that
with respect to any Letters of Credit outstanding at the time of any such assignment, the
Lender may sell to the assignee a ratable participation in such Letters of Credit. From and
after the effective date specified in such documentation, such Eligible Assignee shall be a
party to this Agreement and, to the extent of the interest assigned by the Lender, have the
rights and obligations of the Lender under this Agreement, and the Lender shall, to the
extent of the interest so assigned, be released from its obligations under this Agreement
(and, in the case of an assignment of all of the Lender’s rights and obligations under this
Agreement, shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 3.01, 3.04, 3.05, 9.04 and 9.05
with respect to facts and circumstances occurring prior to the effective date of such
assignment, and shall continue to have all of the rights provided hereunder to the Lender in
its capacity as issuer of any Letters of Credit outstanding at the time of such assignment).
Upon request, the Borrower (at its expense) shall execute and deliver new or replacement
Notes to the Lender and the assignee, and shall execute and deliver any other documents
reasonably necessary or appropriate to give effect to such assignment and to provide for the
administration of this Agreement after giving effect thereto.




     (c) The Lender may at any time, without the consent of, or notice to, the Borrower,
sell participations to any Person (other than a natural person or the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion
of the Lender’s rights and/or obligations under this Agreement (including all or a portion
of its Commitment and/or the outstanding Letters of Credit and/or the Loans and/or the
reimbursement obligations in respect of Letters of Credit); provided that (i) the
Lender’s obligations under this Agreement shall remain unchanged, (ii) the Lender shall
remain solely responsible to the Borrower for the performance of such obligations and (iii)
the Borrower shall continue to deal solely and directly with the Lender in connection with
the Lender’s rights and obligations under this Agreement. Any agreement or instrument
pursuant to which the Lender sells such a participation shall provide that the Lender shall
retain the sole right to enforce this Agreement and to approve any amendment, modification
or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that the Lender will not, without the consent
of the Participant, agree to any amendment, waiver or other modification that would (i)
postpone any date upon which any payment of money is scheduled to be made to such




46









 






Participant, or (ii) reduce the principal, interest, fees or other amounts payable to
such Participant. Subject to subsection (d) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 3.01, 3.04 and
3.05 to the same extent as if it were the Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.09 as though it were
the Lender.




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




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




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




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




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




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



     9.08 Confidentiality. The Lender agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information confidential), (b)
to the extent requested by any regulatory authority, (c) to the extent required by applicable laws
or regulations or by any subpoena or similar legal process, (d) to any other party



47









 







hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a result of a breach of this
Section or (y) becomes available to the Lender on a nonconfidential basis from a source other than
the Borrower. For purposes of this Section, “Information” means all information received
from the Borrower relating to the Borrower or any of its businesses, other than any such
information that is available to the Lender on a nonconfidential basis prior to disclosure by the
Borrower, provided that, in the case of information received from the Borrower after the
date hereof, such information either (x) consists of financial statements or (y) is clearly
identified 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 the Lender provided by law, upon the
occurrence and during the continuance of any Event of Default, the Lender is authorized at any time
and from time to time, without prior notice to the Borrower, any such notice being waived by the
Borrower to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held by, and other indebtedness at
any time owing by, the Lender to or for the credit or the account of the Borrower against any and
all Obligations then due and owing to the Lender hereunder or under any other Loan Document, now or
hereafter existing, irrespective of whether or not the Lender shall have made demand under this
Agreement or any other Loan Document and although such Obligations may be denominated in a currency
different from that of the applicable deposit or indebtedness. The Lender agrees promptly to
notify the Borrower after any such set-off and application; provided, however, that
the failure to give such notice shall not affect the validity of such set-off and application.



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



48









 





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



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



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



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



     9.15 Governing Law.




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




     (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS SITTING IN THE
CITY OF BOSTON OR OF THE UNITED STATES FOR THE EASTERN DISTRICT OF SUCH STATE, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER AND THE LENDER EACH CONSENTS, FOR



49









 







ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. THE BORROWER AND THE LENDER EACH IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER AND THE
LENDER EACH WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.



     9.16 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.



     9.17 Dispute Resolution Provision.



     This paragraph, including the subparagraphs below, is referred to as the “Dispute Resolution
Provision.” This Dispute Resolution Provision is a material inducement for the parties entering
into this agreement.



     (a) This Dispute Resolution Provision 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 Dispute Resolution Provision only, the term “parties” shall
include any parent corporation, subsidiary or affiliate of the Lender involved in the servicing,
management or administration of any obligation described or evidenced by this agreement.



     (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 “Act”). The
Act will apply even though this agreement provides that it is governed by the law of a specified
state.



50









 





     (c) Arbitration proceedings will be determined in accordance with the 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 Dispute Resolution Provision.
In the event of any inconsistency, the terms of this Dispute Resolution Provision shall control.
If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any
provision of this arbitration clause, the Lender may designate 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 real or tangible personal property collateral for this credit is
located or if there is no such collateral, in the state specified in the governing law section of
this agreement. All Claims shall be determined by one arbitrator; however, if Claims exceed Five
Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided by three
arbitrators. All arbitration hearings shall commence within ninety (90) days of the demand for
arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s)
shall be issued within thirty (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
sixty (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 and
have 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 any statutes of limitation, 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), except as set forth at
subparagraph (h) of this Dispute Resolution Provision. The arbitrator(s) shall have the power to
award legal fees pursuant to the terms of this agreement.



     (f) This paragraph 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) Any arbitration or trial by a judge of any Claim will take place on an individual basis
without resort to any form of class or representative action (the “Class Action Waiver”).
Regardless of anything else in this Dispute Resolution Provision, the validity and effect of the
Class Action Waiver may be determined only by a court and not by an arbitrator. The parties to
this Agreement acknowledge that the Class Action Waiver is material and essential to the
arbitration of any disputes between the parties and is nonseverable from the agreement to arbitrate
Claims. If the Class Action Waiver is limited, voided or found unenforceable, then the parties’
agreement to arbitrate shall be null and void with respect to such proceeding, subject to



51









 







the right to appeal the limitation or invalidation of the Class Action Waiver. The Parties
acknowledge and agree that under no circumstances will a class action be arbitrated.



     (i) 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 waiver of jury trial shall remain in effect even if the Class Action Waiver is
limited, voided or found unenforceable. WHETHER THE CLAIM IS DECIDED BY ARBITRATION OR BY TRIAL BY
A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING
UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.



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



     9.19 Time of the Essence.



     Time is of the essence of the Loan Documents.



     9.20 ENTIRE AGREEMENT. This Agreement and the other Loan Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties. There are no unwritten oral agreements between the
parties.



52









 





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



	 	 	 	 	 	 	 
	 	 	iROBOT CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Geoffrey P. Clear	 	 
	 

	 	 	 	 	 	 
	 	 	Name:  Geoffrey P. Clear
	 	 	Title:     Chief Financial Officer






53









 






	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard J. MacDonald	 	 
	 

	 	 	 	 	 	 
	 	 	Name:  Richard J. MacDonald
	 	 	Title:     Vice President






54









 






SCHEDULE 5.05




SUPPLEMENT TO INTERIM FINANCIAL STATEMENTS




NONE




Schedule 5.05





 









 








SCHEDULE 5.06




LITIGATION




NONE




Schedule 5.06




 









 





SCHEDULE 5.09




ENVIRONMENTAL MATTERS




NONE




Schedule 5.09




 









 








SCHEDULE 5.13




SUBSIDIARIES




AND OTHER EQUITY INVESTMENTS




Part (a). Subsidiaries.





	 	a.	 	iRobot Securities Corporation, a Massachusetts securities corporation (FID:
203-911-125)
	 
	 	b.	 	iRobot US Holdings, Inc., a Delaware corporation (FID: 20-3635237)
	 
	 	c.	 	iRobot Holdings LLC, a Delaware corporation (FID: 20-3635307)
	 
	 	d.	 	iRobot (India) Private Limited, an Indian corporation (No.:
U72200KA2005PTC037429)
	 
	 	e.	 	iRobot Corporation a registered office in Hong Kong (No. 33844790-000-08-05-3)
	 
	 	f.	 	Shenzhen iRobot Robot Technology Consulting Company Limited





Part (b). Other Equity Investments.




NONE




Schedule 5.13




 









 





SCHEDULE 5.18




INTELLECTUAL PROPERTY MATTERS




NONE




Schedule 5.18




 









 





SCHEDULE 7.01




EXISTING LIENS




     Security interest in accounts arising from the Borrower’s sales of good or performance of
services to Brookstone Purchasing, Inc., granted to The CIT Group Commercial Services, Inc.
pursuant to UCC financing statement no. 61164292 filed with the Delaware Secretary of State on
April 6, 2006.



Schedule 7.01




 









 





SCHEDULE 7.03




EXISTING INDEBTEDNESS




NONE




Schedule 7.03




 









 





SCHEDULE 9.02




NOTICE ADDRESSES AND LENDING OFFICE




BORROWER:

iRobot Corporation

63 South Avenue

Burlington, Massachusetts 01803

Attention: Joseph P. Mullin

Telephone: (781) 418-3187

Facsimile: (781) 345-0201

Electronic Mail: jmulin@irobot.com

Website Address:    www.irobot.com




with a copy to:

Goodwin Procter LLP

53 State Street

Boston, Massachusetts 02109

Attention: Mark D. Smith

Telephone: (617) 570-1740

Facsimile: (617) 523-1231

Electronic Mail: marksmith@goodwinprocter.com

Website Address:    www.goodwinprocter.com




LENDER




Lending Office for Loans, payments with

respect thereto and payments of fees other than

Letter of Credit fees:




BANK OF AMERICA, N.A.

100 Federal Street

Boston, Massachusetts 02110

Mail Code: MA5-100-07-07

Attn: M. Fay Green

Telephone: (617) 434-2537

Facsimile: (617) 434-2152

Electronic Mail: myrna.f.green@bankofamerica.com

Account No.1093601001000

Ref:Company No.493

ABA# 026009593




with a copy to:




Goulston & Storrs P.C.

400 Atlantic Avenue

Boston, Massachusetts 02110




Section 9.02 (i)




 









 





Attn: James H. Lerner, Esq.

Telephone: (617) 574-3525

Facsimile: (617) 574-7607

Electronic Mail: jlerner@goulstonstorrs.com




Lending Office for Letters of Credit and

payments with respect thereto, including

Letter of Credit fees:




BANK OF AMERICA, N.A

Attn: Kathy Hudson CT2-515-BB12.

Transaction Processing

70 Batterson Park Road

Farmington, CT 06032




Fax Advance and Payment Requests to:

(888) 841-8160




Section 9.02 (ii)




 









 





Notices (other than Requests for Credit Extensions):




BANK OF AMERICA, N.A.

100 Federal Street

Boston, Massachusetts 02110

Mail Code: MA5-100-07-06

Attn: Mr. Richard J. MacDonald

Telephone: (617) 434-4288

Facsimile: _(617) 434-8102

Electronic mail: richard.j.macdonald@bankofamerica.com




Section 9.02
(iii)




 









 





EXHIBIT A




FORM OF LOAN NOTICE




Date:                     




To: Bank of America, N.A.




Ladies and Gentlemen:




     Reference is made to that certain Credit Agreement, dated as of June 5, 2007 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined), between
iRobot Corporation, a Delaware corporation, and Bank of America, N.A..



     The undersigned hereby requests (select one):



     o A Loan                     o A Conversion or Continuation of a Loan




	 	1.	 	On       (a Business Day).
	 
	 	2.	 	In the amount of $     .
	 
	 	3.	 	Comprised of          .
	 
	 	 	 	[Type of Loan requested]
	 
	 	4.	 	For a Eurodollar Rate Loan: with an Interest Period of       months.





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



	 	 	 	 	 	 	 
	 	 	iRobot Corporation  
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exhibit A1





 









 








EXHIBIT B




FORM OF NOTE




	 	 	 
	$35,000,000.00
	 	                    , 2007






     FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to the
order of BANK OF AMERICA, N.A. (the “Lender”), on the Maturity Date (as defined in the
Credit Agreement referred to below) the principal amount of Thirty Five Million Dollars
($35,000,000.00), or such lesser principal amount of Loans (as defined in such Credit Agreement)
due and payable by the Borrower to the Lender on the Maturity Date under that certain Credit
Agreement, dated as of June 5, 2007 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined therein being
used herein as therein defined), between the Borrower and the Lender.



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



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



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



Exhibit B (i)




 









 





     THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH
OF MASSACHUSETTS.



	 	 	 	 	 	 	 
	 	 	iRobot Corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exhibit B (ii)




 









 





LOANS AND PAYMENTS WITH RESPECT THERETO




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Amount of	 	 	 	 
	 	 	 	 	 	 	 	 	Principal or	 	Outstanding	 	 
	 	 	 	 	 	 	End of	 	Interest	 	Principal	 	 
	 	 	Type of	 	Amount of	 	Interest	 	Paid This	 	Balance	 	Notation
	Date	 	Loan Made	 	Loan Made	 	Period	 	Date	 	This Date	 	Made By
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    
	 	                    






Exhibit B (iii)




 









 





EXHIBIT C




FORM OF COMPLIANCE CERTIFICATE




Financial Statement Date:                     ,




To: Bank of America, N.A.




Ladies and Gentlemen:




     Reference is made to that certain Credit Agreement, dated as of June 5, 2007 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined), between
iRobot Corporation, a Delaware corporation (the “Borrower”) and Bank of America, N.A. (the
“Lender”).



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



[Use following paragraph 1 for fiscal year-end financial statements]




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



[Use following paragraph 1 for fiscal quarter-end financial statements]




     1. Attached hereto as Schedule 1 are the unaudited financial statements required by
Section 6.01(b) of the Agreement for the fiscal quarter of the 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 the Borrower and its Subsidiaries in accordance
with GAAP as at such date and for such period, subject only to normal year-end audit adjustments
and the absence of footnotes.



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



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



[select one:]




Exhibit C (i)




 









 





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



—or—




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



     4. The representations and warranties of the Borrower contained in Article V of the
Agreement, or which are contained in any document furnished at any time under or in connection with
the Loan Documents, are true and correct in all material respects 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 in all material respects as of such earlier date, and
except that for purposes of this Compliance Certificate, the representations and warranties
contained in subsections (a) and (b) of Section 5.05 of the Agreement shall be deemed to
refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01 of the Agreement, including 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 specified therein.



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



	 	 	 	 	 	 	 
	 	 	iRobot Corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exhibit C (ii)




 









 








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




SCHEDULE 2

to the Compliance Certificate

($ in 000’s)




	 	 	 	 	 
	I. Section 7.11(a) — Consolidated Tangible Net Worth.
	 	 	 	 
	A. Actual Consolidated Tangible Net Worth at Statement Date:
	 	 	 	 
	1. Shareholders’ Equity:
	 	$	 	 
	 
	 	 	 
	2. Intangible Assets:
	 	$	 	 
	 
	 	 	 
	3. Consolidated Tangible Net Worth (Line I.A1 less
Line I.A.2):
	 	$	 	 
	 
	 	 	 
	B. Minimum required Consolidated Tangible Net Worth
	 	$	75,000,000.00	 
	 
	C. Excess (deficient) for covenant compliance (Line I.A — I.B):
	 	$	 	 
	 
	 	 	 
	II. Section 7.11(b) -Quick Ratio.
	 	 	 	 
	A. Current Assets:
	 	 	 	 
	1. Cash:
	 	$	 	 
	 
	 	 	 
	2. Marketable Securities:
	 	$	 	 
	 
	 	 	 
	3. Accounts Receivables:
	 	$	 	 
	 
	 	 	 
	4. Inventory:
	 	$	 	 
	 
	 	 	 
	5. Current Assets:(Lines II.A.1 + 2 + 3 - 4):
	 	$	 	 
	 
	 	 	 
	B. Current Liabilities for Subject Period:
	 	$	 	 
	 
	 	 	 
	C. Quick Ratio (Line II.A.5  ̧ Line II.B):
	 	 	 	 
	 
	 	 	 
	Minimum required:
	 	 	1.5 to 1	 
	III. Section 7.11(c) — Minimum Profit.
	 	 	 	 
	A. Net Income (exclusive of taxes and extraordinary items)
	 	$	 	 
	 
	 	 	 
	B. Minimum Requirement
	 	$	1.00	 






Exhibit C (iii)




 









 








EXHIBIT E




OPINION MATTERS




     The matters contained in the following Sections of the Credit Agreement should be covered
by the legal opinion:




	•	 	 Section 5.01(a), (b) (c) and (d)
	 
	•	 	Section 5.02
	 
	•	 	Section 5.03
	 
	•	 	Section 5.04
	 
	•	 	Section 5.06
	 
	•	 	Section 5.14(b)





Exhibit E